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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:
Dispute Categories:
Fraudulent
Authorization
Processing Error
Consumer Dispute
Fraudulent
An unauthorized payment claim by a cardholder usually stems from a fraudulent dispute. This commonly involves true fraud, where a criminal uses stolen card details (obtained via identity theft, skimming, or phishing) for unauthorized purchases.
Conversely, some "fraudulent" disputes are instances of friendly fraud, where a cardholder deliberately disputes a valid transaction to avoid paying for received goods or services.
To help mitigate such disputes, all PayMongo transactions are 3DS enabled. We also strongly advise merchants to implement their own security checks. Suspicious transactions can be reported to our disputes team at [email protected] and our risk team at [email protected].
Authorization
Disputes arising from transactions processed without proper authorization, or where the authorization was invalid (e.g., declined, expired, or exceeded).
Late Presentment
The cardholder’s bank claims that a transaction wasn't processed within the allowed time after receiving initial authorization for it. This is typically caused by a delay in settling transaction batches daily.
Declined Authorization / Authorization not Obtained
The cardholder’s bank claims that a transaction was completed even after receiving a 'decline' or 'pick up card' response from the cardholder's bank during the initial authorization request.
Processing Errors
Chargebacks that occur due to mistakes or discrepancies in how a transaction was handled by the merchant, the acquiring bank (the merchant's bank), or the payment processor.
Duplicate Processing
The cardholder claims that the transaction was billed twice (or multiple) for the same transaction.
Paid by Other Means
The cardholder claims that the transaction was paid by alternate means – cash, another card, cheque, or others.
Incorrect Amount
The cardholder claims that the amount charged to the account does not match the actual amount authorized or agreed upon.
Consumer Dispute
Disputes where the cardholder claims dissatisfaction with goods or services.
Goods or Service Not Provided
The cardholder claims non-receipt of the product/service on the agreed date & time.
Not as Described or Defective Goods/Service
The cardholder claims the product or service received was significantly different from its description (e.g., wrong item, color, size, features missing) or arrived damaged, defective, or of unexpectedly poor quality.
Cancelled Recurring Transaction
The cardholder disputes the charge for a recurring subscription that they claim to have canceled.
Credit Not Processed
The cardholder claims they were promised or are due a refund/credit but it was never processed or didn't appear on their statement (e.g., for a returned or cancelled transaction)
Cancelled Merchandise or Service
The cardholder claims they cancelled an order or service as per the merchant's policy, but were still charged or not properly refunded.
3. I received a Dispute Notification email, what will I do?
Here is how the dispute process works:
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:
Transaction details: This section will outline the specifics of the transaction in question, including the payment date, transaction ID, a description of the purchase, customer information, and the disputed amount.
Dispute reason: The email will clearly state why the customer filed the dispute, offering context for their claim. More detailed explanations of common dispute reasons are typically provided on the relevant page (as mentioned in the original text).
Dispute fee/s: Be aware that PayMongo charges a flat dispute fee of PhP800.00 per transaction. This fee is automatically deducted from your upcoming weekly payout. However, if the dispute is resolved in your favor, both the dispute fee and the original transaction amount will be credited back to you.
Deadline: If you choose to contest the dispute, it's critical to submit all necessary supporting documents via the Dispute Contest Submission Form by the specified deadline. This ensures PayMongo can process and forward your evidence to their banking partners.
You may coordinate with your customer regarding the transaction and resolve why it is being disputed. Some disputes may be due to a misunderstanding, if the customer wishes not to proceed with the chargeback you may request for a cardholder withdrawal letter stating that the transaction was valid and they no longer wish to dispute the transaction.
Following your review of the transaction, you may either accept or dispute the charge. Should you decide to accept, kindly notify us using the Dispute Response Form link provided in your email or dashboard.
Should you choose to contest the dispute, you must provide compelling evidence through the Dispute Response Form link. This will enable us to file the contest on your behalf.
Please note that failing to respond and provide sufficient evidence by the deadline will lead to an automatic chargeback acceptance, and the disputed amount and fee will not be reversed to your account.
4. I've already submitted the evidence, what's next?
After a merchant submits documents to contest a transaction dispute, PayMongo forwards these to its banking partners, who then present the case to the customer's issuing bank. The ultimate decision rests solely with the issuing bank and card schemes, based on the evidence provided by the merchant. PayMongo facilitates the submission of evidence but has no influence over the bank's resolution process.
The dispute resolution timeline can vary greatly, from a few weeks to over six months, depending on the case's complexity. PayMongo will notify the merchant via email once the issuing bank reaches a decision.
If the decision favors the merchant, the disputed transaction amount and the PHP 800.00 dispute fee will be returned in the next weekly payout. If the merchant loses, no additional fees are incurred as the transaction amount and dispute fee were already deducted upon initial dispute notification.
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?
To contest a dispute, merchants must provide sufficient compelling evidence. Key supporting documents, which should clearly link to the product/service and customer, include:
Customer Details - customer name, email address, billing & delivery address.
Product/Service Details - product/service description, order confirmation, shipping arrangements, itinerary, etc.
Proof of Payment - receipts showing the breakdown of charges (e.g. sales receipt, invoice, POS charge slips, etc.)
Proof of Delivery - photograph, online transaction logs, delivery receipts, manifest, courier delivery tracker showing fulfillment status of the transaction.
Proof of Properly Disclosed Terms and Conditions - proof that the customer has agreed to your Refund Policy, Cancellation Policy, Return Policy, No show Policy (e.g. tick box or click to confirm agreement upon payment)
Proof of Refund - provide the refund details such as refund date and refund amount. (e.g. deposit slip, cheque, refund to source)
Any additional relevant documentation.
7. How can I prevent these disputes?
Concerned about potential transaction disputes? While the PayMongo Fraud and Risk team actively helps prevent them, merchants can take proactive steps even before a cardholder files a dispute:
Proactively Refund: If a transaction seems problematic, consider issuing a refund before a formal dispute is initiated. Analyze the situation and communicate with your customer to resolve any misunderstandings.
Ensure Transparency: Clearly display product/service information, including properly disclosed policies and terms & conditions.
Document Communications: Maintain records of all customer interactions, such as emails and chat screenshots, related to transactions.
Use Clear Statement Descriptors: Ensure your business name or a recognizable descriptor appears clearly on cardholder billing statements to prevent confusion.