Glossary
Chargeback
A chargeback is a card payment reversed by the buyer's bank after the buyer disputes the charge.
What it means
The buyer goes to their card issuer instead of the merchant, and the issuer pulls the money back while the dispute is reviewed. The merchant can contest it with evidence, and the process can take weeks or months. The merchant's processor usually charges a dispute fee as well. For prop firms, a common case is a trader who fails a challenge and then disputes the fee.
Processors watch each merchant's chargeback ratio. A high ratio can bring higher fees, a larger rolling reserve or a closed merchant account. Firms reduce disputes with a clear refund policy, a recognizable name on the card statement, plain terms at checkout, and records showing the trader accepted the rules and used the account.
Worked example
Illustrative case: a trader buys a challenge, trades it and fails. Weeks later they dispute the charge, and the fee plus a dispute fee is taken from the firm's balance. The firm submits the accepted terms and the trading history, the issuer rules in its favor, and the challenge fee is returned. The dispute fee may not be.
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