Chargeback
Definition
When a customer disputes a card charge with their bank and the money is pulled back from you, usually with a dispute fee. In wholesale, the word also means a retailer deducting penalties from your invoice.
Want a deeper explanation?
Card chargebacks are a direct hit to revenue and a risk to your merchant account if the rate climbs. Retail chargebacks for late shipments or labeling errors can quietly take several percent off wholesale revenue.
Both should be tracked in their own accounts, not netted out of sales. Watch for: a rising chargeback rate, because processors can raise fees, hold reserves or close your account.
Example
A customer disputes a $120 order as "not received." The processor pulls $120 plus a $15 fee. If you win the dispute with tracking proof, the $120 comes back, but the fee often does not.