Disputes Deep Dive
As a WePay partner, you must handle disputes for merchants. This is an educational resource on disputes in general, in addition to UI guidance and dispute-handling code snippets.
Disputes can be a burden for merchants, and there are a few best practices that you, the platform, can implement to help avoid them in the first place:
1. RecognitionMany payers file complaints because they do not recognize a charge. To improve recognition rates, be sure to send a descriptive value for the account
statement_descriptorparameter. In practice, provide a field during onboarding asking merchants for the name of their store, business, etc. that their clients will recognize for use on card statements.
Additionally, remind payers what the charge will look like on their statement during checkout; all charges will be prefixed with "WPY*" and will contain the
statement_descriptorset on the merchant's WePay account.
A strategy to increase recognition specifically for shipped goods is to align the timing of delivery and capturing transactions. This will involve:
- Requiring merchants to, at minimum, ship items within 7 days of purchase
- Ideally, items should be delivered within 7 days of purchase
- Building out a mechanism for merchants to identify shipped orders as delivered
- Sending a
POST /payments/id/capturerequest once an order is shipped or delivered
- At this point, the charge will appear on the payer's statement
While implementing this strategy, it's important not to capture a payment too long after delivery in order to help ensure charge recognition. It's also important to capture payments within 7 days of authorization; attempts to capture the payment more than 7 days after authorization will fail, and the payment must be re-submitted.
2. Charge identification tool
Even with effective descriptors, some card holders may still not recognize a charge. Provide a look up tool where payers can use identifying details like payment date, amount, and/or the last 4 digits of the card number to provide a reference number. Payers should also be able to login to see their payment history (along with reference numbers and merchant contact information), with the option to view a static receipt.
3. Keep records
Keep all tracking numbers, signed contracts and receipts, payer login/checkout IPs (in place of signed physical receipts); also keep records of transaction details for merchants (records should go back at least 2 years for chargeback purposes).
4. Merchant terms of service
The merchant's terms of service, including refund policies, should be prominently posted on their site, presented before checkout, and made available on electronic receipts.
You, as the platform, should require merchants to submit their terms of service to you and to keep them current. From there, you can ensure that their terms of service are present on their platform-hosted page/store, before payer checkout, and on payer receipts.
5. Merchant customer service contact
Payers should be able to easily reach out to the merchant for support related to their goods/services. To facilitate this best practice, require merchants to submit their support contact email address and/or phone number to your platform. Again, you can ensure that this contact information is sufficiently present on the merchant's platform-hosted page/store and on payer receipts.
Part of avoiding disputes is educating your merchants on best practices. Download and host the below guide of recommended documents to upload when challenging a dispute, based on dispute reason category:
Feel free to host these best practices on your platform for merchants to implement and help avoid disputes:
1. Customer service
Provide a customer service phone number and/or email address, and make this contact readily available on your site and on payer receipts.
Provide prompt and responsive customer service. Communicate with customers regarding any delays in shipping, changes to the order, etc.
Set realistic expectations with payers of shipping timelines.
2. Accurate item/service descriptions
Make certain that descriptions and promises about products match reality. A product or service not meeting expectations is one of the grounds for a chargeback.
3. Ask for ID for in person transactions
This practice will reduce fraudulent and unauthorized transactions.
4. Issuing refunds is preferable to receiving a dispute
Make returns and exchanges straightforward by thoroughly and clearly documenting your return/exchange policy, and providing prompt responses to refund requests.
Make sure your refund process itself is quick and easy so that it doesnt add to customer frustration.
Issuing refunds is preferable to receiving a dispute; the dispute process can be lengthy and time-consuming. Additionally, we monitor chargeback rates on a merchant level, and may need to close a merchant's account if their chargeback rate exceeds 2% of their total processing volume.
5. Provide a summary of services, which is signed by the customer
This practice helps align customer expectations with reality, in addition to document challenging a dispute.
Have your own audit and accounting teams go over summaries and orders to spot issues like double charging.
Dispute Edge Cases
As a reminder, the overall charge back life cycle is as follows:
Disputes will typically be resolved one way or another after the merchant either concedes to or challenges the dispute.
Occasionally, a card holder will submit new information about the dispute after the card network closes the case in the merchant's favor. When this happens, a second dispute (also known as a pre-arbitration chargeback) will be issued. Due to the high fees and potential penalties associated with going into arbitration (i.e. challenging the second chargeback), we will close the chargeback in the payer's favor.
Differing Dispute and Transaction Amounts
At times, a dispute amount will differ from the amount of the initial transaction. There are two reasons for this: partial disputes and exchange rate fluctuations.
- Partial disputes occur when the card holder informs the card issuer that they were overcharged.
- Exchange rate fluctuations can occur when the card holder's account is in a differnt currency from the merchant's account. At the time of payment, we automatically convert the payment into the merchant's currency using the current exchange rate. If a dispute occurs, we use the current exchange rate at the time of the dispute to convert the dispute to the merchant's currency. If the exchange rate differs between the time of payment and the time of dispute, the dispute amount will differ from the transaction amount.
Simultaneous Refunds and Disputes
Occasionally, a transaction will be refunded and receive a dispute at the same time. When this happens, we automatically begin the challenge process. That being said, merchants should still submit supporting documentation proving that the refund was issued in order to enhance our representment efforts.