Dispute Management

When using Chargebee Embedded Payments, effective dispute management is critical for maintaining operational integrity and customer trust. Disputes may arise when a customer doesn't recognize a charge, is unhappy with a product or service, or in cases of suspected fraudulent activity. These scenarios can occur at any point in the transaction journey, from the initial charge to settlement, and can impact your revenue and business reputation if not handled effectively. Learn how to handle disputes within Chargebee Payments and navigate chargebacks effectively.

What is a Dispute?

A dispute occurs when a cardholder questions a transaction through their bank. The issuing bank initiates a formal review process, which may result in funds being temporarily or permanently deducted from your merchant account.

Common causes of Disputes

Disputes can stem from a wide range of issues, each with its own set of implications and required responses.

• Fraudulent charges: Transactions that seem unauthorized or suspicious.
• Technical issues: Problems during processing due to insufficient funds or related issues.
• Clerical errors: Mistakes such as double billing or incorrect amounts.
• Quality concerns: Goods or services not meeting expectations or not delivered as promised.

Types of Disputes

Disputes in payment transactions can arise in different forms based on the level of concern raised and the customer’s issuing bank’s response. Understanding the type of dispute helps you determine the appropriate action and timeline for resolution. These are the three primary types of disputes you may encounter when using Chargebee Payments.

• Notification: A notification is an informational alert sent to you when potential fraudulent activity is detected. While no immediate funds are deducted, the notification acts as an early warning and may escalate to a chargeback if the 3D Secure liability shift is not in place.

• Inquiry: An inquiry occurs when the issuing bank requests additional information about a transaction before deciding whether to escalate it to a chargeback. Although no immediate funds are deducted at this stage, failure to respond promptly may result in a chargeback and the subsequent deduction of funds.

• Chargeback: A chargeback is a formal dispute initiated by the issuing bank to reverse a transaction on behalf of the customer. In this case, funds are immediately withdrawn from your merchant account. If you choose to contest the chargeback, you must respond with supporting documentation. Accepting the chargeback or failing to respond by the specified deadline will result in a permanent deduction of the disputed funds. Once a customer files a chargeback, you can choose to either accept the dispute or respond with evidence to defend the transaction.

Dispute flow and process

Understanding how disputes are handled in Chargebee Payments is essential for reducing revenue loss and resolving customer concerns efficiently. This section walks you through the dispute flow and lifecycle, from the moment a dispute is raised to its final resolution. You’ll also learn how to respond to disputes effectively using the Chargebee Payments portal.

Dispute Stakeholders

Each dispute involves several key parties, each with a specific role in the resolution process:

• Cardholder (Customer): Customer initiates the dispute through their bank for reasons such as fraud, billing issues, or service dissatisfaction.
• Merchant (You): You review and respond to disputes via the Chargebee Payments Portal by submitting evidence within the required timeframe (typically 7–10 days).
• Issuing Bank: The customer’s bank, which reviews the dispute and decides its outcome based on the evidence provided.
• Acquiring Bank: Your payment processor, which debits the disputed amount and forwards evidence between you and the issuing bank.
• Chargebee Payments: Provides tools to manage disputes, submit evidence, and track response deadlines in real time.

Stages of a dispute

Once a customer initiates a chargeback, the dispute moves through a series of defined stages. Each stage reflects the current status of the dispute and helps you understand what actions are required and what to expect next. Chargebee Payments provides real-time updates as the dispute progresses.

1. Open: A chargeback has been initiated, and the disputed funds have been withdrawn from your merchant account. The dispute is currently awaiting your response. If you accept the chargeback or fail to respond within the deadline, the status will change to Lost.
2. Responded: You have submitted evidence to challenge the dispute, and Chargebee Payments has forwarded your documentation to the issuing bank for review. Please note that once submitted, documents cannot be edited or withdrawn.
3. Won: The issuing bank has accepted your evidence, and the disputed amount has been credited back to your merchant account. This marks the final resolution of the dispute in your favor.
4. Lost: The dispute was not resolved in your favor. This may have occurred because you accepted the dispute, missed the response deadline, or the issuing bank rejected your evidence. As a result, the funds remain permanently deducted from your account.

