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Handling Stripe disputes effectively is essential, especially if you can’t prevent chargebacks before they happen.
When left unresolved, disputes often escalate into chargebacks, potentially costing merchants up to twice the original transaction amount, once you factor in chargeback fees, lost revenue, and operational costs.
With Stripe processing close to $1 trillion in online payments annually, even a modest 1% chargeback rate represents roughly $10 billion in losses - much of which falls on merchants.
That’s why chargeback prevention and smart dispute management strategies are vital to protecting your revenue and maintaining your payment processing privileges.
In this article, we’ll explore how the Stripe chargeback process works, what these disputes really cost your business, and how to prevent them using tools like Stripe Radar and advanced chargeback prevention platforms such as ChargebackStop.
What is a Stripe Chargeback?
A Stripe chargeback happens when a customer disputes a transaction and their bank forces a reversal of funds from the merchant’s account. This usually occurs after the cardholder contacts their bank to question a charge they don’t recognise, didn’t authorise, or are dissatisfied with.
Stripe acts as the middleman, notifying the merchant and allowing them to respond with evidence. If the dispute is resolved in the customer’s favour, the funds are permanently withdrawn from the merchant, plus a $15 chargeback fee and potentially much more in lost operational and marketing costs.
Even though chargebacks represent a small percentage of total transactions, they can add up quickly and cause serious financial and reputational harm, especially if left unmanaged.
Stripe Dispute and Chargeback Fees
Every time a dispute escalates to a chargeback, Stripe assesses fees on top of the withheld revenue. Currently, this fee is $15 per chargeback.
But the merchant pays more than this for each chargeback.
Here’s what else the merchant pays:
Transaction fees: Every transaction—successful, disputed, or charged back—incurs a transaction fee. These fees run between 1.5 to 4%. If the transaction becomes a chargeback, this is money you won’t get back.
Operational costs: Processing a physical order requires a lot of employee costs, typically around 20% of revenue. Digital sales have less overhead but require computer servers, transactional software, and development and maintenance—roughly 4 to 5% per sale. All is wasted if a chargeback occurs.
Marketing and acquisition costs: Marketing and advertising dollar amounts vary widely but cannot be ignored. Merchants often spend 30 to 40% of their revenue on marketing. This money is lost if the transaction results in a chargeback.
Stripe Disputes and Time Limits
Stripe disputes work like this:
Time Limit for Filing a Dispute
A cardholder has up to 110 days to file a dispute after the merchant has captured the transaction.
Dispute Initiation
A customer questions a transaction with their bank.
The bank notifies Stripe of dispute initiation.
Merchant Notification
Stripe alerts the merchant via their Dashboard and email.
Evidence Submission
The merchant gathers relevant documentation.
The merchant submits evidence through the Stripe Dashboard.
Review Process
Stripe reviews and submits evidence to the issuing bank
The bank reviews all the evidence and makes a decision.
Resolution
If resolved in the merchant's favour, disputed funds are returned to the merchant.
If resolved in the customer's favour, the chargeback is completed, and the funds stay with the customer.
Post-Resolution
The merchant reviews and analyses the dispute’s outcome.
The merchant wisely implements preventive measures based on the analysis.
How to Win a Stripe Chargeback Dispute
Once a dispute is filed, winning it comes down to the quality of your response. Stripe gives you a chance to submit compelling evidence through the Dashboard—and this is where a clear, well-documented case can make all the difference.
Here’s how to improve your chances of winning a Stripe chargeback:
- Submit clear evidence: Include transaction records, proof of delivery, customer communication, signed agreements, or screenshots—whatever shows the customer received what they paid for.
- Tailor your response: Use the reason code provided by the card issuer to guide what evidence you include. A dispute over fraud needs different proof than one over “product not as described.”
- Stay within the deadline: Merchants usually have 7–21 days to respond, depending on the card network. Stripe will show you exactly when your evidence is due.
