Chargebacks
Learn how to handle disputes, prevent chargebacks, and manage the evidence submission process.
A chargeback occurs when a cardholder disputes a transaction with their issuing bank. When this happens, the funds are immediately reversed from your account, and a dispute fee is levied.
Dispute Lifecycle
- Notification: The cardholder initiates a dispute. Tapaya notifies you via email.
- Funds Withdrawal: The disputed amount + a dispute fee is deducted from the merchant's balance.
- Evidence Submission: The merchant has a limited time (usually 14-21 days) to submit evidence proving the transaction was legitimate.
- Bank Review: The issuing bank reviews the evidence. This process can take up to 60-75 days.
- Final Decision:
- Won: The disputed amount is returned to the merchant's balance. The dispute fee is not refunded.
- Lost: The funds remain with the cardholder.
Preventing Chargebacks
The best way to handle chargebacks is to prevent them from happening.
1. Clear Descriptor
Ensure your Statement Descriptor (the name that appears on the customer's bank statement) is recognizable. It should match the merchant's business name or website.
2. Digital Receipts
Always offer to send a digital receipt (Email/SMS) within the app. This gives the customer a record of the transaction and reduces "unrecognized transaction" disputes.
3. Contact Information
Make sure your merchants' customer support contact details are easily available to their customers. Customers often dispute charges simply because they can't find a way to ask for a refund directly.
Responding to Disputes
If a merchant receives a dispute, they can respond by replying to the email.
Compelling Evidence
The type of evidence required depends on the dispute reason:
- Fraudulent: Proof that the card was present (e.g., the SDK's transaction receipt showing "Chip Read" or "PIN Verified").
- Product Not Received: Proof of delivery or service fulfillment (e.g., signed delivery note).
- Duplicate: Reference to the original successful transaction and the refunded duplicate.
Contactless Advantage
Transactions processed via the Tapaya Accept SDK using Contactless (Apple/Google Pay) have liability shift. This means the issuer is liable for fraud disputes, not you. You automatically win these disputes.
Excessive Chargeback Program
Card networks monitor dispute rates. If a merchant's dispute rate exceeds 0.9% of their total transactions:
- The merchant may be placed in a monitoring program.
- The merchant will incur higher dispute fees.
- The merchant's account may be suspended if the rate does not improve.