What is the PayPal Dispute Fee and why was I charged one?

PayPal charges a Merchant Dispute Fee to manage the dispute resolution process on transactions that were completed by a buyer with a PayPal account or a buyer using PayPal Checkout as a Guest. 

This Dispute Fee applies to such transactions both when the buyer files a claim directly with PayPal and when they file through a chargeback with their card issuer or a reversal with their bank. 

The Dispute Fee does not apply to transactions processed through PayPal Pro or Advanced credit and debit card processing, sometimes called "unbranded" transactions. 

The amount of the Dispute Fee depends on the percentage of claims filed against your total sales in the previous 3 months. The Standard Dispute Fee will apply unless your dispute rate is 1.5% or more and you had more than 100 sales transactions in the previous three full months. If you fall into that category, the High Volume Dispute Fee would apply for each dispute.  

The Standard Dispute Fee will be waived for Inquiries in the PayPal Resolution Center that aren't escalated to a claim, those that are resolved amicably between the buyer and the seller, or those filed to PayPal directly as an Unauthorized transaction.