Dispute Process Overview

If the merchant has provided the required service or product and wishes to respond to the chargeback, they will have to provide evidence to support or challenge the dispute. Depending on the payment method and the bank's terms, the customer can raise a chargeback anytime between 45 and 180 days (up to 13 months for SEPA). The acquiring bank debits the amount from the merchant's account. The merchant is generally given 7 - 10 days to submit the evidence. The disagreement then goes through a resolution process, which can take approximately 30 - 90 days. If the evidence is valid, then the merchant wins the chargeback; if not, they lose the chargeback.

1. Chargeback Initiated The customer raises a chargeback request through their issuing bank. Depending on the payment method and the bank’s policies, this can occur anywhere from 45 to 180 days after the transaction (up to 13 months for SEPA).
2. Funds Debited The acquiring bank immediately debits the disputed amount from the merchant’s account.
3. Merchant Notification The merchant is notified of the chargeback and is typically given 7–10 days to respond.
4. Submit Evidence If the merchant has provided the product or service, they can submit supporting evidence to validate the transaction and dispute the chargeback.
5. Review and Resolution The chargeback case goes through a resolution process, which can take approximately 30–90 days, depending on the payment network and the banks involved.
6. Outcome If the submitted evidence is deemed valid, the merchant wins the chargeback, and the funds are returned. If the evidence is insufficient or invalid, the chargeback is upheld, and the customer retains the refunded amount.

Dispute Timeframes

Dispute timeframes vary by issuing bank. Once a chargeback is initiated, the merchant must respond with supporting documents within the specified deadline. Typically, cardholders have up to 120 calendar days from the transaction or fulfillment date to raise a dispute. In some cases, Visa and Mastercard may allow up to 540 days.

Understanding the timelines for different payment networks is crucial, especially since some disputes are considered non-defendable. The table below outlines the typical dispute windows for common payment methods such as ACH, SEPA, and BACS.

Chargebee Payments automatically tracks and displays dispute response deadlines within the Payments portal. This ensures that merchants can act within the allowable defence period and respond to customers on time.

Dispute Resolution Workflow

Chargebee provides a streamlined workflow to help you respond efficiently through the Payments Portal. Follow the steps below to respond to disputes:

1. Log in to your Chargebee Billing site.
2. Navigate to Chargebee Payments Portal > Payments > Disputes.

3. Use filters such as Status, date, and Payment method to locate the specific dispute.
4. Review the dispute details, including the Reason for the dispute, such as fraudulent activity, quality issues, or service cancellation; the disputed amount; the response deadline; and the customer's details.
5. Click Respond to Dispute.

6. Upload supporting evidence in one of these accepted formats: PDF, JPG, TIFF. Note that the uploaded evidence cannot be modified or withdrawn once submitted.
7. Click Submit. You’ll receive a confirmation once the dispute details have been successfully submitted.

Evidence submission

Evidence submission is providing documentation to support a merchant’s case during a payment dispute or chargeback. When a customer disputes a transaction, the merchant can submit evidence to demonstrate that the charge was valid and that the product or service was delivered as expected.

Chargebee Payments forwards this evidence to the issuing bank for review. The bank evaluates the documentation and determines whether to reverse or uphold the chargeback.

What to include?

Submit clear, complete, and relevant documentation. Accepted file formats include PDF, JPG, and TIFF.

Examples of valid evidence

• Proof of delivery, such as shipping receipts or tracking information.
• Clearly stated refund or cancellation policies were shared with the customer.
• Communication from the customer confirming receipt or satisfaction.
• Documentation that proves the customer used the service or product.
• Transaction receipts or invoices are issued to the customer.

What happens after submission

After you submit evidence:

1. The dispute status changes to Responded in the Chargebee Payments Portal.
2. Chargebee Payments forwards the documentation to the issuing bank.
3. The bank reviews the evidence and updates the outcome:
   • Won: The bank accepts the evidence, and the disputed amount is credited back to your account.
   • Lost: The bank rejects the evidence, and the funds remain with the customer.

General guidelines for dispute defense

When defending a dispute, you must upload one or more supporting documents. The number and type of required documents vary depending on the dispute type.

• Accepted File Formats

  • JPG: up to 10 MB
  • TIFF: up to 10 MB
  • PDF: up to 2 MB

• Network-Specific Requirements

  • Diners and Discover: Maximum file size is 3 MB.
  • Mastercard: Maximum of 19 pages per chargeback defense document.