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Home>Disputes Overview

How Payment Disputes Work

One of the inherent risks of accepting card payments is receiving a payment dispute, also commonly known as a chargeback. It is important for your business to understand how the dispute process works at a high level and what parties are involved.

What is a payment dispute?


A payment dispute or chargeback occurs when a cardholder files a claim with their card-issuing bank to request a reversal of the charge. Disputes are a fixture of the card networks (Visa, Mastercard, American Express and eftpos) and exist to protect buyers from unauthorised transactions.

Cardholders can file disputes for a number of reasons, but the most common reasons are:

  • Fraudulent activity - the buyer had their card or their card details stolen, and the fraudsters use the stolen details to make payments.

  • Goods or services not received - the buyer made a purchase but did not receive the goods or services they paid for. For example, a buyer purchased clothes online but never received their items.

  • Goods or services not as described - the buyer made a purchase, but the goods or services they received were either incorrect or not of the quality they expected. For example, a buyer paid a contractor to build a patio for them, but the patio was either built incorrectly or the quality of the workmanship was poor.

Who is involved in the dispute process?

Typically, the major parties involved in the dispute process are:

  • Square

  • Square’s financial partners, such as our acquiring and banking partners

  • The card networks (Visa, Mastercard, American Express and eftpos)

  • You, the merchant

  • The buyer, also known as the customer or cardholder

  • The buyer card-issuing bank

The dispute process may vary slightly depending on the card network, but these different networks generally follow the same guidelines.

How does the dispute process work?

First, a cardholder will contact their issuing bank to request a reversal of the charge—this officially starts the dispute process. It’s important to note that Square cannot initiate a chargeback on behalf of a cardholder, even if the cardholder reaches out to us instead of their bank first.

Once the cardholder’s issuing bank begins the dispute process, they issue a chargeback and notify Square that their cardholder filed a claim against a payment processed by a Square merchant. Square will notify you that a chargeback was issued--you have a small window to provide documentation to support your claim, usually around 14 days. This deadline is determined by the card network, not Square, and may vary across different networks.

If you do not provide evidence to support your claim and the deadline passes, Square will represent the dispute with any information about the disputed payment we already have. However, the likelihood of winning a dispute this way is low.

Timeline for Outcome

If you do submit documentation, Square’s Dispute Resolution Team will take this information and send it to the cardholder’s issuing bank. The issuing bank also has a timeline for the dispute process, usually up to 90 days. During this time, they will review the evidence supplied by the merchant and Square and make a decision on the dispute. Since this timeline is determined by the bank, we aren't able to speed it up.

Note: Square does not have any influence over or determine the resolution of the chargeback process and can only support the merchant by helping present a sound case for review.

Once a dispute outcome is returned, Square will update the status of the dispute in your Disputes Dashboard as soon as we receive a response from the cardholder’s bank. However, once a dispute has been resolved by the cardholder’s bank, Square must abide by the outcome and no longer has a right to escalate or continue challenging the dispute on your behalf.

For more information about what happens when you receive a dispute with Square, you can review our Payment Disputes Walkthrough

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