Chargeback
A chargeback is a payment reversal a customer obtains through their card issuer rather than by asking you for a refund. You lose the sale amount, pay a fee of roughly $15 to $25, usually eat the product, and take a hit to your chargeback ratio. That ratio is the number that matters: sustained rates near 1% of transactions put you in card-network monitoring programs, bring fines, and trigger reserves or account termination.
The full cost of one chargeback runs well past the fee. A disputed $80 order costs the $80, a $20 fee, the product and its shipping, plus the labor of fighting it, easily $130 all-in, and won disputes are the minority. At any real volume the ratio threat outweighs the individual losses: a processor watching disputes climb toward 1% will impose a rolling reserve long before it terminates you, freezing 10% of payouts while you fix the root cause.
In the books, chargebacks are contra revenue with the fees expensed separately, never netted invisibly into deposits, because the trend is diagnostic. When we break them out by channel during a monthly close, spikes point somewhere specific: a fraud wave, a delivery problem, a billing descriptor customers don't recognize. They arrive in the settlement reports, so books built on settlements catch them automatically, part of our monthly bookkeeping discipline.
Where this shows up in our work
This isn’t textbook material for us; it’s the day-to-day of keeping seller books right. See how we handle it in practice:
Monthly Ecommerce Bookkeeping→Related terms