What is a Dispute?
A dispute occurs when a customer questions a charge on their account and contacts their bank or card issuer for clarification or a refund. The bank then notifies the merchant and temporarily withholds the funds until the issue is resolved. Disputes are initiated by customers for various reasons and must be addressed promptly.
Why Did I Get a Dispute?
There are several reasons why you might receive a dispute, including:
- Unrecognized or fraudulent transactions: The customer doesn't remember authorizing the charge or believes their payment details were used without permission.
- Product or service issues: The customer feels the item or service they purchased was defective, not delivered as expected, or not delivered at all.
- Technical or processing errors: There may have been a duplicate charge, an incorrect amount, or other payment-related issues.
How to Handle a Dispute
Dealing with disputes quickly and efficiently is crucial to avoid potential losses. Follow these steps:
- Review the dispute details: Carefully review the reason for the dispute and the associated transaction details.
- Gather evidence: Collect any documentation that proves the validity of the transaction, such as receipts, delivery confirmations, or communication with the customer.
- Respond promptly: Ensure you respond within the specified time frame set by the payment processor or bank, typically 7-10 days.
- Communicate with the customer: If possible, reach out to the customer directly to resolve the issue. Sometimes, misunderstandings can be clarified without going through the formal dispute process.
- Submit your response: Provide all the necessary evidence to the payment processor or bank to challenge the dispute if you believe it is unfounded.
- Monitor the outcome: Once you’ve submitted your response, the bank will review the evidence and decide whether to uphold or dismiss the dispute.
What are Chargebacks?
A chargeback is a specific type of dispute where the customer's bank reverses the transaction, returning the funds to the customer and debiting them from your account. Chargebacks can occur if the bank sides with the customer after investigating the dispute. Excessive chargebacks can affect your business negatively, including potential fines and even account closure.
How to Minimize Chargebacks:
- Clearly communicate product descriptions, pricing, and refund policies.
- Provide timely and accurate shipping and delivery information.
- Ensure all transactions are securely processed, and monitor for fraud.
- Offer excellent customer service to address issues before they escalate to disputes.