Here's the Rundown on Stripe Chargeback Fees for Merchants
Let’s be honest: chargebacks are a pain in the neck.
First, there’s a sale revenue you lose from the initial dispute. Then, there’s all the time and effort you spend fighting the claim and trying to get your money back. Of course, that’s not even accounting for chargeback fees, which still hit your account even if you win a dispute.
Today, we’ll look at chargeback fees as they pertain to one of the leading merchant financial services providers on the market: Stripe. We’ll see how much Stripe chargeback fees cost, when they’re assessed, and if there’s a way to get your money back.
What are Chargeback Fees?
Let’s start at the top.
Typically, when a chargeback is filed against you, the funds will be automatically removed from your account. You will also be charged an additional fee by your acquiring bank for every chargeback filed against you (anywhere between $5-100 per incident).
These fees are meant to cover the bank’s administrative costs resulting from the chargeback. As a result, these fees are nonrefundable (in most cases). You don’t get the money back, even if you engage in representment and prove the dispute was invalid.
Like other acquirers, Stripe assesses a chargeback fee for every chargeback against one of their customers. However, their approach differs in some key ways compared to other financial institutions.
What is the Stripe Chargeback Fee?
As we discussed above, Stripe chargesa per-chargeback fee like most banks and processors. However, their fees are generally less punitive than other acquirers.
If you’re a Stripe customer, and you receive a chargeback, the company will immediately deduct the transaction value from your account. They will also subtract a $15 chargeback fee per chargeback.
The fee applies regardless of perceived liability or the outcome of any dispute. This means that the fee will stand even if the chargeback is invalid (i.e. a case of friendly fraud).
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Why Does Stripe Assess a Chargeback Fee?
Like all acquirers, Stripe charges their customers a fee for every chargeback filed against them. From the merchant’s perspective, these fees can often seem heavy-handed and unfair. After all, you’ve already lost revenue due to the initial chargeback. Why should you have to pay another fee on top of that?
The Stripe chargeback fee is not meant to be punitive in nature. Instead, it’s meant to cover the company’s costs resulting from the chargeback.
When an issuer submits a chargeback, they don’t recover the money from your merchant’s account directly. Instead, they withdraw it from Stripe. The acquirer must then recover the funds from you to recoup their loss.
Processing dispute documents, forwarding them along to the merchant, and recovering the money lost to the dispute takes time and added resources. The Stripe chargeback fee is meant to cover the cost of doing this added work.
Does Stripe Refund Chargeback Fees?
No. As outlined above, you will not get a refund for Stripe chargeback fees. However, the company does offer a program which lets you insulate your business against chargeback costs.
If you are enrolled in Stripe Chargeback Protection, the company will reimburse you for the cost of any chargebacks. They will also waive the Stripe chargeback fee.
Of course, participation in Stripe Chargeback Protection also comes at a cost. You must pay an additional 0.4% of the transaction total per transaction. This is in addition to the standard card processing fee of 2.9% plus $0.30 per transaction. While this doesn’t seem like at first glance, it can add up quickly.
Also, some chargebacks are not covered. Stripe Chargeback Protection covers fraud chargebacks resulting from one-time transactions for which a customer enters their card details. It does not apply to recurring transactions, manually-approved transactions, or chargebacks with a non-fraud reason code, like “item not received” claims.
Have Additional Questions?
The Stripe chargeback fee seems like a pretty simple concept at first glance. But, there’s a lot more to the matter when you dig a little deeper.
Want to learn more about Stripe chargebacks? Have questions about other facets of the chargeback process? Chargebacks911® is here to help.
Chargebacks911 offers over more than a decade of leadership in the chargebacks and payments industry. We are uniquely placed to help you fight back against chargebacks and win. Contact us today for a free demo.