Under a merchant of record, the chargeback is filed against the MoR, but the cost of a lost chargeback is normally passed back to you**.** The MoR receives the dispute, submits the evidence and, in most contracts, decides whether to fight. If the dispute is lost, the disputed amount and a dispute fee of roughly $15 to $35 come out of your payouts.
We read the public terms of eight merchants of record, starting with our own, to see what actually hits your payout. The legal responsibility moves to the MoR, but most of the money does not. The differences that matter sit in the fee, who decides to fight, how freely the MoR can refund your customers and the chargeback rate that gets your account reviewed.
The short answer
The MoR carries | You carry |
|---|---|
Being the merchant on the card statement, so the dispute is filed against it | The disputed amount when the dispute is lost |
Receiving the chargeback from its acquirer and meeting the network deadline | The dispute fee, which most MoRs charge even when the dispute is won |
Writing and submitting the response, and usually deciding whether to contest | Sending usage logs, terms acceptance and other evidence before the MoR's deadline |
Card-network monitoring programs, which measure its merchant accounts | The processing and MoR fee on the original sale, which is not returned |
The loss if your payout balance can't cover a chargeback and you never repay it | Reserves, payout holds or suspension if your dispute rate climbs |
The last row on the left is the one real economic risk the MoR takes on: it is exposed to you as a debtor. That exposure is why the contracts we read let the MoR hold payouts, set a reserve or suspend the account.
The MoR is the merchant on your customer's card statement
A chargeback is filed against the merchant the card network sees on the transaction. Under a merchant of record, that is the MoR: it holds the merchant account, its acquirer settles the payment, and its name appears on the statement. When a cardholder disputes the charge, the issuer sends the dispute down that chain to the MoR, never to you.
Eight MoR contracts side by side
Seven of the eight providers state that a lost chargeback comes out of your payouts or is held from them while the bank decides. Stripe Managed Payments' page is silent on the point, though standard Stripe accounts are debited the amount. Our own contract is first.
Provider | Dispute fee | Who decides whether to fight | Lost amount taken from you? | When the MoR can refund without asking you | Reserves and suspension | Source |
|---|---|---|---|---|---|---|
tiun | $35 per dispute [EDITOR: pricing table says $35, every other tiun page says $15; fix before publishing]. Also charged on refunds made to head off a chargeback. Kept if tiun wins | tiun responds, submits the evidence and decides how far to pursue the dispute. You send evidence within 5 business days or it may be lost by default | Yes: the chargeback amount, the related sales tax and the dispute fee come out of your next payout. Any shortfall is due within 10 business days | Any time it judges a refund necessary to prevent a chargeback, manage risk or meet legal or scheme rules. Its call on pre-chargeback alerts is final | Corrective action (product description, refund policy, checkout flow), enrolment in a scheme monitoring program at your cost, a reserve, or termination if your rate passes scheme or tiun limits. Payouts tied to a disputed transaction can be held until it is resolved | MSA §7.1, §7.5, §9.1 to 9.4, updated 2 Sep 2026; pricing |
Paddle | Up to $20, €20 or £20 (A$40 or C$40). Also charged on pre-chargeback alerts. Kept if Paddle wins | Paddle's automated system contests disputes. Seller evidence is not accepted, and second-stage disputes are not contested | Yes, plus Paddle's processing fees | Buyer requests within 14 days, at Paddle's discretion. Any time Paddle believes a chargeback may follow | Sales suspended or account terminated if rates are excessive. Help docs ask sellers to stay under 0.65% by value | Terms §10, updated 6 Oct 2026; chargebacks help |
Lemon Squeezy | $15 | Lemon Squeezy sends what it can to the payment provider. In most cases it refunds the buyer in full on your behalf | Yes, from your next payout | Within 60 days, to prevent a chargeback | Too many chargebacks can lead to suspension | |
Stripe Managed Payments | $15 in the US (Stripe's dispute received fee). Stripe pays the counter fee when it responds | Stripe decides and responds without asking you. It may accept disputes it thinks you are unlikely to win | Not stated on the Managed Payments page. Standard Stripe accounts are debited the amount plus the fee | Within 60 days in certain cases, or if you don't answer a support request that needs your input within 48 hours | Not stated on the page | |
Polar | $15 regardless of outcome (fees page). Its contract allows up to $30 per incident plus a $25 fee per prevention alert | Polar | Yes, and Polar keeps its fees | 60 days (fees page). The contract says 10 days for one-off purchases, 30 days from a renewal, any time a chargeback looks likely, or if you don't reply within 72 hours | Internal limit of 0.4%. Above it: refunds, payout holds until the 120-day dispute window closes, paused payments, then account block | Fees; account reviews; Master Services Terms, updated 25 Mar 2026 |
Dodo Payments | $30 per dispute (the contract calls $30 a minimum). $1 per refund. $18 per Visa RDR alert, $27 per Ethoca alert | Not stated | Yes, plus charges and fees | Not stated | Reserve possible. The contract refers to a chargeback, cancellation or refund rate above 0.5% of monthly orders | |
Creem | $25 or €25 per chargeback | Creem sends information to the payment provider. It typically refunds the buyer in full on your behalf | Yes | Within 60 days, to prevent a chargeback | Excessive chargebacks can lead to suspension | |
FastSpring | Not published. The chargeback amount shown in the dashboard includes network fees | You submit evidence; FastSpring forwards it; the bank decides within 60 to 75 days | Held from your payout as soon as the dispute arrives, and kept if it is lost | PayPal cases: if you don't resolve them within 48 hours | Balance may be held at its threshold | Chargebacks and disputes, updated 5 Jan 2026 |
Contracts checked on 28 October 2026. Where a provider's help pages and its contract disagree, as Polar's do, both are shown; the contract governs.
