# What is Chargeback?

> A chargeback is a card payment reversed by the cardholder's bank after a dispute, which costs a prop firm the sale, a fee and points against its chargeback ratio.

- Source: https://pipvalley.com/glossary/chargeback
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-03

In a prop firm, chargebacks usually follow a failed evaluation, a denied payout or confusion about what was bought. The trader disputes the charge with their bank, the firm loses the funds and pays a fee, and can respond with evidence through its processor.

Card networks run monitoring programs that flag merchants whose dispute or fraud levels exceed thresholds, and acquirers often set tighter limits of their own. Repeated breaches lead to fines, reserves or account closure.

Winning a dispute depends on evidence: the terms the trader accepted at checkout, the rules page as it stood that day, the account's trading history and the breach log.

## Why it matters

Chargebacks threaten the merchant account itself. Most are prevented by clarity: rules visible before purchase, terms accepted with a recorded checkbox, a clear refund policy, a recognizable billing descriptor and responsive support. Keep dated copies of your rules and terms so you can show what the trader agreed to.