Chargeback

A chargeback is a forced reversal of a card payment initiated by the cardholder's bank rather than by the merchant. In brokerage, it happens when a trader disputes a deposit with their card issuer and the funds are pulled back out of the broker's account.

The mechanism exists to protect consumers from genuine fraud and undelivered goods, and it is governed by the card networks (Visa, Mastercard) under formal dispute "reason codes." A trader can file a dispute for reasons like "transaction not recognized," "services not provided," or "fraud," and the issuing bank provisionally refunds them while the case is investigated.

The problem for brokers and their partners is that many trading chargebacks are not about real fraud — they follow a losing streak. A client deposits $500, trades it away in the market, then tells their bank the charge was unauthorized to claw the money back. Beyond the lost $500, the broker pays a chargeback fee (commonly $15-$100 per case) and risks its standing with payment processors.

Because the deposit that seeded a commission has now vanished, the broker typically reverses the associated affiliate earnings. A single client chargeback can therefore erase your commission on that account and, in volume, put your entire deal at risk.

When a cardholder files a dispute, the issuing bank sends the reason code to the broker's acquiring bank, which provisionally credits the trader and debits the broker. The broker can "represent" the case — submitting evidence such as KYC records, IP logs, trading history, and signed terms — to prove the deposit and service were legitimate.

If the broker wins, funds return; if it loses or does not respond, the reversal stands and a fee applies. Either way the case counts toward the broker's chargeback rate with the card networks. Because the deposit underlying your commission is now disputed, the broker's affiliate system flags the account and usually reverses the payout you earned on it.