The fee runs from $15 to $35 per dispute, and most providers keep it when they win. Most decide alone whether to contest, and Paddle does not take seller evidence at all. Lemon Squeezy, Creem, Stripe Managed Payments and Polar can refund your customers for up to 60 days without asking, and tiun and Paddle can do so whenever a chargeback looks likely.
One lost $100 chargeback, with and without an MoR
A lost chargeback costs you the disputed amount, every dispute fee, and the processing fee on the original sale, which no provider returns.
The example is a $100 sale, before tax, paid with a US card. On Stripe without an MoR, you are the merchant. Under tiun, tiun is.
Stripe, you are the merchant | tiun as merchant of record | |
|---|---|---|
Fee on the original sale, not returned | $3.20 (2.9% + $0.30) | $3.20 (2.9% + $0.30; $3.70 on a subscription) |
Disputed amount reversed | $100.00 | $100.00 |
Dispute fee | $15.00, plus $15.00 more if you contest and lose | $35.00 [EDITOR: or $15.00 once the pricing page is fixed] |
Who writes the response | You | tiun, using your evidence |
Cost if the dispute is lost | $118.20 uncontested, $133.20 contested | $138.20 |
Cost if the dispute is won | $15.00 | $35.00 |
The numbers for the two set-ups are close because the economics are the same. The MoR saves you the work of fighting the dispute and the exposure on your own merchant account. It does not save you the $100.
Sales tax and VAT are left out. They are refunded to the customer with the chargeback, and each contract sets how that tax line is settled with you. Stripe's fees are from stripe.com/pricing and its dispute fee rules: the $15 received fee is never returned, and the $15 counter fee is returned only if you win.
A refund made to stop a dispute costs the same under tiun as losing one, because the dispute fee also applies to pre-chargeback refunds. A refund the customer asks you for directly carries no dispute fee. Refunding quickly when a customer asks is the cheapest outcome on every platform in the table.
Fraud, friendly fraud and service disputes are won with different evidence
The MoR can only win a dispute with evidence you hold. It helps to know which kind of dispute you are looking at, because the odds and the evidence differ.
Type | What happened | Can it be won? | Evidence that helps |
|---|---|---|---|
True fraud | A stolen card was used to buy your product | Rarely, unless the payment passed 3-D Secure, which shifts fraud liability to the card issuer | 3-D Secure result; for Visa, two earlier undisputed payments from the same customer, 120 to 365 days old, sharing two data points with the disputed one, one of them the IP address or device ID (Compelling Evidence 3.0) |
Friendly fraud | The cardholder made or allowed the purchase, then disputed it: a forgotten renewal, a family member's purchase, buyer's remorse | Often, if usage after the charge is on record | Login and usage logs with timestamps and IP addresses after the charge; renewal reminder emails; terms accepted at checkout |
Service dispute | The customer says they cancelled, were not refunded, or did not get what was described | Sometimes; refunding is often cheaper | Your cancellation flow and proof it was not used; refund records; support conversations; what the product page promised |
Under an MoR you never speak to the card issuer. The MoR asks you for this evidence and sets a deadline, which is shorter than the network's because the MoR needs time to assemble the response. Keep the evidence where you can export it in minutes: per-customer activity logs, the checkout terms version each customer accepted, and every email that mentions billing.
Refunds: you set the policy, the MoR can override it
You set the refund policy, within consumer law. Most contracts in the table also let the MoR refund your customer without asking, because a refund made before a chargeback avoids a dispute on its merchant account. The windows differ: 14 days for Paddle's discretionary refunds, 60 days for Lemon Squeezy, Creem and Stripe Managed Payments, and no time limit at tiun and Paddle when a chargeback looks likely.
Pre-dispute alerts make this automatic. Ethoca alerts and Visa's Rapid Dispute Resolution flag a dispute before it becomes a chargeback, and many MoRs refund on the alert without a person looking at it. Visa disputes resolved through its pre-dispute tools are left out of its monitoring ratio, which is why MoRs use them. They are not free for you: tiun and Paddle charge their dispute fee on these refunds, and Dodo lists $18 per Visa RDR alert and $27 per Ethoca alert.
