The short answer
A chargeback is when the cardholder's bank reverses a card payment and takes the money back through the acquirer from the merchant. The funds are usually held or debited right away. You answer with evidence, typically within 7 to 21 days. Too many disputes can put a business in Visa's monitoring program, which flags US merchants at a 1.5% ratio.
What Is a Chargeback?
A reversal started by the customer's bank. Visa defines disputes as "the reversal of the value (or partial value) of a transaction by the card issuer to the acquirer, and usually, by the merchant bank to the merchant." Visa groups them into four categories: fraud, authorization, processing errors and consumer disputes.
How Long Do Customers Have, and How Long Do You Have?
Visa stresses that "each step in the dispute cycle has a defined time limit," so a late response is a lost dispute.
- Customers: "Card networks typically allow cardholders to initiate disputes within 120 days of the original payment."
- You: usually 7 to 21 days to respond, depending on the card network, per Stripe. Square gives its sellers seven days from the first notification.
- The decision: the issuer usually takes 60 to 75 days.
What Evidence Wins a Chargeback?
Evidence that answers the reason code. A signed receipt or chip read for a fraud claim, a delivery confirmation for "not received," your posted refund policy and the customer's acceptance of it for a return dispute. For a card-absent fraud claim, Visa's dispute guide lets a merchant point to two or more earlier transactions from the same cardholder, settled at least 120 days before and never reported as fraud, that share at least two data elements such as device ID, device fingerprint or IP address.
Settle fast, too: Visa recommends depositing transactions "ideally within one to five days of the transaction date" to avoid late-presentment disputes.
What Does a Chargeback Cost?
The sale, plus sometimes a fee. Square says it will "place an immediate hold on the disputed funds" and that "there are no fees for dispute management services for chargebacks." Stripe charges a dispute fee and says "you get this fee back for won disputes." On a traditional merchant account, check your agreement for the fee.
What Happens If You Get Too Many?
Visa watches the ratio. Its Acquirer Monitoring Program counts fraud reports and disputes against settled transactions each month. Since April 1, 2026, a US merchant is flagged as excessive at a ratio of 150 basis points (1.5%) once it has at least 1,500 fraud and dispute reports in a month. A flagged merchant has to put risk controls in place.
Prevention is cheaper than winning: a clear billing descriptor, a visible refund policy, fast replies to customers, and delivery tracking. BatchOut sets merchants up with a processor that fits their dispute profile, including higher-risk industries.
Commonly Asked Questions
How long does a customer have to file a chargeback?
Card networks typically allow cardholders to dispute within 120 days of the original payment.
How long do I have to respond to a chargeback?
Usually 7 to 21 days depending on the card network; Square gives its sellers seven days from the first notification.
Does Square charge a chargeback fee?
No. Square says there are no fees for its dispute management services for chargebacks, though it holds the disputed funds.
What chargeback ratio is too high for Visa?
Since April 1, 2026, Visa's monitoring program flags US merchants at a fraud-and-dispute ratio of 1.5% or more, with at least 1,500 fraud and dispute reports in a month.
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