Chargebacks on Paddle: what a merchant of record handles for you

If you sell through Paddle, you do not deal with chargebacks the way a Stripe or Braintree merchant does. Paddle is the merchant of record, so the bank’s dispute is raised against Paddle, and Paddle runs the process. That removes a lot of work. It does not remove the cost, and it does not remove the things only you can do to prevent disputes in the first place.

This guide explains what Paddle handles, what reaches your balance, how to see it in your data, and what is still in your hands. It sticks to Paddle’s own pages: the help article understanding chargebacks with Paddle, the seller handbook, the developer guide on transaction adjustments and the adjustment reports page (all accessed November 2026). Where Paddle’s pages disagree, we point it out.

Who the dispute is against

Paddle’s help article is clear: because Paddle is the merchant of record for transactions processed through its platform, the dispute is raised against Paddle rather than against you, the seller.

In practice that means:

• You do not receive the dispute from the bank or a payment processor.
• You do not submit the evidence or the response yourself.
• Paddle contests the chargeback on your behalf.

How Paddle contests disputes

Paddle’s help article describes a Dispute Defense System that contests chargebacks automatically by gathering evidence. The evidence it lists can include communication with the buyer, subscription payment history and proof of authorization for the purchase.

The same article notes one limit: if a buyer disputes a second time at the pre-arbitration stage, Paddle does not contest it, and it is treated as a standard chargeback.

Where the money goes

The flow, as Paddle’s help article describes it:

1. When a chargeback occurs, the funds are withdrawn from Paddle and the payment provider applies a fee.
2. Paddle deducts the transaction amount and the chargeback fee from your balance.
3. If Paddle wins, the transaction amount comes back to you.

On the fee, Paddle’s own pages differ. The help article lists a fee per card chargeback and a higher one for PayPal, and gives different wording on whether the fee is returned when a dispute is won. The seller handbook lists other amounts and says the fee is set out in your Paddle agreement. Treat your agreement as the answer, and check the fee on a real adjustment rather than relying on a number from a blog, including this one.

Chargeback alerts: the early warning

Paddle sometimes receives an alert before a chargeback is finalized. According to the help article, these alerts typically give a short window of around 48 hours to act. In that case Paddle refunds the disputed amount before it becomes a chargeback. A fee still applies to cover the alert, but the dispute does not count toward your chargeback rate.

For subscription businesses, this is worth understanding. A refund you did not choose shows up on your account, and the customer may still have an active subscription. If you do not act on it, the next renewal can produce the same outcome.

Seeing chargebacks in your data

Paddle records chargebacks as adjustments on transactions. The transaction adjustments guide explains that Paddle creates these automatically:

Adjustment action	When Paddle creates it
chargeback_warning	Paddle received an early warning; the disputed amount is refunded
chargeback	A chargeback without early warning; the disputed amount is refunded
chargeback_reverse	Paddle contested successfully; the held amount is returned

The adjustment reports page adds a chargeback_fee column, present when the action is chargeback or chargeback_warning.

Practical steps:

1. Pull the adjustments report on a schedule, or subscribe to adjustment notifications (check Paddle’s webhook reference for the current event names).
2. When you see chargeback or chargeback_warning, find the customer and the subscription.
3. Decide what happens to the subscription. In most cases a disputed customer should not be charged again until you have spoken to them.
4. Record chargeback_reverse when it arrives, so your reporting shows wins.

What a merchant of record does not do for you

Paddle runs the dispute. It cannot make your customers less likely to dispute in the first place. Most subscription disputes come from a few causes you control.

Make charges recognizable

Customers dispute charges they do not recognize. Use a product name customers know, send a receipt for every renewal, and remind before annual renewals. See annual plan renewal reminders.

Make cancelling easy

A customer who cannot find the cancel button calls their bank instead. Paddle’s customer portal lets customers cancel, and Paddle’s Cancellation Flows show a cancel link on every screen in regions with one-click cancellation rules. Do not hide it behind a support email. Our guide to click to cancel rules covers the details.

Refund before the bank does

If a customer emails asking for their money back and you are going to agree anyway, refund quickly through Paddle. A refund you choose is cheaper than a chargeback, and it keeps the customer relationship intact.

Answer support fast

Many disputes start as unanswered support tickets. A clear reply, with the option to cancel or get a refund, ends most of them.

Keep your own record

Even though Paddle gathers evidence, keep a clean record per customer: when they signed up, what they used, what emails you sent, whether they tried to cancel. If Paddle asks you for information, you will have it ready.

Watch the subscription after a dispute

A chargeback or an alert refund does not cancel the customer’s subscription by itself in the flows described above. Check the subscription status every time you see a chargeback or chargeback_warning adjustment. If it is still active, decide whether to cancel it or to contact the customer first. Charging a card again after its owner disputed the last payment is the fastest way to a second dispute, and Paddle does not contest second disputes at pre-arbitration.

Fraud versus friendly disputes

Not every dispute is fraud. Some are customers who forgot they subscribed, could not find how to cancel, or expected a refund they never asked for. The prevention steps above mostly address those. Real fraud (stolen cards used at signup) looks different: new accounts, little or no usage, several signups close together. If you see that pattern, raise it with Paddle support and stop the affected subscriptions.

Watching the trend

Track chargebacks per month alongside cancellations and refunds:

• Count of chargeback, chargeback_warning and chargeback_reverse adjustments.
• Total fees from the chargeback_fee column.
• Share of disputed customers who had contacted support or tried to cancel first.

That last number tells you whether disputes are a fraud problem or a customer experience problem. The fixes are very different.

Doing this with NoChurn

On Paddle, disputes are handled by Paddle as merchant of record, so NoChurn shows them read only: you see each chargeback next to the customer’s subscription, cancel flow answers, emails and support conversations, but there is nothing to submit. Where NoChurn helps is prevention: a cancel flow with one-click cancel always visible, a churn score from 0 to 100, and help desk connectors (read only) that put support history next to billing. See NoChurn + Paddle.