How Should Indian Exporters Handle Chargebacks and Disputes on International Payments?

A chargeback on an international payment is a reversal of a card payment that the overseas payer starts through the bank that issued the card. The money already credited to the Indian exporter is debited back. A dispute is the wider process in which the payer questions a payment and the exporter responds with evidence.

• Who handles it: Every payment aggregator must have a dispute resolution mechanism with timelines for refunds, which includes assigning proper reason codes and responding to chargebacks and disputes raised against its onboarded merchants (paragraph 8(a), Master Direction on Payment Aggregators).
• Your contract: Agreements between the aggregator, its merchants and its acquiring banks must set out the roles of each party, including the manner of refunds, failed transactions, return policy, grievance redressal and reconciliation (paragraph 8(b)).
• Payer rights: The chargeback rights of customers, as applicable, remain unaffected by the escrow account rules. Reversed and refunded transactions are routed back through the escrow account unless the merchant handles the refund directly and the payer has been told (paragraph 18(h)).
• Refund route: All refunds go to the original method of payment, unless the payer asks for the refund to be credited to another mode belonging to the same payer (paragraph 10(f)).
• Export status: Your AD bank marks off an export entry in EDPMS only after the export value has been realised (Regulation 18(1)(g), FEMA export regulations, 2026). A chargeback can undo money that was counted as realised.

RBI's rules set the framework for how aggregators handle disputes. The detailed reason codes and response windows come from card scheme rules and your provider agreement, so read that agreement before you accept the first card payment. For the term itself, see what is a chargeback.

Chargebacks mainly affect Indian exporters who are paid by card, either through their own bank or through a payment aggregator. Exporters paid by bank transfer face disputes too, but those follow the bank's own process. The FEMA realisation and reduction rules apply in every case, as the table shows.

You respond to a chargeback by sending your bank or payment aggregator evidence that the goods or services were delivered as agreed, within the window in your agreement. If the chargeback stands, you then deal with the FEMA and GST effects. The steps below follow that order.

1. Read the chargeback notice from your bank or aggregator. Note the reason code, the amount, the transaction date and the last date to respond.
2. Contact the buyer in writing. Many disputes come from an unrecognised billing name or a misunderstanding, and the buyer can withdraw the dispute with the card issuer.
3. Collect evidence: the signed contract or order, the invoice, delivery records or work logs, the buyer's approval emails and any refund or cancellation policy the buyer accepted.
4. Submit the evidence through the aggregator's or bank's dispute process before the deadline. The aggregator must have a mechanism for responding to chargebacks (paragraph 8(a)).
5. If the chargeback is upheld, ask the buyer to pay again through another route within the realisation period of 9 months from the invoice date for services (Regulation 5(1)).
6. Tell your AD bank about the reversal and ask it to update the EDPMS entry. If the buyer will not pay, request an extension under Regulation 5(1) or a reduction in export value under Regulation 6.
7. Review the GST position: whether a credit note is needed under section 34 of the CGST Act, and whether the reversal affects your LUT under Rule 96A.

The documents that help most in a chargeback dispute prove that the buyer agreed to the price and received what was ordered. RBI does not prescribe a list for disputes. Your aggregator's or bank's process and the reason code decide what is needed, and the same papers support any later request to your AD bank.

If an Indian exporter ignores or loses a chargeback, the payment is debited back and the export value is treated as unrealised for that amount. Unless the money is recovered, or the AD bank allows an extension or reduction, the export stays open in EDPMS and can trigger FEMA and GST consequences.

• Realisation gap: Full export value, or the reduced value allowed under Regulation 6, must be realised within the period in Regulation 5(1).
• Future exports: If proceeds stay unrealised for more than one year after the due or extended date, further exports are allowed only against full advance or an irrevocable letter of credit (Regulation 13).
• IGST under LUT: An exporter of services under an LUT binds itself to pay tax with interest within fifteen days after one year, or the FEMA period including extensions, whichever is later, if payment is not received (Rule 96A(1)(b)).
• Bank charges: Your AD bank may not levy charges or a penalty for regulatory delay or violation by you, and its charges must be reasonable (Regulation 19(3)). Aggregator fees for disputes come from your agreement.

Act before the realisation period ends. Recover the amount from the buyer if you can. If the buyer still intends to pay, ask your AD bank for an extension; if the money will not come, ask for a reduction under Regulation 6, which can be on your declaration for invoices up to Rs 10 lakh. See reduction in export invoice value and extension of the export realisation period.

The timeline for a chargeback starts with the dispute notice, whose response window is set by your provider agreement, not by RBI. After that, the FEMA realisation period of 9 months from the invoice date for services still runs. GST credit notes must be reported by 30 November after the financial year, or the annual return date if earlier.

• Missing the window: Not checking the response deadline in the chargeback notice. A dispute with no reply is usually decided for the payer.
• No delivery proof: Delivering work by email or chat without keeping a record the buyer accepted it. Keep approvals and hand-over logs for every card sale.
• Silent EDPMS: Leaving the AD bank unaware of a reversal. The bank marks off an entry only after the export value is realised (Regulation 18(1)(g)).
• Old write-off rules: Applying the old Master Direction write-off limits. That direction was superseded from 1 October 2026 (A.P. (DIR Series) Circular No. 20), and reductions now fall under Regulation 6.
• Refund elsewhere: Promising to refund a card payer to a different account. Aggregator refunds go to the original payment method unless the payer instructs another mode in the payer's own name (paragraph 10(f)).
• Ignoring GST: Forgetting that unpaid services exported under an LUT can create an IGST liability with interest under Rule 96A.

Every rule, deadline and form on this page is linked to its official source, checked on the dates below.

1. Master Direction on Regulation of Payment Aggregators (PA), RBI/DPSS/2025-26/141, 15 September 2025, Paragraphs 8(a) to 8(d), 10(f), 11(h), 16 (Table 1, permitted credits and debits) and 18(h) (checked 9 Oct 2026)
2. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification No. FEMA 23(R)/2026-RB (amended up to 22 September 2026), Regulations 4(2), 5(1), 6, 13, 18(1)(g), 18(1)(i), 18(2), 19(1)(c), 19(2), 19(3) and 19(4) (checked 9 Oct 2026)
3. A.P. (DIR Series) Circular No. 20, 16 January 2026 (RBI/2025-26/194), Supersession of the Master Direction on Export of Goods and Services from 1 October 2026 (checked 9 Oct 2026)
4. CGST Act, 2017, Section 34: Credit and debit notes (CBIC tax information portal), Section 34(1) and 34(2) (checked 9 Oct 2026)
5. CGST Rules, 2017, Rule 96A: Export of goods or services under bond or Letter of Undertaking (CBIC tax information portal), Rule 96A(1)(b) (checked 9 Oct 2026)
6. RBI purpose codes for reporting forex transactions (Annex to A.P. (DIR Series) Circular No. 84, 29 February 2012), Payment purposes, Group 15 Others, S1501 (checked 9 Oct 2026)