With every card payment you take, you and your customer are entering into an agreement. This means that you can be held liable for the payment amount if your customer disputes the payment.
By following these guidelines, you’ll reduce the likelihood of facing a payment dispute and be more prepared if you do receive one.
Purchases made when your customer and their payment card are present are less likely to be disputed than a payment made remotely. Follow the practices below to minimize the risk of disputes when making card-present transactions.
Always insert or tap EMV cards
EMV (chip) cards are more secure than traditional magstripe cards, so credit card companies have introduced regulations to make sure sellers correctly process chip cards whenever possible.
What this means for you as a seller is that there has been a liability shift. If you swipe a chip card rather than using a chip reader, you are automatically liable for any fraudulent transactions.
If the card is physically present for a transaction, always insert the chip or tap the card with Square contactless chip card reader. If it is not a chip card, swipe it through the reader.
Confirm the Customer’s ID
When possible, ask your customer for a government-issued ID to confirm that they are the legitimate owner of the card being used.
Always Provide a Receipt
A receipt is a record of the transaction for both you and your customer. Having a receipt available can help a buyer recall what a charge was for. In the event of a dispute, we can use a receipt to challenge the dispute with the customer’s bank.
With Ecommerce or Virtual Terminal payments, naturally, the customer doesn’t have to be physically present. Since you can’t physically verify that the person making the transaction is the cardholder, we recommend taking the steps listed below to minimize the risk of payment disputes.
Obtain Card Information
Ask a customer to provide the card number, the name on the card, billing address, expiration date, and CVV code on the back of the card.
Get Delivery Confirmation
If you are shipping a product, make sure to keep the tracking information and a delivery receipt. For large orders, require a signed confirmation of delivery.
Get Proof of Service
If you provide a service, document that it was successfully provided. For example, you can ask your customer to review and sign a work order and keep it for your records.
Know Your Customer
Get to know your customer before completing a large transaction. Verify your customer’s identity, billing address, and business (if applicable) prior to processing a high-ticket item or sizeable order. Do a Google search or ask for a government-issued ID and match the name on the ID to the name on the payment card.
Match Billing and Shipping Zip Codes
If you’re shipping an item, check whether the billing and shipping ZIP codes match. If they don’t, ask your customer why. Their answer should make practical sense. If it doesn’t, don’t accept the payment.
To find out more about accepting credit card payments, check out our Seller Community.
If you’re processing multiple transactions for one item over a period of time, obtain a signature for each individual payment. In the item description, clarify that the payment is an “installment payment.” This ensures that you’re on the same page as your customer and protects you if they ever claim that any of the transactions were unauthorized.
If you have a recurring charge with a client, acquire written cardholder permission to periodically charge for the recurring services or goods. On the written agreement make sure to include:
- transaction amounts
- frequency of the charges
- the duration for which cardholder permission is granted
- the cardholder’s signature
If you wish to refund a payment, always issue the refund directly back to the payment card. If you must provide a refund via cash, check, or money order, make sure to obtain a signed agreement that your customer received the refund.
Never have your customer sign a statement waiving their right to dispute the transaction with the card issuer. This is a card network violation and will impact your chances of winning a payment dispute if one occurs. It’s better practice to set expectations with your customer and make sure they understand how transactions with your business work.
All Square merchants have a per transaction limit of $50,000.
If you’d like to accept individual transactions above $50,000 each, you’ll need to split the payment into multiple installments. Make sure to record the receipt number and the total amount charged for each installment. For the sake of security, we may sometimes reach out to customers to confirm this information.
Note: Merchants who process more than $100,000 annually will be asked to sign a Commercial Entity Agreement acknowledging that the payments processed are associated with a commercial business.
Individual states have their own rules and regulations regarding surcharges. Learn more about applying a surcharge with Square.
Add your contact information
Add your phone number, address, website, and social media pages to your receipts. This will help a customer reach out to you directly if something goes wrong with a sale, rather than immediately filing a dispute with their bank.
Publish a refund policy
Make your business name recognizable
Make sure the business name on your receipt is recognizable. This is the name that shows up on your customers’ bank statements. If a customer sees an unfamiliar business name on their statement, they may be more inclined to file a dispute.
If you don’t have a business name or your business name is longer than 35 characters, add a description of what you sell and your location to your business name. For example, if you are a taxi driver in San Antonio, write Taxi - San Antonio, TX.
Write a description of the goods or services you sold
Provide an accurate description of what you sold for every transaction. This can help jog a customer’s memory and prevent a dispute from happening.
If writing descriptions for each transaction isn’t feasible for your business, create an item library. Then, when you process a sale, select the items or services sold and they’ll be added to the receipt.
Collect Customer Feedback
Use Square Feedback to collect comments from your customers about their purchase. If a customer has a problem with a sale, they can reach out to you directly from their digital receipt. You may be able to respond, issue a refund, or resolve the issue without ever having to enter the dispute process.
Although following these guidelines can reduce your chances of facing a dispute, there is always a potential risk when accepting credit card payments. If a customer disputes a payment, Square will represent you in the dispute process free of charge, and our team of specialists will use their expertise to help you along the way. You can learn more about the disputes process here. We also suggest that you familiarize yourself with how to protect yourself from scams and fraud.