Imagine losing a $30 sale and then paying another $30 just to dispute it, and still coming out with nothing. That’s the new reality for merchants using Stripe.
Stripe’s overhaul of its chargeback fee structure, which was rolled out on June 17, 2025, marks a major departure from its previous, more predictable system. For years, a flat $15 fee accompanied any dispute, no matter the outcome. But now, Stripe has introduced a second, conditional fee that applies when a merchant chooses to contest a dispute.
The financial impact of this change is significant, especially for businesses operating on thin margins or processing high volumes of low-value transactions. This consequently represents a major shift in the way merchants must think about chargebacks, profitability, and dispute management.
Stripe’s New Dispute Fee Model Explained
The core change lies in Stripe’s adoption of a two-tier dispute fee system:
- Dispute Received Fee ($15) — This is triggered whenever a cardholder files a dispute. It’s non-refundable, even if you win. In the U.S., this fee is set at $15, and similar amounts apply across other regions depending on the local currency.
- Dispute Countered Fee ($15) — This is triggered only if a merchant decides to challenge the dispute. While the fee is refundable upon winning, it’s forfeited if the dispute is lost, even partially.
As a result, a U.S. merchant who contests and loses a dispute pays a total of $30 in fees, not including the value of the reversed transaction. This adds an extra layer of financial risk that directly discourages blanket representment strategies.
Why Fighting Everything Doesn’t Work Anymore
Let’s say you sell a $40 product. If a customer disputes the charge and you don’t contest it, you’re down $55 — the product and the $15 received fee. If you do fight and lose, you lose $70.
For many businesses, this new risk isn’t worth it. Stripe has made it so you have to be confident you’ll win (and win completely) before pushing back.
This means shifting away from blanket representments and toward a more selective approach. Disputes should now be handled like financial decisions based on risk, expected return, and the strength of your evidence. That means asking questions like:
- Is the disputed amount high enough to justify the risk?
- Do you have documentation that directly contradicts the customer’s claim?
- Is this a loyal customer or a one-off order that looks suspicious?
If you can’t answer yes to all of the above, it may be smarter to cut your losses.
Stripe’s Dispute Tools: Helpful, or Cost Traps?
Stripe offers several tools to help merchants manage disputes, but these solutions come with trade-offs that are now more visible under the new fee regime.
Radar, Stripe’s fraud detection engine, is a baseline layer of protection that flags and blocks suspicious transactions. For businesses that want more control, Radar for Fraud Teams offers advanced filtering and rules management, albeit at an extra cost per transaction. Using these tools effectively can prevent disputes before they even start, which is a key advantage when every dispute now carries additional financial risk.
Smart Disputes, Stripe’s AI-powered representment service, automates the process of gathering and submitting evidence. When merchants use Smart Disputes, they are exempt from the dispute countered fee. However, if the dispute is won, Stripe takes a 30% cut of the recovered transaction amount. While this may be acceptable for businesses without the internal capacity to handle disputes, it can be a costly trade-off for merchants with a higher success rate using manual processes.
Chargeback Protection is another option. Merchants pay 0.4% of each transaction to have Stripe absorb dispute costs for qualifying fraud-related chargebacks. But the protection is narrow. It excludes disputes categorized as “product not received” or “not as described,” and doesn’t cover recurring payments. That makes it a limited shield, best suited for certain high-risk retail environments.
Stripe’s Fees vs. PayPal, Square, and Adyen
Compared to its competitors, Stripe’s approach is more punitive and complex.
- PayPal charges between $8 and $20 for disputes, depending on whether they’re handled internally or through card networks, and applies penalties for merchants with high dispute rates. However, these fees are sometimes refunded if the merchant wins.
- Square takes a different tack. It doesn’t charge any dispute fees at all. It absorbs the network costs and simplifies the process for merchants, but its dispute handling is less comprehensive, offering no escalation or arbitration if a card issuer rules against the merchant.
- Adyen, which caters to large enterprises, doesn’t publish standard dispute fees. Instead, they are negotiated into custom pricing packages. Adyen also offers advanced tools for automated representment, especially in cases where the dispute involves a refunded transaction or where liability has shifted due to 3D Secure authentication.
Each processor targets a different kind of merchant. Stripe’s new model seems to favor businesses with high average order values, solid fraud prevention, and resources to selectively manage disputes. It’s a less forgiving environment for small businesses or high-volume, low-margin sellers.
Preventing Disputes Before They Bite
With dispute costs rising, the best move is to reduce how many disputes happen in the first place. Prevention saves more than any tool or service.
Start with the basics. Make sure your billing descriptor matches your brand name and includes a phone number or web address. Customers often file disputes simply because they don’t recognize a charge.
Send order confirmations and shipping updates so buyers know when to expect their product. Keep return and refund policies clear and easy to find. If customers feel they can resolve issues with you directly, they’re less likely to go through their bank.
For physical goods, include tracking numbers and keep proof of delivery. For digital goods, keep logs of when the user accessed the content, along with their device and IP address. This information can make or break your case if you ever do need to fight a dispute.
Also, take full advantage of tools like AVS and CVV checks, and use 3D Secure whenever possible. These not only reduce fraud, but they can shift liability away from you entirely. Finally, consider making use of Ethoca Alerts and Verifi RDR.
Read More: How Merchants Can Prevent Chargebacks with Ethoca Alerts
Stay Ahead of Chargebacks with ChargebackStop
With Stripe’s fees doubling the cost of every mistake, merchants can’t afford a trial-and-error approach. At ChargebackStop, we help businesses adapt by giving them better tools, better data, and better outcomes.
Our platform alerts you when a dispute is initiated, giving you time to refund or respond strategically. We also automate the representment process, generating customized evidence packets that align with card network requirements. Most importantly, we give you the insights to decide which disputes are worth fighting and which are better left alone.
This isn’t about pushing more merchants into the same tools. It’s about building smarter, more sustainable strategies that reflect your risk and margin profile.
If you want to stay ahead of the curve, now’s the time to act. Book a free consultation with ChargebackStop and take control of your dispute strategy before Stripe’s new fees take hold.
