A Transaction Dispute is when a cardholder contacts the card issuer (a network or bank) because they believe a transaction made on their card is incorrect or that they did not authorize it.
There are many reasons a cardholder may question a transaction. They may not have understood the amount of the payment, didn't think they would have to make a payment, didn't receive the product or their card was stolen, etc. A dispute is how the card issuer resolves the cardholders' concerns.
A chargeback is one of the first actions taken on a dispute. The card issuer takes the funds back that it provided on a transaction.
- The card issuer gathers information from the cardholder about why they disagree with the transaction.
- If a dispute occurs, it can be assumed the card issuer believes the cardholder and is taking action to correct the problem.
- They will use the card network to reach across to the merchant (you) and take the funds back.
This action can not be stopped as it is part of the conditions to take payments on the card network. Refusing to return the funds would result in the merchant losing the option to take transactions.
The card network does have conditions and protections for the merchant:
- The card issuer is required to notify the merchant and provide the reason for the dispute. Typically they will allow between 10-15 business days for the merchant to provide evidence and make a case to reclaim the funds.
- There are limitations on how much, what type, and the format of evidence that can be submitted.
- The card issuer will get to make the final decision. They will provide notification to both parties and award the funds to either the cardholder or the merchant
What Disputes Look Like with Weave
Weave gets a notification of a disputed transaction from our partners. Weave’s Payment Team verifies the transaction, reviews the reason, and gathers all the transaction details. They create an email notification and send it to the email associated with the Stripe Express Account that took the transaction. Learn how to find the email associated with your Stripe Express Account.
Weave then prepares a basic response for the card issuer with the information gathered about the disputed transaction (working under the impression that the transaction is valid). If there were any errors in the Weave System associated with the transaction, we may also prepare a statement about the error. Weave will then wait for your office to reply to the notification and give direction on how they would like to proceed.
What is on the Dispute Notification Email?
You can find the amount and date of the original transaction that is being disputed in the notification. This will help you locate the transaction in the Weave Portal. Learn how to find transactions.
Note: The bank does not usually provide the cardholder's name nor do they know the name you charged the transaction to, so you will not find that info on the notification. Weave will attach the receipt from the transaction when available.
You will also find the amount being disputed on the notification. This is not always the same as the amount of the original transaction. The cardholder may dispute any amount up to the full amount on any dispute including transactions that have been partially refunded. When a disputed amount is less than the full amount, the cardholder will have the option to dispute for the full amount at any point.
The reason that was provided for the dispute will also be on the notification. This is a generalized category. For instance, the cardholder may tell the bank "I don't know anything about this transaction. I don't remember making a payment for that amount and don't recognize the statement descriptor." The bank would generalize this as fraud and give that as the reason. You would find a statement on the dispute notification such as: "The cardholder is disputing this transaction stating that they did not authorize this transaction."
The notification will also include the date you must respond to the dispute before. This date will be the latest date that Weave can confidently have time to review any evidence you have provided and still submit before the dispute is automatically closed. Weave handles all dispute matters urgently and recommends you do the same. Responding quickly with all the evidence required may help resolve the dispute with a positive outcome, and build trust with the networks and banks.
Weave will include attachments of the transaction details, the receipt for the transaction, claim details, and any other relevant documents when available. You should carefully review every document attached.
The Claim Details is a document provided by the card issuer. Often it will contain a generic statement about the dispute and the reason behind it. The Claim Details may include other important information such as the bank’s questions to the cardholder about the dispute, what information the bank has verified, a contact from the card issuer, and (especially in unusual or escalated disputes) a more detailed explanation and/or the actual statement from the cardholder. This may help to understand the dispute.
Note: Due to the electronic filing system the card issuers are not required to include the claim details so they may not always be available