The MoR's fee on the original sale is generally not returned on a refund, Polar and Creem keep their original transaction fees, and Paddle recovers its processing fees from you. A refunded $100 sale under tiun still costs you $3.20.
The EU and UK 14-day withdrawal right
Consumers in the EU and UK can withdraw from an online purchase within 14 days without giving a reason (Consumer Rights Directive 2011/83/EU, Article 9; in the UK, the Consumer Contracts Regulations 2013). The MoR is the seller, so the MoR owes this right to the customer, and it applies whatever your own refund policy says.
The checkout can narrow it. For digital content, the right ends once delivery starts, provided the customer expressly asked for immediate access, acknowledged that they lose the right, and received a confirmation of both. For a service that runs over time, such as a monthly subscription, a customer who asked you to start straight away can still withdraw within the 14 days but owes a proportionate amount for the time already used. tiun collects this consent and acknowledgement at checkout under Terms of Sale.
The waiver matters in a dispute because it is evidence. A customer who files "cancelled" or "credit not processed" ten days after buying is easier to answer when the MoR can show a timestamped record of the consent and the confirmation email. Without it, an EU or UK buyer who asks for their money back inside 14 days is usually entitled to it, and the MoR will refund rather than fight.
The chargeback rates that get an account reviewed
Card networks fine and restrict merchants whose dispute rates cross set thresholds. Under an MoR, those programs measure the MoR's merchant accounts, so your disputes are pooled with every other seller on the platform.
Program | How the ratio is measured | Threshold |
|---|---|---|
(Fraud reports + disputes) ÷ settled card-not-present transactions, monthly | Merchant "Excessive" level cut from 2.2% to 1.5% on 1 April 2026 in the US, Canada, Europe and Asia-Pacific, with at least 1,500 fraud reports and disputes in the month | |
Chargebacks this month ÷ transactions last month | 100 to 299 chargebacks and a ratio of 1.5% or more | |
Mastercard High Excessive Chargeback Merchant (HECM) | Same | 300 or more chargebacks and a ratio of 3.0% or more |
A single SaaS seller rarely reaches 1,500 disputes a month, so these programs will almost never name you. They can name the MoR, and one seller with a 5% dispute rate pulls up the average for everyone. MoRs therefore set their own limits far below the network's. Polar's internal limit is 0.4%, Dodo's contract refers to 0.5% of monthly orders, and Paddle asks sellers to stay under 0.65% by value. Expect an MoR to review your account, raise your reserve or pause payouts well before any network program would notice you.
Our guide to chargeback monitoring programs for SaaS covers how each program counts disputes and what the fines are.
Questions to ask any MoR before signing
What is the dispute fee, and is it charged when the dispute is won or settled by a refund before it becomes a chargeback?
Who decides whether to contest a dispute, and can I ask you to fight one you would otherwise accept?
How many days do I have to send evidence, and what happens if I miss the deadline?
When can you refund my customer without asking me, including on pre-dispute alerts, and is the MoR fee returned?
At what dispute rate do you review accounts, add a reserve or hold payouts, and how much notice do I get?
What will my customers see on their card statement, and can it include my product name?
Ask for the clause number with each answer. A sales call's "we handle chargebacks" means the MoR runs the process; the contract says who pays.
FAQ
Does the MoR return the money if it wins the chargeback?
Yes. The disputed amount is credited back to your balance. The dispute fee usually is not: tiun, Paddle and Polar keep it whatever the outcome.
Can the MoR refund my customer without asking me?
Yes. Every contract we read that addresses the point allows it, at least to prevent a chargeback. tiun and Paddle can do so at any time when a chargeback looks likely, and Lemon Squeezy, Creem and Stripe Managed Payments within 60 days of the purchase.
Do I get the MoR fee back on a refund?
Usually not. tiun, Polar, Creem and Paddle all keep or recover the fee on the original sale, and Stripe does not return processing fees on refunds either.
What chargeback rate gets my account reviewed?
MoRs act well below the card networks' 1.5% thresholds. Polar's internal limit is 0.4%, Dodo's contract refers to 0.5% of monthly orders, and Paddle asks sellers to stay under 0.65% by value. tiun reviews accounts that pass scheme limits or its own.
Who handles a dispute from a business customer?
The MoR, in the same way. It is the seller to business buyers too, and a corporate card dispute follows the same network rules. The EU and UK 14-day withdrawal right does not apply to business buyers.
Are chargebacks on renewals treated differently?
The process is the same, but the dispute is often coded as a cancelled recurring payment or as fraud by a customer who forgot the subscription. Renewal reminder emails, a visible cancellation flow and usage logs after the renewal date are the evidence that wins these. tiun's Terms of Sale require a reminder email before every renewal and let buyers cancel any time in the customer portal, and they ask buyers to contact tiun before filing a chargeback. Visa's Compelling Evidence 3.0 also counts earlier renewals as prior undisputed transactions.