What is a dispute?
A dispute is a contested credit card charge. When a cardholder believes a charge on their account is incorrect or fraudulent, they request that their card company or issuing bank rescind the charge. The card company or issuing bank then initiates a chargeback against the merchant until the dispute is resolved.
Please be aware that all disputes incur a $15 service fee.
I received a dispute notification, what should I do?
In the Disputes section of NeonPay, click View Disputes or View Open Disputes. Note the Amount and Reason. The reason code will tell you more about why the cardholder is disputing the charge, and will help guide you in collecting compelling evidence to prove the charge was valid, should you choose to respond and fight the case. Add & Submit Evidence to contest the dispute. Submit all evidence at once. Only one round of Evidence can be submitted.
We recommend that you speak directly to the cardholder. In many dispute cases, the cardholder simply forgot they made the purchase, or did not recognize the merchant descriptor that appeared on their statement. If the cardholder agrees that the charge is valid, they can ask their card company or issuing bank to reverse the chargeback and close the dispute.
If you believe the dispute is valid, you can choose to accept. Select Accept Dispute to concede and accept the dispute. The cardholder will keep the money and the case will be considered resolved. This is usually a good idea in duplicate processing cases, when the cardholder was mistakenly charged twice for a single transaction.
Even if you believe the dispute is valid and the cardholder should receive the funds back, it is important to accept and resolve the case rather than ignore it. This not only cleans up your dispute queue, but also shows the card company and issuing bank that you’re actively monitoring disputes and will contest if needed.
What is a chargeback?
A chargeback is the reversal of a credit card charge. Upon request by the cardholder, the card company or cardholder’s issuing bank takes back the money that had previously flowed from cardholder to merchant. The money is temporarily transferred from out of the merchant’s acquiring bank account and returned to the cardholder’s issuing bank account, until the dispute is resolved.
Why do disputes occur?
Cardholders can initiate disputes for a variety of reasons, but the most common is that the cardholder does not recognize a charge on their account and suspects fraud. Other reasons, like duplicate charges being processed, or the cardholder claiming that goods/services were not provided, are less common, but do happen. A dispute can also be initiated when the cardholder requests a refund from the merchant, but their request is not fulfilled in a timely manner.
What happens during the dispute process?
Several stakeholders are involved in resolving the dispute process. The cardholder who initiated the dispute, the card company, the cardholder’s card issuing bank, the merchant, the merchant’s payment processor, and the merchant’s acquiring bank all play a role in resolving a dispute.
When a dispute is initiated, the cardholder’s card company or card issuing bank removes the funds in question from the merchant’s acquiring bank and transfers them to the cardholder’s card issuing bank. At this point, the merchant can choose to fight or accept the dispute. The merchant lets their payment processor know what they’d like to do, and the payment processor facilitates with the card company or card issuing bank.
If the merchant chooses to accept, the payment processor lets the other institutions know; the dispute is resolved and the transferred funds stay in the cardholder’s card issuing bank. If the merchant chooses to fight the dispute and prove that the charge was valid, the merchant uploads any evidence they have to the payment processor’s dispute portal. The dispute now enters a status of “representment,” and the merchant’s acquiring bank is temporarily credited for the amount in question. The cardholder’s card company or card issuing bank then reviews the evidence, and can choose to accept and resolve the case, resulting in a win for the merchant, or send the case to “pre-arbitration.” Once the case reaches this stage, a third party is brought in to examine the facts of the case and make a decision.
All of this is done behind the scenes between these institutions. As a merchant fighting a dispute, you will only be dealing with NeonPay’s Dispute portal and the cardholder directly, should you choose to contact them.
What is compelling evidence?
If you believe the charge is valid, you will need to submit evidence and/or an explanation to contest the dispute. You may choose to write a message explaining the situation and why you believe the charge is valid, upload evidence to the dispute portal, or both. Compelling evidence typically includes a copy of the receipt of purchase, order confirmation with cardholder’s name and billing address, and any other relevant transaction documents.
When compiling evidence to prove the charge is valid, it’s important to note the reason the cardholder initiated the dispute. Oftentimes a cardholder will see a suspicious transaction on their statement and report it to their card company. If the card company initiates a fraud investigation, transactions that occurred within a few days of the suspicious one will also be subject to investigation, which can lead to disputed charges that were not actually fraudulent. When the reason for the dispute is fraud, it is important to include any available evidence that proves the transaction was not fraudulent, such as receipts, emails, and order records or history connected to the cardholder in question.
The goal of uploading evidence to the dispute portal is to prove that the transaction was initiated and authorized by the cardholder. While actual fraud is rare in the nonprofit space, it does happen. If you suspect that the disputed charge was fraudulent, you may accept the dispute, or upload any evidence at your disposal to aid in the investigation. Supplying the transaction information will either help prove the transaction was not fraudulent, or if a true case of fraud, will help the card company or issuing bank’s investigation, so it is usually a good idea to upload evidence.
Should I refund the cardholder?
Generally when a dispute is initiated, the card company or issuing bank removes the funds in question from the merchant and transfers them back to the cardholder. If you would like to refund the cardholder and not fight the case, you can accept the dispute. The cardholder will keep the amount in question, and ensure that you don’t return any more funds than necessary.
How long does the dispute process take?
The dispute process can take up to 90 days to fully resolve, and can take even longer in some cases. It varies greatly from case to case, and depends upon each stakeholder and financial institution involved.
How will I know when a dispute has been resolved?
Your disputes and their statuses are shown on your NeonPay Dashboard and update in real time. When a dispute is updated in NeonPay, all Administrator-level users associated with the NeonPay merchant account receive an email notification.
How can I prevent disputes?
An accurate statement descriptor is vital to preventing disputes. If a cardholder recognizes the charge on their statement, they are much less likely to initiate a dispute. To make sure your statement descriptor is accurate to your organization, navigate to the Merchant Accounts section of NeonPay, then select the Merchant Account you’d like to edit. In Account Details, edit Statement Descriptor.
Note: NeonPay sends the specified Statement Descriptor to the cardholder’s card network or issuing bank, but ultimately, these institutions control what appears on a cardholder’s statement.
Additionally, cardholders are less likely to dispute a charge if they can resolve their concerns directly with the merchant in a timely manner. Make sure there is a clear means of communication between the cardholder and your organization, and always address a cardholder’s purchase or refund concerns quickly and effectively.