Radar
Disputes and fraud
How disputes work

How disputes work

Learn the terminology and lifecycle of disputes.

In response to the elevated disputes faced by many merchants in the travel and entertainment industries due to COVID-19, Visa and Mastercard have issued guidelines for resolving them. These guidlines relate specifically to goods and services canceled directly due to a government order or prohibition. If your business is receiving disputes that fall into this category and you need to submit dispute evidence before the submission date, please proceed to this guide.

For all industries, the best actions you can take are to proactively communicate with your customers and issue refunds where appropriate, especially when requested.

Disputes work differently across card networks, but typically follow similar patterns.

The dispute process involves multiple parties. Although Stripe doesn’t decide the outcome of the dispute, we play a role by conveying your evidence to our financial partners. In turn, our financial partners pass your evidence on to the card issuers if they deem it sufficient. These are necessary steps in the evidence submission process.

Stripe reviews the evidence and decides whether it meets the card brand’s requirements to provide a potential remedy for the dispute. If it does not, the case is closed. If it presents a potential remedy, Stripe forwards evidence to the card issuer. The issuer reviews the evidence and makes a final decision, which we communicate to you through the Stripe Dashboard, webhooks, and API. As the card issuer has final say, Stripe’s decision to forward the evidence does not, by itself, guarantee a resolution in your favor.

Inquiries and retrievals

Some card issuers may begin to investigate a payment before creating a chargeback, and request further information about the charge. Most card networks call these “retrievals”, and American Express calls them “inquiries”. These are common for American Express and Discover payments. Mastercard and Visa almost always create a chargeback immediately.

To avoid an inquiry or retrieval becoming a chargeback, you should submit any required evidence or refund the payment in full. Refunding marks the inquiry or retrieval as resolved and no dispute fee is incurred.

Many inquiries and retrievals are the result of the cardholder not recognizing the transaction, and providing basic info about your business and what was purchased is usually sufficient to close the case. However, if the cardholder refutes your evidence, or the card issuer considers it insufficient, the card issuer might escalate the inquiry or retrieval into a chargeback and reclaim the cardholder’s funds. It’s important to resolve the case while it is still in the inquiry or retrieval stage.

Regardless of which option you choose, it’s always best to reach out to your customer first to get more information about the reason for the inquiry or retrieval.

Unwinnable-chargebacks

Failure to respond to an inquiry or retrieval with sufficient evidence may lead to an unwinnable chargeback. Always respond to inquiries and retrievals as if they were chargebacks, and make every effort to resolve issues with your customer during this stage.

Chargebacks

If the card issuer has chosen not to create an inquiry or retrieval, or is unsatisfied with the evidence, they create a chargeback. Unlike inquiries or retrievals, during a chargeback the issuer debits your account and holds the funds while the dispute is processed. Once the chargeback is created, you have a limited amount of time (usually 7–21 days) to respond with evidence. The time given varies depending on the card network.

If you do not submit evidence by the time the deadline passes, the cardholder wins the dispute and keeps the funds.

If you submit evidence, it is sent to the cardholder’s bank, which also has a limited amount of time (usually 60–75 days) to respond, varying based on the card network. Stripe updates the dispute’s status as soon as the bank’s response is available, but that response is often not known until the deadline passes. The decision from the cardholder’s bank is the final step in the dispute process.

Disputed amount

If the original payment was converted into your account’s default currency (e.g., a USD payment converted into EUR and deposited into your account), the disputed amount is converted back to the payment’s original currency (e.g., EUR is withdrawn from your account and converted back to USD).

The amount of a dispute can sometimes exceed the original charge amount. In certain cases, this discrepancy is due to currency conversion. It can also occur when the card’s issuer bundles multiple charges into a single chargeback. This bundling discrepancy is more common for regular, recurring charges, or multiple charges of small amounts—usually less than 50 USD.

If you receive a dispute for more than the original charge amount, and currency conversion is not a factor: you should review all payments made to your business by the same customer or card, to determine whether more than one charge might be included in the disputed amount. If you are unable to determine why a dispute is for more than the original charge, you can contact support to ask for more details.