Chargeback (dispute)
The cardholder asks their bank to reverse a charge, and the money gets yanked back from you, plus a fee, agree or not.
See it
What it is
A chargeback is the cardholder going over your head. Instead of asking you for a refund they tell their issuing bank the charge was wrong, and the card network pulls the money back out of your account whether you agree or not. It arrives with a reason code (fraud, goods not received, not as described, subscription not cancelled), a dispute fee whose treatment depends on your processor and region (plenty keep it win or lose, some hand it back when you win, so read your pricing schedule), and a short deadline to submit evidence. Fighting it is called representment.
For a lot of small-ticket products the disputes are not real fraud at all: they are people who did not recognize the line on their statement. Whether that is your situation is an empirical question, so pull your own reason-code distribution before deciding what to build. If 'transaction not recognized' and 'subscription not cancelled' dominate, a clear statement descriptor and an obvious cancel button are worth more than any evidence packet. If the genuine fraud codes dominate instead, that is a different beast, and it is what 3-D Secure liability shift exists to move off you.
The gotcha is the ratio, not the money. Card networks run monitoring programs keyed to your dispute and fraud ratios, but the programs themselves, how the ratio is calculated, and the level that trips them vary by network, region, and acquirer, and they get revised. Get the numbers that currently apply to your account from your acquirer or the scheme rules rather than from a figure someone quoted online. Landing in a program means fines, mandatory remediation, and eventually losing the ability to accept cards at all. A second trap: refunding a charge that is already disputed does not withdraw the dispute, so you can pay the customer twice plus the fee. Once a dispute opens, respond through the dispute process only.
Ask AI for it
Build chargeback handling into this billing service. Subscribe to the dispute webhooks (charge.dispute.created, updated, closed), and on creation store dispute id, reason code, amount, and evidence-due date against the order, revoke that order's entitlement, and post an alert to the billing channel. Add an internal dispute page that assembles the representment packet automatically: receipt and invoice PDF, the exact statement descriptor shown, purchase timestamp with IP and device, terms acceptance record, delivery or product-usage logs after purchase, and any support thread with that customer. Store monitoring thresholds as effective-dated configuration rows keyed by network, region, and acquirer rather than hardcoding a number, then show the measured rolling 30-day dispute and fraud ratios on the admin dashboard, break them down by reason code, and alert against whichever configured rule currently applies. Block refunds on an order that already has an open dispute, and add the payment fingerprint to a blocklist when a fraud dispute closes against us.