Chargeback Example: How One $120 Dispute Moves Through the Banks

A chargeback works by reversing a card payment through the banks instead of through the merchant. The cardholder’s bank takes the money back from the merchant’s bank, the merchant can answer with evidence, and the bank’s decision sets who keeps the funds.

The fastest way to see how credit card chargebacks work is to follow the money. Below, one $120 order moves through every party, with the fees and dates at each step.

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The Short Answer: Where the Money Goes in a Chargeback

• The cardholder disputes a charge with their card issuer, usually within 120 days.
• The issuer gives the cardholder a provisional credit and sends a chargeback through the card network.
• The acquirer takes the disputed amount plus a fee out of the merchant’s balance.
• The merchant accepts the loss or sends evidence before a deadline of 9 to 40 days.
• The issuer decides. The winner keeps the money, and fees usually stay with the merchant.

For the definition, types, and common reasons, start with what is a chargeback.

Who Moves the Money in a Chargeback

Five parties sit between the customer and your bank account. Money only moves along this chain, one link at a time.

Some providers combine roles. American Express and Discover often act as both network and issuer. The merchant acquirer vs payment processor split matters when you need to know who holds your funds.

A $120 Chargeback, Step by Step

Here is a hypothetical example. A customer pays $120 for running shoes with a Visa credit card. The store uses Stripe in the US. Two weeks later, the customer tells their bank the shoes never arrived.

Fees and timing from Stripe’s dispute documentation and Stripe’s dispute fee page ($15 dispute fee, plus a $15 countered fee for disputes opened after June 17, 2025, returned if you win). Hypothetical example, not a Chargeflow customer result.

If the Merchant Wins

The issuer reverses its decision. Stripe returns the $120 and the $15 countered fee. The $15 dispute fee is not returned. The issuer removes the $120 provisional credit, so the cardholder pays for the shoes again.

If the Merchant Loses

The cardholder keeps the $120. The merchant is out the $120 sale, $30 in fees, and the shoes and shipping. That is why one lost chargeback often costs more than the order itself.

Fees differ by processor. Compare them in the chargeback fees by processor guide.

Qu'est-ce qu'un crédit provisoire ?

Provisional credit is a temporary refund the issuer gives the cardholder while it reviews the case. It is not the final outcome. If the merchant wins, the issuer takes it back.

For credit cards, US banks must resolve billing errors within two billing cycles and no later than 90 days, under Regulation Z. Learn more in what provisional credit is.

A chargeback can affect your balance before the review ends. Shopify’s chargeback overview notes that an inquiry does not remove funds, but a chargeback does. Treat the early debit as a hold, not a loss, until the case closes.

How Long the $120 Chargeback Takes

A chargeback like this one usually takes 2 to 3 months from the dispute to the final decision, according to Stripe. Several clocks run along the way:

Scroll to compare all columns. Use the arrow keys when the table is focused.

Use the deadline on your actual case notice, not a general rule. For every network’s windows, see chargeback time limits. For the full stage-by-stage lifecycle, see the chargeback process guide.

Who Loses Money in a Chargeback?

The merchant almost always pays for a chargeback. The issuer passes the cost down the chain, and the acquirer debits the merchant. Even a win usually costs the dispute fee and staff time.

Sources: Mastercard research by Datos Insights (updated June 2026) and Mastercard’s 2025 State of Chargebacks report, a survey of merchants in four countries.

Many chargebacks are not true fraud. A customer may forget a purchase or skip asking for a refund. This is called friendly fraud, and it is a major reason merchants fight back.

How to Do a Chargeback as a Cardholder

If you are the customer, a chargeback starts with your card issuer, not the store:

1. Contact the merchant first and ask for a refund. Many banks expect this.
2. Call your card issuer or use its app to dispute the charge.
3. Explain the problem and share receipts, emails, or tracking.
4. Watch for a provisional credit and any requests from the bank.

Banks can re-bill you if the merchant proves the charge was valid. A refund from the merchant is faster and does not affect anyone’s dispute record.

What Evidence Can Change the Outcome?

Evidence must answer the reason code. Proof of delivery answers “not received.” Login and device history answer fraud claims. Accepted terms answer subscription claims. The reason-code guide explains why each claim needs different proof, and the representment guide explains how to package it.

No single record wins every case. Neither an IP match nor a screenshot is an automatic win. See how issuers evaluate disputes and how to maintain supporting records.

What Happens After the Decision?

If you lose, the issuer may still allow pre-arbitration for some networks. Others treat the decision as final. Stripe, for example, does not support arbitration. If you win, the funds return to your balance, as shown in the example above. To weigh the cost of each choice, see merchant decision points in the chargeback process.

Do not confuse accepting a chargeback with issuing a refund. Review chargebacks versus refunds before you send money outside the case.

Stop Paying for Chargebacks You Could Win

Clear billing, fast delivery, and easy refunds prevent many disputes. Use the prevention guide to pick controls. For cases that still arrive, Chargeflow Automation builds and submits evidence for you, and you pay only when it recovers a chargeback. See Chargeflow’s automated chargeback recovery.

Keep learning with Chargeback Basics and Rules, credit card chargebacks, and the bank-side view of a chargeback in banking.

Sources

• Visa: current public rules and editions
• Mastercard: rules and chargeback documents
• Stripe: responding to card disputes
• Stripe: how disputes work
• Mastercard: true cost of a chargeback (updated June 2026)

Foire aux questions

Who moves the money in a chargeback?

Chargebacks work by letting a cardholder’s bank reverse a card payment. The issuer files the chargeback through the card network, the acquirer debits the merchant, and the merchant can submit evidence. The issuer then decides who keeps the funds.

Is a chargeback a final decision against the merchant?

No. A new chargeback is not a final decision. The merchant can usually submit evidence within 9 to 40 days, and if the issuer agrees, the disputed amount returns to the merchant.

Does the payment processor decide every chargeback?

No. The card issuer decides most card chargebacks. The processor only passes the case and evidence along. In arbitration, the card network makes the final ruling.

Does accepting a chargeback mean issuing another refund?

No. Accepting a chargeback means letting the cardholder keep the disputed funds through the dispute process. Issuing a separate refund on top of it would pay the customer twice.

Can a merchant win every chargeback with enough evidence?

No. Evidence must match the reason code and the network’s rules, and some disputes cannot be challenged at all. Merchants in Mastercard’s 2025 survey reported winning about half of the disputes they fought.