All payment companies work with chargebacks in the same way. Upon receipt of a claim from a client, the merchant will receive a notification and have to respond within a week’s term. Documents to prove the case can be sent via email or through the internal interfaces of the payment system.
Stripe is different from most payment systems. First, some provide their merchant with a simple dispute management interface that helps track and respond to claims. Secondly, Stripe gives its merchant a fairly broad description of what the merchant should do when receiving a claim: what documents to prepare for the rebuttal, how to confirm the client’s participation in the transaction, receipt of goods, or provision of services.
But why then do merchants only have a 30-40% win rate? There are several reasons for this.
The first reason: Dispute Reason Code
Stripe, according to its documentation, has eight disputable reasons:
Credit not processed
Product not received
For each reason, Stripe describes what the merchant should provide as a response. Everything seems to be clear, but what’s the catch?
Visa and Mastercard payment systems have much more Reason Codes, divided into groups: Visa has 25 of them, and MasterCard has 28 of them. That means that Stripe generalizes the causes of disputes into its groups. In this case, the merchant cannot know why the dispute arises and cannot prepare a relevant answer.
The second reason: Dispute Details
In the list of mandatory actions, Stripe informs that such actions as viewing the documents received from the client and contacting the client to clarify the reasons for the dispute are optional, not mandatory.
Based on our many years of experience dealing with disputes, we can say this is a must! The documents may contain all the information on the essence of the dispute, and you will be able to answer better.
Reason three: Fraudulent Disputes
It seems that if a client’s card was stolen and paid at a point of sale, the point of sale is to blame. At least, most of the payment systems answer this way (the merchant must verify the client, etc.). In fact, few people know that card theft is the responsibility of the client or his bank until the card is blocked. And another interesting fact for Travel and Entertainment companies. Few people know about the Сard-Present and Сard-not Present terms. The Travel and Entertainment industry can have both types of transactions for the same client, so they need to know the specifics of each type to respond to a dispute correctly.
Reason four: Automation
A merchant can upload data from all his systems, attach documents containing dozens of sheets and lose a dispute. Why is this happening – the absence of a person. People consider all disputes in payment systems and banks. Therefore, the merchant will definitely lose if he does not have his answer about what it did to prevent a dispute or resolve the issue directly with the client. Believe me, a short transaction summary and correspondence with the client will be a better option than a dry date.
Reason Five: Your Opponents
Your client applies to the bank, and a claim is considered by its employees who have completed chargeback training at payment systems academies and have access to the operating rules of payment systems and technical specifications.
These are the 10k pages of knowledge on how a transaction should go, what a merchant must comply with, and how to respond to a dispute. These rules are updated twice a year, and you, as a merchant or Stripe support, do not have the time and opportunity to gain this knowledge. Chargeback officers usually win cases thanks to the following points:
client verification errors
return policy and terms and conditions rules
information wasn’t provided on time
lack of communication with the client (or no evidence of an attempt to contact the client)
or just because of an extra checkmark on your site
That is not a complete list of reasons to lose your dispute. But it’s not so bad, because your business is still running efficiently! In any case, you can always ask our service gurus about what you can do to increase your win rate. In addition, we have opened a new opportunity for companies: we answer all your questions on disputes for free. So contact us if you wish to sort out your disputes.