How Payment Disputes Impact Both Merchants and Consumers

October 25, 2022

A customer comes first. Whenever a person feels like their credit or debit cards were charged due to an error or fraud, they can initiate a payment dispute.Banks and vendors should learn about the payment dispute process to streamline the process, save money, and provide exceptional customer service no matter what.

What Are Payment Disputes?

A payment dispute is a disagreement between the cardholder and the merchant. Visa uses the term “chargeback” instead of “dispute.” For other card networks, a “dispute” can occur ahead of the “chargeback.

Disputes vs. Refunds

Disputes and refunds are not the same. These are two different processes. A merchant can refund a customer directly. When discussing a dispute, the bank should pay a client upfront.

What Happens When You Dispute a Transaction?

There are several points to consider when disputing a transaction. Banks often have strict procedures for handling clients’ allegations. Users need to dispute charges within 120 days following the translation date. The bank should be brought in only if the issue cannot be resolved between the cardholder and the merchant.

Credit vs. Debit Card Disputes

Both credit and debit card holders can dispute transactions on their cards. The Fair Credit Billing Act covers credit cards. According to the latter, credit card users can be issued no more than $50 after a fraud attack. FCBA doesn’t cover debit cards though. Still, some consumers may be covered, depending on when they lost their debit cards.

What is the Bank’s Role in Disputes?

The dispute process involves two banks – the one that issued the payment card used by the cardholder and the bank that hosts the merchant account and represents the business.
There are many factors investigators commonly consider to find out if a specific transaction was truly invalid. For example, a bank should find out if it’s the first time a customer used the merchant’s services or if a person had previously been a merchant’s client.

When You Should and Shouldn’t Dispute Payments?

In some cases, a bank can dismiss a claim without an investigation. The transaction can be investigated in the following chargeback cases:

  • A client paid for the order but it had never been delivered;
  • The product or service was not as advertised;
  • A client was charged the wrong amount;
  • Unauthorized transaction

For expert advice and world-class customer service, contact us by phone from 9 a.m. to 4 p.m. Central Time at 1-888-312-1203, Monday throughout Friday.

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