![]() ![]() You can’t issue a refund outside the dispute process while the dispute is open.Stripe in turn debits your Stripe balance for the disputed amount plus a dispute fee.The card network debits Stripe for your disputed payment and related dispute fees.The initiation of a dispute triggers several processes: Why the debited amount is different from the original payment Receiving a dispute This might be for the full amount of the charge or a different amount. Whether it’s because of an inquiry that escalated, or for some other reason, when an account owner files a formal dispute against a payment, the action initiates a chargeback where the card network pulls the funds for the dispute from your Stripe balance and holds it for the entire duration of the dispute. At this point, you can be confident the card network won’t escalate it-they don’t provide an explicit “win” message for inquiries. If an inquiry has been open for 120 days without escalation to a chargeback, Stripe marks it as closed in the Dashboard and API. ![]() The Dashboard payment page describes inquiries as an “inquiry” or “dispute inquiry”, and as a “warning” or “dispute warning” in the API events summary, to mirror the language in the API. Inquiries on partially refunded charges can still escalate to a chargeback. You can resolve the case without incurring a dispute fee by either providing satisfactory evidence that answers the dispute type for the inquiry, or by issuing a full refund. American Express and Discover are the networks that most often use this phase, while Mastercard and Visa don’t use it anymore.ĭuring the inquiry phase, the cardholder’s bank requests transaction clarification, often because the cardholder doesn’t recognize the transaction description. Stripe calls this preliminary phase an inquiry, though these are sometimes also called a “retrieval” or a “request for information”. Some card networks initiate a preliminary phase before creating a formal dispute and chargeback. You can listen for EFW webhooks using our API. This is generally because the systems the networks use to process EFWs are separate from the systems they use to process disputes, and the two aren’t necessarily in sync. If any of the conditions described under the Best practices for preventing fraud apply to your situation, it makes sense to more aggressively refund EFWs.Īlthough it’s called an early fraud warning, it’s possible to receive an EFW even after you receive a fraud dispute on a charge. The main exception to the optimal refund strategy above is if you have reason to worry about the effect of the dispute itself on your business or account. It’s probably not worthwhile to refund EFWs on charges more than 35 percent higher than your dispute fee. Regardless of the likelihood of escalation, it’s not always a good strategy to refund all EFWs because if you’re too aggressive in issuing refunds for all EFWs, you’ll inevitably be refunding some transactions that would never have become disputes.Īll other things being equal, our analysis suggests that the optimal point for issuing a refund on early fraud warnings is on charges that are roughly less than or equal to your dispute fee. If the payment was covered by liability shift you might still receive a dispute, and we will provide some evidence automatically for you, for example from 3D Secure. ![]() Unless the payment was covered by the liability shift rule, 80% of EFWs convert into a fraud dispute if you do nothing. You might proactively refund the charge to prevent the cardholder from initiating a dispute, or you might wait and see if a fraud dispute happens. Failure to respond in the pre-dispute phase can have negative implications in the formal dispute phaseĮarly fraud warnings (EFWs) are messages sourced from Visa TC40 reports and Mastercard SAFE (System to Avoid Fraud Effectively) reports that card issuers on these two networks generate to flag payments they suspect might be fraudulent.Īs with any fraud signal, EFWs don’t require any action or response from you.You might avoid a dispute entirely with proactive customer service and transaction clarification.Pay attention to these notifications because: Sometimes, Stripe alerts you to pre-dispute notifications before an actual dispute is filed. Throughout this process, Stripe facilitates your case, but doesn’t have influence over the outcome, which is at the sole discretion of the account owner’s bank. Steps you through the process of submitting convincing evidence to counter the dispute.Provides you with an explanation of the dispute and access to the account owner’s claim to their bank.Debits the disputed amount, plus a dispute fee, from your Stripe account until the dispute is resolved.Notifies you of the dispute through the Stripe Dashboard, email, webhooks, and the API.When an account owner disputes a charge to their payment account, Stripe: ![]()
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