- Keep things professional: Your tone matters. Stick to the facts, avoid emotion, and structure your response clearly.
- Use Stripe’s tools: Stripe provides templates and dispute guidance in the Dashboard to help you submit a strong case. Use them—they’re built to support your win rate.
Even with strong evidence, not all disputes are winnable. That’s why prevention is always the better strategy. But when disputes do happen, a solid process can protect your revenue and reputation.
Stripe Radar
Your Stripe account includes a built-in machine-learning tool that uses data from millions of companies to prevent fraudulent transactions and identify dispute trends: Stripe Radar.
The machine-learning tool is retrained daily, so the latest fraud patterns are available for identification.
You use Radar with no code, so no programming is necessary. Radar is accessed from your Stripe dashboard. Its primary functions revolve around analysing transactions in real-time to identify and block fraudulent activities.
Customisable rules can be added to reflect the policies of your transaction handling. You set these rules, and Stripe Radar uses them to set the tolerance of the system’s leniency. This means that you can achieve a balance between blocking fraud and mitigating false positives that can kill legitimate transactions.
Dispute Handling Tools
Stripe also provides evidence-submitting tools for the merchant to respond appropriately to a dispute inquiry. These tools integrate with Stripe Radar to obtain all relevant data.
Links to Monitoring Programs
Adhering to industry-standard rules and regulations is mandatory, as you might guess. Stripe interfaces with the following programs to identify and manage a merchant’s chargeback and dispute ratios:
- Visa's Fraud Monitoring Program (VFMP)
- Visa's Dispute Monitoring Program (VDMP)
- Mastercard's Global Fraud Management Program (GFMP)
- Mastercard's Excessive Chargeback Program (ECP)
Prevent Stripe Disputes with ChargebackStop
ChargebackStop is a dedicated chargeback prevention platform built to help merchants avoid disputes before they become a problem. Our goal is simple: stop chargebacks before they cost you time, money, or your ability to accept payments.
With automated chargeback prevention, real-time transaction monitoring, and pre-emptive refund tools, ChargebackStop is designed to eliminate up to 99% of chargebacks - no manual guesswork required.
Here’s how it works:
- 24/7 Monitoring: Our system tracks all your transactions around the clock to detect signs of fraud or dispute risks.
- Smart Alerts: As soon as a potential chargeback pops up, you’ll get a notification with actionable advice. With one click, ChargebackStop handles the task for you.
- Root Cause Prevention: We help you identify and address the underlying reasons behind disputes—whether it's fraud, customer confusion, or processing issues.
- Pre-Emptive Refunds: Sometimes a fast refund is cheaper than a chargeback. We automate that too.
Chargebacks are a reality in online payments, but they don’t have to derail your business. If left unmanaged, they can drain revenue and even lead to being blacklisted by card networks. With ChargebackStop, you stay in control.
Got questions about Stripe disputes or how our platform works? Our team’s here to help. Visit ChargebackStop.com for a free demo of our intelligent, automated solution.
FAQ: Stripe Disputes
Why do Stripe disputes happen?
Disputes can arise for various reasons, including unauthorised transactions, not recognising a transaction, dissatisfaction with a purchase, or not receiving goods or services as described.
How does Stripe notify me of a dispute?
Stripe notifies merchants of disputes through email and alerts in the Stripe Dashboard, providing details about the disputed transaction.
What is the timeframe for a merchant’s response to a dispute?
Merchants typically have a specified number of days to respond to a dispute with evidence to support their case. The timeframe is usually around 7-21 days, depending on the card network—Visa, Mastercard, etc.
What kind of evidence is effective in disputing a chargeback?
Compelling evidence can include proof of delivery, communication with the customer, transaction records, service agreements, or any documentation that proves the customer authorised and received their purchase.
Can I appeal a dispute decision?
Yes, merchants can appeal a dispute decision by submitting additional evidence or information that may not have been considered in the initial review.
