In our prior blog post, Understanding risk for small businesses accepting payments online, we explained what a dispute is and how to protect your business from potential related losses. If you receive a dispute from your bank or payment processor here are some best practices on how to respond.

Act quickly

Banks generally run to a timeline for how long they will wait to hear from you. It's recommended that you respond to your acquiring bank or payment processor no later than 3 days after you've received a dispute. It's not unusual for the dispute to be ruled in the cardholder's favour if you don't respond within 7 days.

Contact your customer

It's possible the cardholder simply didn't recognise the business name on their bank statement, so a prudent first step is to reach out and ask your customer why they initiated the dispute. If this was the case and they're happy with the charge, they can request a reversal of the dispute with their bank.

In a situation whereby you exhaust all avenues in contacting your customer and you still don't hear back from them, this may suggest the purchase was made via unauthorised use of someone else's credit card. It can still be worth submitting a challenge in this situation.

Provide relevant information as soon as possible

At a minimum you should include the following when responding to a dispute request for information:

  • Receipt that was sent to the customer
  • Online tracking or shipping confirmations (if applicable, i.e. the goods were physical and not digital)
  • A transcript of any customer service communication you had with your customer
  • Device identification or IP address of the customer (if applicable, i.e. online purchase, or using an online product)

Don't submit a refund

Once you've received a dispute, it's best not to issue a refund. Even after your refund, the dispute could be ruled in the cardholder's favour, in which case you would pay for both the refund and the lost dispute.

Wait for the process to complete

It can take the cardholder's bank up to 55 days to resolve a dispute, once documentation has been sent to the payment processor. During this time it's normal for your payment processor to place a temporary hold on the amount being contested. If the dispute is ruled in your favour these funds are returned to your account.

  1. Dispute arrives
  2. Contact your customer
  3. Send documentation to payment processor
  4. Wait for decision