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What happens when there is a dispute?
What happens when there is a dispute?

This happens when a cardholder questions the payment made with their card issuer.

Pam avatar
Written by Pam
Updated over a week ago

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1. What is a Dispute?

A dispute, also known as a chargeback, happens when the cardholder questions a particular transaction on their debit or credit cards, raising and reporting it to their issuing bank. If found valid, the bank will reverse or 'charge back' the amount to the merchant and return the money to the cardholder.

Established by the card association network for the customer or cardholder, a dispute is a form of consumer protection against unauthorized or fraudulent transactions. Hence, it is up to the merchant to prove the eligibility of the disputed transaction.

2. What causes a Dispute?

The cardholder files a dispute due to a variety of reasons. When a customer disputes payment for an order, a reason or a category is assigned to the case that best describes the context. These are PayMongo's most common dispute reasons filed by cardholders with their merchants:


This is the most common dispute reason. It occurs when the cardholder claims that the payment made was not authorized.

Most fraudulent disputes involve true fraud, wherein a cardholder's credit card details fall into the hands of a fraudster, who then makes an unauthorized transaction. The complexity and tactics involved in this type of fraud vary greatly. Some include identity theft, card skimming, phishing, etc.

On the other hand, other fraudulent disputes may actually be transactions made by the cardholder. This is called friendly fraud, wherein the cardholder, in a deliberate and malicious attempt to retain goods or services rendered without paying for the transaction, purposefully disputes a transaction that was in fact fulfilled and completed by a merchant.

Product not received

This happens when the customer claims they did not receive the product or services that they purchased.

Credit not processed

The customer claims that the purchased product was returned or the transaction was otherwise canceled, but you have the merchant has not yet provided a refund or credit.

Product unacceptable

This means the dispute is filed because the product or service was delivered or received but was defective, damaged, or not as described.


The customer filed a dispute for transactions that they claim were charged multiple times for the same product or service.

3. I received a Dispute Notification email, what will I do?

Here is how the dispute process works:

  1. The first step is to carefully read and understand the dispute email sent to you by the Disputes team. The most basic details that are included in the email are the following:

    1. Transaction details: These include the payment date, ID, description, customer details, and amount.

    2. Dispute reason: A dispute is filed by the customer for a specific reason. The different kinds of dispute reasons are explained further on this page. The reason is also explained in the email to give you more context.

    3. Dispute fee/s: PayMongo charges a fixed dispute fee of PhP800.00 per transaction. The card schemes will automatically deduct this from your next weekly payout if you have a sufficient payout balance. Should the dispute be decided in your favor, the dispute fee will be returned to you along with the transaction amount.

    4. Deadline: Should you decide to contest, you must submit sufficient relevant documents to our Dispute Contest Submission Form on or before the deadline, in order for us to process and send the documents to our acquirer or banking partners.

  2. You may coordinate with your customer regarding the transaction and resolve why it is being disputed. For example, it may only be due to a misunderstanding.

  3. Based on your own investigation of the transaction, you can either accept or dispute the transaction. If you decided to accept, kindly notify us through the Dispute Contest Form link provided in the email.

  4. Should you decide to contest, you must submit supporting documents through our form using the same Dispute Contest Form link. So that we can file the contest on your behalf.

Note that failure to respond and provide enough evidence before the deadline will lead to losing the dispute case. Hence, you will not be able to recover the transaction amount and the dispute fee.

4. I've already submitted the evidence, what's next?

  1. The issuing bank and the card schemes will decide the outcome

    • Once you have successfully submitted the relevant documents, we will notify you that the contest has been filed and submitted to our banking partners to process the case to be presented to the customer's issuing bank.

    • Note, however, that while PayMongo helps you submit evidence and respond to a dispute, we have no access to or influence on the dispute resolution process of your customer's bank. The decision is based solely on the documents you have submitted and on the customer's issuing bank's examination of such documents.

    • Keep in mind that the decision may take a few weeks or last up to more than six (6) months, depending on the complexity and nature of the transaction being disputed. PayMongo will immediately notify you once the issuing bank has made a decision.

  2. Decision notification

    • PayMongo will update you through email regarding the decision of the issuing bank. The decision will either be in your favor, i.e., you have won the case, or in the cardholder's favor, i.e., you have lost the dispute.

    • In the case of the decision being awarded in your favor, the transaction amount and the dispute fee of PHP 800.00 will be returned to you in your next weekly payout. On the other hand, losing the dispute will not cost you any additional expenses because the transaction amount and the dispute fee have already been deducted when you were notified of the dispute.

5. I was charged Php 800.00. What is it for?

When a card issuer accepts the cardholder's dispute, they then file a formal dispute case on the card association network. The transaction amount being disputed, plus a corresponding dispute fee of Php 800.00, will be deducted from your PayMongo balance. Note that the dispute fee is being imposed by the card association network (Mastercard or Visa). If the dispute is in your favor, the amount disputed and its corresponding fee will be returned. If the dispute is confirmed and the card issuer’s decision is final, then the cardholder’s payment will remain refunded.

6. How can I successfully contest a dispute?

When contesting a dispute, the merchant must take note of all the paper or digital trails that occurred since the beginning of the transaction. Some good examples of important and acceptable documents to submit when contesting include, but are not limited to:

  1. Customer Communication

    • These include screenshots of the email thread, conversations, acknowledgment messages, as well as the product or service linked. The product or service identifier must appear on the communication for it to be as compelling as possible.

  2. Customer Identification

    • For fraudulent dispute cases, the name and email address linked to their customer profile on your business database may help you win the case.

  3. Product or service documents

    • These documents must be signed or acknowledged and agreed upon by the customer for them to be compelling. These include a sales order form, quotation, service contract, purchase order, etc.

  4. Receiving documents

    • You may provide a sales invoice, official receipt, delivery receipt, or acknowledgment receipt where the product or service details must appear clearly together with the customer name, shipping address, billing address, and signature.

  5. Transaction history

    • For fraudulent dispute cases, you may provide evidence that the same debit or credit card was used in a previous payment for a product or a service made by the cardholder that was not disputed.

  6. Clear and transparent product or service information, including terms and conditions for dispute cases involving return policies.

Note that these are just some of the documents that can help you win a dispute. You may also submit documents not listed above if you think these can help reverse the dispute.

7. How can I prevent these disputes?

What if you think you have a transaction that is at risk of being disputed? While the PayMongo Fraud and Risk team is here to help you prevent disputes and fraudulent transactions from occurring, you as the merchant may take action even before the cardholder files a dispute. Some of the key steps include, but are not limited to:

  • Issue a refund before the cardholder files a dispute. Based on the context, analyze the transaction and coordinate with your customer in case of any misunderstanding.

  • Set clear and transparent product or service information, including return policies and terms and conditions.

  • Keep track of emails and screenshots of conversations between you and your customer regarding the transaction.

  • Set straightforward statement descriptors to avoid confusion for your customer or cardholder. A statement descriptor is what appears in the billing statement of the cardholder.

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