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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, 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, and American Express) and exist to protect buyers from unauthorized 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 poorly constructed.

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, Discover)

  • You, the merchant

  • The buyer, also known as the customer or cardholder

  • The buyer’s 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 then have a small window to provide documentation to support your claim, usually around 7 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.

Cash App Disputes

At your Square Point of Sale or Square Online, customers using Cash App can complete their payment by scanning a QR code that generates on the screen on your point of sale device or in your online store.

Just like other types of payment disputes, buyers can file disputes for Cash App Pay transactions for two types of reasons:

  • Fraud: The buyer claims that they never participated in the transaction themselves, and that their account or card was stolen and used by a fraudster. Sellers who receive a fraud dispute from a Cash App Pay transaction are covered entirely by Square and owe no money for the dispute. They do not have to take any action to receive this coverage. Note that does not apply to any other payment methods.

  • Non-fraud: The buyer acknowledges that they made the payment themselves but that the goods or services they purchased either weren’t delivered or satisfactory to what they thought they would receive. Sellers who receive a non-fraud dispute from a Cash App Pay transaction are not covered by Square. They must follow the normal disputes process, wherein they can choose to challenge the dispute with evidence and upon the cardholder’s bank’s review of the dispute, either win or lose. This is similar to how all other non-Cash App Pay disputes are handled.

Learn more about Cash App Pay in our Support Center.

Dispute Permissions

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:

  1. From you Square Dashboard, go to Team > Team Members.

  2. Select the team member you want to give this permission.

  3. Under Permissions, click Edit.

  4. You will see this employee's current permissions. Under "Permission set," click Edit

  5. Select Reports and toggle it on to grant the employee access to view your reports.

  6. Check View dispute reporting, then check View open disputes and Respond to disputes.

  7. 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.

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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