Chargeback Fees represent penalties that are levied on merchants by their acquiring bank when a customer initiates a chargeback. These fees serve to cover the administrative costs associated with the handling and processing of the chargeback, which include the following tasks:
- investigating the validity of the chargeback claim
- communicating with the card issuer
- dealing with the merchant involved
The specific amount of these fees can vary significantly depending on the acquiring bank and the terms set out in the merchant’s payment processing agreement.
For businesses, particularly small businesses or those operating with slim margins, these fees can pose a significant financial burden, potentially impacting their overall revenue and profitability.