Guide to Payment Disputes: Protecting Your Revenue at Nayax

Beyond the Sale: Understanding the Customer Journey

The moment a customer completes a purchase is just the beginning of your relationship with them. Every interaction after payment from confirmation emails to shipping updates to support inquiries shapes their perception of your business. When these touchpoints fail, customers may resort to payment disputes rather than working directly with you to resolve issues.

 

What Exactly Is a Payment Dispute?

When a customer questions a charge on their statement, they can contact their bank to reverse the transaction. This process - known as a Payment dispute or Chargeback - pulls funds directly from your merchant account while an investigation takes place.

 

The good news? Industry data shows that dispute rates are gradually decreasing as businesses implement better prevention strategies. However, payment disputes remain a significant threat to revenue.

 

Payment Disputes vs. Direct Refunds: Understanding the Difference

While both processes return money to customers, they work very differently:

 

Direct Refunds

• Control: You maintain full control of the process
• Communication: Direct interaction between you and your customer
• Timeline: Typically processed within 3-7 business days
• Cost: Only the transaction amount is returned

 

Payment Disputes

• Control: The customer's bank manages the entire process
• Communication: Formal documentation through banking channels
• Timeline: Can extend from several weeks to months
• Cost: Transaction amount plus additional fees and potential penalties

 

Why Customers File Disputes: The Root Causes

Understanding why customers bypass your customer service and go straight to their bank is crucial for prevention:

 

True Fraud

Payment disputes were originally designed to protect consumers from unauthorized transactions, and this remains a common reason for disputes.

 

Process Confusion

Customers may file disputes when they:

 

• Don't recognize your business name on their statement
• Never received their purchase or tracking information
• Find your return process too complicated
• Can't reach your customer service team
• Notice duplicate charges or billing errors
• Want to cancel a subscription but can't figure out how

 

The Dispute Resolution Process

When a dispute occurs, here's what happens:

1. Customer initiates: The customer contacts their bank claiming the charge is unauthorized or problematic
2. Bank notification: Your payment processor alerts you about the dispute
3. Your response window: You have a limited time to provide evidence supporting the transaction
4. Bank investigation: The issuing bank reviews all documentation
5. Decision and resolution: The bank rules in favour of either you or the customer
6. Possible appeal: If either party disagrees, the case may proceed to arbitration with the card network

 

Protecting Your Business: Smart Prevention Strategies

Implementing these practices can significantly reduce your dispute rate:

• Use clear billing descriptors that customers will recognize on their statements
• Document everything from IP addresses to delivery confirmations
• Implement strong fraud detection tools like address verification and 3D Secure
• Communicate proactively about order status and delivery timelines
• Make customer service easily accessible through multiple channels
• Create a hassle-free refund policy that encourages customers to come to you first
• Send reminders before charging for subscriptions or recurring payments

 

When to Contest a Dispute

• Not every dispute deserves a challenge. Consider fighting when:
• You have compelling evidence the transaction was legitimate
• The purchase value justifies the time investment
• You've identified patterns of "friendly fraud" from the same customer

 

Remember, each dispute requires staff time and resources to address properly.