With this information, the best strategy for a merchant is to:
- keep records of transactions and communicate effectively with customers at every stage of the dispute/chargeback process
- understand the
Guide
Gain a better understanding of chargebacks nature and manage them effectively. reason codes for chargebacks and develop ways to prevent them from occurring
By implementing these strategies, merchants can minimize disputes and chargebacks, maintain positive relationships with their customers, and ensure the longevity of their PayPal accounts.
dispute_life_cycle_stage |
Description |
|---|---|
| INQUIRY | Customer and merchant resolved the dispute without escalation to PayPal. This occurs when the customer has not received goods, reports goods not as described, or needs more details. |
| CHARGEBACK | Inquiry escalated to a claim. PayPal investigated and decided that it was visible only to PayPal agents. Merchant can accept, challenge, or resolve the claim. |
| PRE_ARBITRATION | Merchant's first appeal stage. Appeal a chargeback if PayPal's decision is unfavorable. Must appeal within the appeal period. |
| ARBITRATION | Merchant's second appeal stage. Appeal a dispute again if the first appeal was denied. Must appeal within the appeal period. |
dispute_channel |
Description |
|---|---|
| INTERNAL | Internal Dispute. Customer contacts PayPal to file a dispute with the merchant. |
| EXTERNAL | External Chargeback. Customer contacts their card issuer or bank for a refund. |
| ALERT | Pre-chargeback alert when customer contacts their card issuer. |
reason |
Description |
|---|---|
| MERCHANDISE_OR_SERVICE_NOT_RECEIVED | Customer did not receive the merchandise or service. |
| MERCHANDISE_OR_SERVICE_NOT_AS_DESCRIBED | Merchandise or service not as described by the customer. |
| UNAUTHORISED | Customer did not authorize the purchase. |
| CREDIT_NOT_PROCESSED | Refund or credit was not processed for the customer. |
| DUPLICATE_TRANSACTION | Transaction was a duplicate. |
| INCORRECT_AMOUNT | Customer was charged an incorrect amount. |
| PAYMENT_BY_OTHER_MEANS | Customer paid for the transaction through other means. |
| CANCELED_RECURRING_BILLING | Customer was charged for a canceled subscription. |
| PROBLEM_WITH_REMITTANCE | A problem occurred with the remittance. |
| OTHER | Other. |
status |
Description |
|---|---|
| OPEN | Dispute is newly initiated and under investigation. Both parties have 10 days to resolve it before it may escalate to a claim. |
| WAITING_FOR_BUYER_RESPONSE | Waiting for the customer to respond after the merchant has provided a resolution or evidence. |
| WAITING_FOR_SELLER_RESPONSE | Waiting for the merchant's response, often after the customer escalates the issue. |
| UNDER_REVIEW | PayPal is reviewing the evidence from both parties to make a decision, typically in cases of internal chargebacks. |
| RESOLVED | Dispute has been settled, either by mutual agreement, PayPal’s decision, or through the appeals process. |
| OTHER | Catch-all status for cases that do not fit standard categories. |
dispute_outcome |
Description |
|---|---|
| RESOLVED_BUYER_FAVOUR | Dispute was resolved in the customer's favor. |
| RESOLVED_SELLER_FAVOUR | Dispute was resolved in the merchant's favor. |
| RESOLVED_WITH_PAYOUT | PayPal provided the merchant or customer with protection, and the case is resolved. |
| CANCELED_BY_BUYER | Customer canceled the dispute. |
| NONE | Dispute was created for the same transaction ID, and the previous dispute was closed without any decision. |
The PayPal disputes report provides merchants with critical insights into dispute cases, including all lifecycle stages, enabling efficient resolution and improved customer satisfaction. reporting solution provides detailed insights into PayPal disputes, covering every stage from initiation to resolution.
It includes essential data like dispute IDs, order details, amounts, and reasons, helping businesses enhance dispute management and operational efficiency.
Prevention recommendations
Beyond card payments, PayPal processes various alternative payment methods such as bank transfers, Buy Now Pay Later (BNPL) options, and more. Based on our empirical data, the denominator includes all sales for external chargebacks, while the numerator only accounts for half of the sales. Plus, PayPal uses multiple MIDs to distribute transactions, and this distribution process is completely obscure. All this can lead to discrepancies, where some MIDs may have higher chargeback rates despite an overall rate being below the
Guide
Prevent risk by keeping chargeback and fraud ratio below monitoring thresholds.
monitoring program’s
. Unfortunately, these MID-specific rates are unpredictable and hard to track.
Download to reduce the risk of PayPal account fraud and improve overall payment security.
Block fraudulent geographies
Some Tier 3 countries and regions may have higher fraud levels. By identifying these high-risk areas, you can proactively protect your business from fraudulent activity. This may include implementing more stringent verification processes or blocking transactions from these regions altogether.
Implement clear unsubscribe options
Solidgate retries invoice collection four times after a failed attempt and cancels the subscription if the retry period extends beyond the billing period, sending a webhook to adjust billing and discontinue product use.
Ensure a visible Unsubscribe button in emails and customer profile pages to cancel subscriptions easily. Provide immediate confirmation and clear cancellation policies, and develop a self-service portal for managing subscriptions and processing refunds.
Quick resolve of dispute alerts
Prioritize payment methods
Customizing the order of payment methods can reduce fraud by encouraging the use of less risky options such as card payments, GooglePay, and Apple Pay, and putting PayPal button lower. This should be done carefully to avoid affecting sales conversions, as some customers prefer PayPal.
Consider client risk scoring
Using a risk scoring system to determine if a customer can use PayPal for payment. This helps reduce fraud by accurately predicting high-risk transactions and disabling the PayPal option for those customers.
Send billing notifications
Use business name consistently
Ensuring your Doing Business As (DBA) and statement descriptor names match the Product Name. Seeing different business names pop up across your documents and platforms confuses customers who, not recognizing the purchase, start requesting chargebacks en masse.
Customizing your PayPal account is a must-have strategy to ensure transaction safety and enhance the shopping experience. By providing clear billing information, prompt customer service, and easy account management, you can foster more secure sales.
