Chargeback Lifecycle Fees

What is the Chargeback Lifecycle?

The chargeback life cycle describes the chargeback process from start to finish. This includes all the parties involved and the wait times and responses each imposes for the duration of that chargeback. The lifecycle involves three parties typically: the bank that issued your customer’s credit or debit card (the “issuer”) the processor that provides a merchant with a merchant account and processing capabilities (the “acquirer”, in this case Dharma and our partners); and you, the merchant. Indirectly, your customer (the “cardholder”) may be involved, but they typically work through their issuer. In some cases, an issuer may file a dispute against the merchant without even involving the cardholder. This situation is relatively rare.

What are the steps?

You can imagine the various parts of a dispute: the cardholder notices something on their statement that they feel is incorrect; they notify the issuer; the issuer files the dispute with the acquirer; our banking partners review the dispute; our banking partners pull all the documents related to the dispute, and notify you, the merchant; you decide whether or not to fight the dispute; if you chose to fight, you assemble your own documentation showing the transaction was real, legitimate, and that you fulfilled your obligations to the cardholder; our banking partners send your materials back to the issuer; and the issue makes a final determination.

Along the way, a couple things happen: once the dispute is filed with the issuer, they typically issue a provisional credit back to the cardholder, and withdraw the funds from the acquirer, who in turn withdraws them from your account. Until such time as you win the dispute, you are without those funds, even if you correctly fulfilled your role in the transaction.

If you win the case, which is called a Chargeback Reversal, then game over, and the funds are returned to you. But in full transparency, merchants almost never win disputes without very clear and obvious documentation (which can include video, invoices, correspondence with the cardholder, and much much more). And even then, the cardholder almost always wins.

And even if you win the dispute, the cardholder can file what is sometimes called a “second chargeback”, which in the lingo of the card brands is actually called “pre-arbitration” or “arbitration chargeback”. Pre-arbitration chargebacks happen because the cardholder has new evidence or additional information to provide that shows the merchant omitted or falsified information in their dispute rebuttal. In that case, the issuing bank represents the dispute to the acquirer, and process is repeated with all parties doing additional due diligence.

You may also lose this second time. If you do, most merchants give up at this point. Should you chose not to, the next step is arbitration, where evidence is presented by both parties, and you agree to be held to the decision of the arbitrator. All decisions regarding the original chargeback from this stage will be final, because arbitration is the absolute last stop in the chargeback process.

We point out the major steps in the process, as our banking partners have implemented new fees to compensate for the work they are required to do at each step in the process.

Chargeback Lifecycle Fees

Our banking partners have implemented the following fees that are applicable to all Dharma merchants*

• Retrieval Fee – $5 per occurrence
• Chargeback Loss – $25 per occurrence
• Chargeback Reversal – $15 per occurrence
• Chargeback Bank Representments – $15 per occurrence
• Pre-Arbitration – $25 per occurrence

*  These fees were messaged in merchant account statements in the August 2026 statement, and went into effect on September 1, 2026. As per the message in the statement by continuing your account, you agreed to be bound by this new fee structure, Your recourse at that time was to close your account if you objected to the fees.