Chargebacks

Purpose

When a customer disputes a charge directly with their bank/card issuer, rather than requesting a refund through SellVia.

Why This Is Different From a Refund

A chargeback is initiated by the customer's bank, not by the merchant or SellVia — it comes with its own Paddle dispute flow, evidence-submission window, and a chargeback fee charged by Paddle regardless of outcome. This is a distinct process from Refund Handling and needs its own handling, not just a variant of it.

Process

1. Paddle notifies SellVia of a dispute via webhook
2. Funds are held/reversed by Paddle pending resolution
3. Merchant (or SellVia on their behalf) can submit evidence to contest it within Paddle's window
4. If lost: treated the same as a refund for clawback purposes (per Commission Engine's 14-day rule) — superseded, see Update below: no clawback rule exists, creator commission is never clawed back — plus the Paddle dispute fee itself, which isn't currently allocated to anyone in the split model

Open Questions (genuinely unresolved, not defaults)

• Who absorbs the Paddle dispute fee — SellVia, the merchant, or split? Not addressed anywhere in prior docs and needs a real decision, since disputes are effectively guaranteed to happen at some volume.
• Whether SellVia or the merchant is responsible for submitting dispute evidence — affects whether this needs to be a merchant-facing feature or an Admin-handled process

Update (2026-08-07): Clawback Reference Superseded

The "14-day rule" referenced above no longer exists — creator commission is never clawed back (01. Commission Engine). A lost chargeback still costs the merchant the sale amount plus the Paddle dispute fee (allocation still unresolved, see this page's Open Questions), but creator commission is unaffected regardless of chargeback outcome.

Update (2026-08-07): RESOLVED — 5-Dispute Grace Allowance Per Merchant

Founder-confirmed: SellVia absorbs the Paddle dispute fee for a merchant's first 5 lost chargebacks (lifetime counter, working assumption — flag if this should reset periodically instead). From the 6th lost dispute onward, the dispute fee is passed to the merchant, deducted from their balance.

Mechanics:

merchant_profiles.lifetime_disputes_lost  (counter, increments on each lost dispute)

On chargeback lost:
  if lifetime_disputes_lost < 5:
    SellVia absorbs the Paddle dispute fee, counter increments
  else:
    Dispute fee deducted from merchant's Connect balance

This is a trust/onboarding allowance — protects early-stage merchants from a bad-luck chargeback while they're building trust with the platform, while ensuring a merchant with a genuine pattern of disputes bears the cost themselves rather than SellVia absorbing it indefinitely.

Open Questions

• Whether the counter is truly lifetime or resets on a period (e.g. annually) — implemented as lifetime as the simpler default; flag if a reset was intended

Update (2026-08-23): Paddle Removed, Swich Confirmed — Real Open Question This Creates

Founder decisions: Pakistan-only market, Paddle removed, Swich (swichnow.io) confirmed same day. Full reasoning: 02. Architecture Decision Log.

Every "Paddle" above means "Swich" for the mechanics that still apply (dispute notification via webhook, funds held pending resolution, evidence-submission window, a dispute fee — all generic to any processor, not Paddle-specific in principle).

Genuinely new question this raises, not just a rename: SellVia's billing through Swich isn't purely card-based — the doc above assumes a Paddle-style card chargeback flow specifically. Swich's checkout also offers bank transfer, JazzCash, and EasyPaisa, and it's unconfirmed whether "chargeback" in the card-network sense applies to those methods at all — a bank transfer or mobile-wallet payment typically doesn't have a chargeback mechanism the way a card does; disputing one usually goes through a different process (bank-level complaint, wallet provider mediation) if it exists at all. This doc's entire framing may only apply to the subset of billing cycles paid by card through Swich. Needs clarification before assuming the 5-dispute grace allowance mechanics translate unchanged.