Stripe - What is a dispute and how do I handle it?
A dispute, also known as a chargeback, occurs when a cardholder questions a purchase made from their account with their card issuer. The issuer creates a formal dispute which immediately reverses the payment.
When a dispute occurs, Stripe will send an email notification to your email address. Otherwise, dispute information can also be found in your Merchant Dashboard. Each one will include relevant information about the payment being disputed and the reason the cardholder reported to their card issuer.
When you receive a dispute, you have the opportunity to respond to it and submit the appropriate evidence, should you argue the dispute, or accept it. In this article, we'll go over some basics to prepare you for anything dispute related!
Types of disputes
When a payment is disputed by a cardholder, their card issuer assigns a category to best describe the reason for their dispute. This will be displayed in the Stripe Merchant Dashboard when viewing a dispute.
The dispute reasons are as follows:
- Credit not processed
- Product not received
- Product unacceptable
- Subscription canceled
Stripe offers information about each dispute category, along with what will be required to overturn the dispute and how to respond.
How do I respond to a dispute?
Stripe recommends most users respond within their Merchant Dashboard. The Dashboard guides you through the submission process, step-by-step, automatically formatting the information you provide. You're asked to provide different pieces of evidence and upload any necessary files, depending on the dispute type. All of this works to increase the likelihood of a dispute being found in your favor.
Stripe also offers a breakdown of all the different categories, along with what is required to overturn that type of dispute and how to respond.
If you receive a dispute, you may want to first get in touch with the customer and discuss it before you respond. It's possible that they simply did not recognize or remember the transaction when they viewed their statement. If an email address was provided to Stripe by the customer when creating the payment (either to send an email receipt or if it was created using a customer object), click Email Customer to create a new email thread that contains information about the dispute.
What kind of evidence can I submit?
The evidence you submit should be appropriate to the reason for the dispute. Web logs, email communications, shipment tracking numbers, delivery confirmation, proof of prior refunds, replacement shipments, etc., can all be helpful.
Do not include requests to call or email for more information, or links to click for further information such as file downloads, as these will not be actioned by the card issuer evaluating the dispute. Card issuers will not call merchants or follow external links, so it's important to submit all available evidence through stripe.
Because you are selling tickets through Splash, you can use your event information for this evidence, as well as any communications with the disputer, information on the ticket they purchased, etc.
How can I accept a dispute?
You can accept a dispute, effectively agreeing with the cardholder that the dispute was valid for the reason given. Doing so marks the dispute as lost, so the disputed amount and fee will not be returned to you.
You can accomplish this on Stripe under the Disputes tab within your Merchant Dashboard.
How do I prevent disputes?
Disputes are an unfortunate aspect of accepting payments online and the best way to manage them is to prevent them from happening at all!
An effective dispute and fraud prevention strategy uses a number of methods that are the best suited for your business while keeping any other customer burden - and losses - to a minimum.
Stripe offers a lot of information on how to create an effective disputes and fraud prevention strategy. Depending on the service you provide, e.g. events or selling products, certain methods may be more effective than others.
Why was I charged a dispute fee?
When a cardholder disputes a payment you have processed, you will be charged a $15.00 dispute fee (for merchants in the United States) by the card network. This amount is withdrawn from your account balance along with the disputed amount.
If you submit evidence against the dispute and it is found in your favor, Stripe reimburses you for the dispute fee.
However, if a dispute is accepted or unsuccessfully challenged, you will still be responsible for both the dispute fee and the Stripe processing fee on the original payment.
Read everything you need to know about disputes on Stripe here!