Payment Disputes Walkthrough
Where there are purchases, there are payment disputes. As with any transaction, there’s always a risk that your customer will dispute the validity of their purchase. Cardholders can initiate a payment dispute or chargeback by asking their bank to reverse the charge.
When this happens, we place a hold on the disputed funds in your Square account until the dispute gets cleared up. This is because the customer’s bank has just taken the funds from us, and we need to cover that amount. If there aren’t enough funds available in your Square account, we’ll have to debit your linked bank account to cover the disputed amount.
Square doesn’t decide who wins or loses a dispute – that’s up to the bank that issued your customer’s credit card (like Visa or MasterCard). But our Disputes Resolution Team can help you make your case to your customer’s bank. Here’s how the process works.
Step 1: We’ll notify you of a dispute.
If your customer initiates a dispute, their bank contacts us to get more information about the transaction. We reach out to you to pass on their request. They’re looking for any supporting evidence you may have about the transaction, like receipts, invoices, email correspondence, proof of delivery or photos. The more evidence you can provide, the better chance you have of winning the dispute.
You can find information about a dispute on your Disputes Dashboard and in the Square Point of Sale app under Reports. We populate the Dashboard with the dispute information that your customer’s bank sends us. There, you’ll be able to find:
A detailed description of why your customer has initiated the dispute.
The information the bank needs to make their decision on the case.
Information on the status of your dispute, which we’ll update for you when the bank gets back to us. The status includes all documents you have uploaded so far and what’s next in the dispute process.
The deadline for sending us your information.
Step 2: Send us your supporting documentation and information.
Square handles sending your information to your customer’s bank. But we’ll need your help here. Before we can dispatch your information to the bank, we need you to gather together and send us the information they need.
Access your Information Request Form
To send us your information, we’ll need you to access the Information Request Form we sent you in the initial dispute notification email. You can also find it in your Disputes Dashboard or in the Square Point of Sale app under Reports. It’s also important to note that the bank gives us only a small window to submit your information to them. If you aren’t able to send us your information within the allotted time, we’ll have to move forward and fight the dispute using the information about the disputed transaction that we already have. Check your Disputes Dashboard online or in the Square Point of Sale (POS) app for the deadline for sending us your information.
Turn on dispute permissions for team members
If you don’t have the time to manage the dispute process or you want to focus on other areas of your business, let your employees answer the dispute. You can turn on this permission for specific team members in Team Management. To get started:
From you Square Dashboard, go to Team > Team Members.
Select the team member you want to give this permission.
Under Permissions, click Edit.
You will see this employee’s current permissions. Under "Permission set," click Edit
Select Reports and toggle it on to grant the employee access to view your reports.
Check View dispute reporting, then check View open disputes and Respond to disputes.
Click Continue > Save to finish.
That team member will now have access to view and respond to your disputes. To turn this permission off, just uncheck the permission boxes.
Learn more about how to get started with Team Management.
Open up your Information Request Form. Read over the details of the dispute on the form, and pay close attention to what your customer is claiming. Take a close look at the reason code and the amount disputed: this will help you determine which transaction is being disputed and which supporting evidence to send to us. You have two ways to proceed here:
Return the funds
If you don’t want to challenge the dispute, you can always return the funds from the transaction to your customer. To do this, select “No” on the first question of the form, where we ask you if you’d like to challenge the dispute. Submit the form to us, and we’ll let the bank know you’d like to return the funds to the customer.
Challenge the dispute
If you do want to challenge the dispute, select “Yes” on the first question of the form and respond to the rest of the questions. Collect any supporting documentation that the form asks for and attach it to the form before submitting it. We may reach back out to you if we think the bank will need more information.
The documentation you send us should help us directly contradict the customer’s claim. For example, a signed receipt alone would not be effective evidence to challenge a dispute in which the customer claims the goods were not received. Their bank would need to see proof of delivery, as well.
Step 3: Wait for the bank to resolve the case.
As soon as you send us your transaction information, we’ll forward it on to your customer’s bank. It’s up to them to resolve the case, and it can take up to 90 days for them to inform us of their decision. We’ll notify you of the ruling by email (and on your Disputes Dashboard) as soon as we hear about it.
If the bank resolves the case in your customer’s favour, your customer will receive a refund for the disputed amount. Unfortunately, when the bank makes their decision, it is final – they won’t allow us to assist you any further. If you don’t have enough funds to cover the cost of a lost payment dispute, you can discuss your available repayment options with our Recovery Team.
If the dispute is resolved in your favour, we’ll lift the hold on the funds and you’ll be able to transfer them to your bank account.