Chargebacks are part of doing business online. They happen when a customer disputes a charge with their bank, and suddenly, you’re at risk of losing both the money and the product. It’s frustrating, especially when you feel like you did everything right.
Stripe offers a way to deal with this: chargeback protection. It’s a feature that helps shield you from the cost of certain types of disputes, mostly ones related to fraud. You pay a small fee per transaction, and Stripe takes care of the rest if a covered chargeback comes in.
In this guide, we break it all down for you. What it covers. What it doesn’t. How much it costs. And most importantly, whether it actually makes sense for your business.
What is Stripe?
Stripe is a platform that lets you accept payments online. Whether you’re selling digital products, physical items, or subscriptions, Stripe helps process the payment behind the scenes.
It’s built for businesses of all sizes, and it's known for being developer-friendly. But beyond the tech, it also includes tools to handle fraud, disputes, and chargebacks. One of those tools is chargeback protection.
How Does Stripe Handle Chargebacks?
When a customer files a chargeback, you get notified by Stripe. Then, you’re given a chance to respond and submit evidence things such as receipts, emails, tracking info, or screenshots.
From there, Stripe passes your evidence to the customer’s bank. Then, the waiting begins. The bank reviews everything and decides whether you or the customer gets the money.
If you win, you keep the payment. If not, the money is pulled from your account. Either way, the process takes time and comes with a fee.
A Glimpse of Stripe Chargeback Fees
Right now, Stripe charges a $15 fee anytime a chargeback comes in. It doesn’t matter if you win or lose. The fee sticks either way.
But that’s about to change.
Starting June 17, 2025, the fee for lost disputes will jump to $30. If you win, it stays at $15. So if you fight a chargeback and still lose, the cost doubles.
For businesses that deal with chargebacks often, this adds up fast. Especially if your products are low-priced or your margins are tight. That’s where Stripe’s chargeback protection might actually help. It won’t cover everything, but if disputes are a regular headache, it could save you time and money in the long run.
What’s Included in Stripe Chargeback Protection
Stripe’s chargeback protection is meant to reduce that risk. When you turn it on, Stripe covers the cost of certain types of chargebacks. You don’t have to handle dispute paperwork for covered cases. You don’t lose the money from the transaction. You don’t pay the $15 fee.
Here’s what’s typically covered:
- Fraud-related chargebacks, like when someone uses a stolen card
- Transactions that follow Stripe’s rules and best practices
- Covered cases, even if the customer’s bank sides with the buyer
The idea is simple. You pay a small fee upfront. In return, Stripe takes care of disputes that fall within their protection rules.
What Doesn’t Stripe Chargeback Protection Cover?
It’s not blanket coverage, though. Stripe doesn’t protect against every type of dispute.
These are a few situations that fall outside the protection:
- A customer says the item never arrived
- They claim it wasn’t as described
- They’re unhappy with the service
- The transaction doesn’t meet Stripe’s eligibility requirements
Basically, Stripe protects against fraud, not buyer's remorse. If the dispute is about product quality, miscommunication, or delivery issues, you’re still responsible.
How to Qualify for Stripe Chargeback Protection
There’s no complicated sign-up process. If you're in a supported country and your business type is eligible, you can enable chargeback protection right in your Stripe dashboard.
To be eligible:
- You must have Chargeback Protection turned on at the time of the transaction.
- The payment must be processed using Stripe Checkout, not custom integrations.
- The dispute must fall under one of Stripe’s supported chargeback reason codes.
- You must follow Stripe’s Terms of Service and your merchant agreement.
- You can't use an allow rule that skips Stripe's protection checks for the transaction.
- The transaction must fall within your annual protection limit for the settlement currency.
- Subscription payments are only covered if they’re the initial charge at sign-up.
There are yearly limits, too. Stripe caps how much they’ll cover each year based on the currency you use. Here’s what that looks like:
Once you hit the yearly cap, any chargebacks after that won’t be covered until the next calendar year starts.
If you’re new to Stripe, you might see some extra steps at the beginning. Sometimes Stripe holds onto dispute-related funds and fees until your account is fully verified. This is temporary. If a dispute happens during that time and it qualifies for protection, Stripe will refund the amount later and won’t charge you the dispute fee.
One last note. If you sell subscriptions through Stripe Checkout, only the initial payment is covered. That means the charge at sign-up qualifies. Any future billing, like after a trial or monthly renewals, doesn’t.
To sum it up: make sure Chargeback Protection is turned on, use Stripe Checkout, stay within Stripe’s terms, and don’t go over the yearly limit. If you stick to that, you’ll be covered for eligible chargebacks.
The Cost of Stripe Chargeback Protection
Stripe charges 0.4% per covered transaction. That means if you sell something for $100, you’ll pay 40 cents to have that payment protected.
You’re only charged when the protection is applied. So if a transaction doesn’t qualify, or if you choose not to use protection for certain charges, you won’t pay the fee. No surprise bills. Just a small cut from each sale to offset the risk of a big loss.
Should You Get Stripe Chargeback Protection?
That depends on your business and how often chargebacks hit you.
Here’s when it might make sense:
- You sell digital goods or subscriptions
- You deal with a high volume of small transactions
- You’ve had issues with fraud in the past
- You want to avoid dealing with banks and paperwork
And here’s when you might skip it:
- Your chargeback rate is very low
- You mostly sell to repeat customers
- You have strong systems in place to fight disputes yourself
It’s a tradeoff. Pay a little now to avoid losing a lot later. For some businesses, that’s a no-brainer. For others, it might not be necessary.
Take a look at your past disputes. If you rarely get chargebacks, you might be fine without it. However, if they’ve burned you before, the protection could be worth every cent.
