An email arrives from your gateway with a subject line like “Dispute raised” or “Chargeback initiated”. An order you shipped weeks ago has been disputed by the customer’s bank. The amount has already been taken out of your next settlement, and there is a deadline to respond. You did nothing wrong, as far as you know, and the customer never contacted you.
What follows is a chargeback explained from the seller’s side: what has happened, who decides the outcome, what evidence to send and how to make the next one less likely. Read it as general information, not legal or financial advice. Each gateway and card network has its own process and time limits, and your gateway’s dispute help pages are the authority for your account.
Chargeback explained in plain terms
A refund is something you give. A chargeback is something the customer’s bank takes. The customer goes to their bank or card issuer and says a payment was wrong, and the bank reverses it through the card network. The gateway passes that reversal on to you, usually by debiting the amount from your settlements.
For card payments, the decision is not made by your gateway, and not by you. It is made by the customer’s bank under the card network’s rules, based on the evidence each side provides. Your gateway’s role is to tell you about it, collect your evidence, and forward it.
Disputes are not only a card thing. UPI and net banking payments can also be disputed through their own channels, and gateways usually show these in the same disputes section. The steps below apply broadly, but the timelines and forms differ.
How a dispute moves, step by step
- The customer complains to their bank. Sometimes after contacting you, often without.
- The bank raises a dispute with a reason, such as fraud, goods not received or duplicate charge.
- Your gateway notifies you by email and in the dashboard, with the payment ID, amount, reason and a response deadline. The amount is commonly held or debited at this stage.
- You decide: accept or contest. Accepting ends it; the customer keeps the money. Contesting means submitting evidence before the deadline.
- The bank reviews the evidence and decides. If you win, the amount is returned to your settlements. If you lose, it stays with the customer.
- Further rounds are possible in some cases, depending on the network’s rules.
Missing the deadline usually counts as accepting. Put dispute emails on a list someone checks daily, and make sure the gateway sends them to an inbox that is actually read.
The usual reasons, and what wins each one
| Reason given | What it usually means | Evidence that helps |
|---|---|---|
| Fraud or “I did not make this payment” | A stolen card was used, or the cardholder does not recognise your business name on the statement | Billing and delivery match, customer’s previous orders, delivery confirmation signed or OTP-verified, any chat with the customer |
| Goods or service not received | The parcel did not arrive, arrived late, or the service was not delivered | Courier tracking showing delivery to the customer’s address, proof of delivery, service completion record or logs |
| Not as described or defective | The customer is unhappy with what arrived | Product page as it appeared at purchase, photos before dispatch, your refund policy, messages offering a return |
| Duplicate charge | The customer was charged twice, or thinks so | Proof that the two payments were separate orders, or proof you already refunded one |
| Cancelled or refund not processed | The customer cancelled and expected a refund | Your cancellation terms, dates of cancellation, refund reference if you issued one |
| Subscription charged after cancelling | A recurring debit the customer believes they stopped | Sign-up terms, renewal notice sent, cancellation records |
How to handle a chargeback you want to contest
Disputes are won on clear, organised evidence, not on long explanations. A good response usually has:
- A short summary, three or four sentences: what was ordered, when, where it went and why the dispute should be rejected.
- The order record: date, items, amount, customer name, email, phone, billing and delivery address.
- Delivery or completion proof, matched to that order.
- Customer communication: emails or messages, especially any where the customer confirmed receipt or asked about something else.
- Your policies: refund, cancellation and delivery terms as they were shown on your site when the customer bought.
- Screenshots of the product page, if the dispute is about description.
Label each file clearly. The reviewer at the bank does not know your business, so make it easy for them to see the connection between documents.
Not every dispute is worth contesting. If the customer has a fair point, or the amount is small and the evidence is thin, accepting may be the sensible choice. Make that decision deliberately, not by missing the deadline.
Refunding during an open dispute
When a customer disputes a payment and also asks you for a refund, be careful. If you refund them directly while the chargeback is open, you can end up paying twice: once through your refund and once through the chargeback. Ask your gateway how it handles this case before refunding anything. Usually the right step is to respond through the dispute itself.
If a refund you issued earlier never reached the customer, which is one common reason for “refund not processed” disputes, our post on WooCommerce refunds that do not go through explains how to check what happened.
Where the money goes and when it comes back
Gateways commonly debit the disputed amount from your next settlement as soon as the dispute is raised, or hold it from your balance. Some also charge a dispute fee, whether you win or lose; check your gateway’s pricing page. If you win, the amount is usually added back to a later settlement.
This is why a chargeback can make a settlement look smaller than expected. Our guide to reading settlement reports shows where the deduction appears.
A high number of disputes compared with your sales can also lead the gateway to review your account, hold more of your settlements or, in serious cases, close the account. Prevention matters more than winning.
Cutting down disputes before they start
Make your name recognisable
Many “I did not make this payment” disputes are simply customers who do not recognise the name on their statement. Check what business name your gateway sends, and set it to something a customer will remember buying from.
Make yourself easy to reach
A customer who can reach you quickly usually asks you for a refund. One who cannot goes to their bank. Put a phone number or WhatsApp contact on the order confirmation email and the website.
Ship with tracking, and keep it
For physical goods, tracked delivery with proof of delivery is one of the strongest pieces of evidence for “not received” disputes. Save the tracking number against each order.
Say clearly what customers are buying
Accurate photos, sizes, materials and delivery times on the product page. Over-polished photos invite “not as described” claims.
Watch for risky orders
Large first orders, mismatched billing and delivery countries, and repeated failed card attempts are worth a second look before you ship. International orders need extra care; our post on foreign card payments for Indian sellers covers the warning signs.
Refund promptly when you agree
If a customer has a fair complaint, a quick refund is cheaper than a dispute.
Friendly fraud, and what to do about it
Some disputes come from genuine customers who received the goods and still claim they did not, or who forgot a purchase and assumed it was fraud. This is often called friendly fraud. It is frustrating, but the response is the same as for any other dispute: evidence, not argument.
A few things help with this kind of dispute in particular:
- Delivery confirmation that ties the parcel to the customer, such as a signature or an OTP given at the door.
- Records of the customer using what they bought: a login to a course, a download, a booking they attended.
- Earlier orders from the same customer that were delivered without complaint.
- Messages in which the customer mentioned the order after the delivery date.
If the same customer disputes more than once, you are free to stop accepting orders from them, or to offer only prepaid methods you can verify.
A dispute log worth keeping
Keep a simple sheet with the date raised, payment ID, amount, reason, your decision, the date you responded and the outcome. Over a few months it shows patterns: one product that keeps getting “not as described” claims, one courier that keeps losing parcels, or one checkout step that leads to duplicate payments. Those patterns are worth fixing at the source.
Disputes are part of choosing a gateway
How a gateway handles disputes, how clearly it notifies you and how easy it makes uploading evidence, is a fair question to ask before you sign up. Our guide to choosing a payment gateway in india puts it alongside fees, settlement and support.
Seen this way, your first chargeback should feel less personal. It is a paperwork exercise with a deadline, and the seller who keeps good records usually has the better hand.
Next in this series: Cashfree vs Razorpay: How to Compare Them Yourself
