How to Deal with Stripe Disputes in Accounting

The digital payments processing industry is accelerating.

In a high-tech world, where most transactions are fulfilled online and with mobile devices, platforms are popping up to facilitate cheaper and faster payment processing and commerce solutions.

Enter: Stripe.

In 2010, Stripe was launched—a financial and software-as-a-service (saas) firm that offers a suite of features, including payment processing, application programming interfaces, and mobile applications. Over the last decade, it has grown into a company with over 4,000 employees and multiple subsidiaries.

But, while Stripe has been an ultra-successful tech firm with headquarters in San Francisco, Dubai, and Ireland, hiccups—also known as disputes—can occur. So what can you do about them?

What Are Stripe Disputes in Accounting?

As your business grows, particularly in the online arena, you will attract more customers and generate more sales, leading to inevitable discrepancies and payment challenges for you and your customers—and this applies to Stripe as well. These disputes occur when you charge clients an amount through Stripe, but these individuals do not agree to the amount charged and seek to reclaim their funds.

This includes:

• Dispute fees
• Chargebacks
• Inquiries
• Retrievals

Of course, an investigation will need to take place to determine what happened, but the verdicts of such investigations tend to favor the customer over the merchant.

How Stripe Disputes Work

Stripe maintains a rigorous process when settling card payment disputes. While it can be frustrating, it is a detailed plan to ensure that both sides are treated fairly.

Ultimately, when a customer files a dispute, the company will carry out the following actions:

• Notify the account owner of the submission
• Debit the amount until the dispute is resolved
• Offer an explanation of what happened
• Share a step-by-step guideline to submit a counterclaim

The company recommends that businesses maintain terrific customer service and transaction transparency and respond to all inquiries immediately.

During the dispute, here is how you can respond:

• Click the "Needs response!" flag on your Payments tab
• Review the dispute and click the link for more information
• View the claim and email your customer
• Accept or challenge the dispute immediately
• Hit "Submit evidence" to open a form and upload relevant documentation and transactions

In the end, you will be notified if the dispute was won or lost—just remember that you cannot overturn a lost dispute, despite your personal feelings.

How Long Do Stripe Disputes Last?

Typically, disputes will be filed within 120 days of the original claim. However, depending on the industry (like travel and event ticketing), the time span could be longer.

Your business will have between 7 and 21 days to respond to the dispute. Should you choose to respond to this claim and submit evidence, the disputing party will have between 60 and 75 days to evaluate the claim and choose the outcome.

Overall, from the start of the dispute to the final decision from the bank, the entire Stripe dispute can take as long as three months to complete.

Managing and Preventing Stripe Disputes in Accounting

Unfortunately, no matter how critical digital commerce is to your business, it can turn into a time-consuming and bureaucratic headache—but this doesn't have to be the case. Companies can mitigate extensive disputes by taking some proactive measures to ensure that the issue is not played out for a long period.

Here are some things you can do to minimize the length of time a dispute can take.

Gather Information

The first thing you need to do is collect as much payment information as possible when the customer is checking out.

Here is what you can request upon checkout:

• Customer name
• Email address
• CVC Number
• Billing and shipping address and postal code
• Telephone number and email address

Communicate With Your Customers

A receptive and proactive customer service team can essentially avoid most disputes. By staying in touch with customers throughout the purchasing process, you can resolve issues, process refunds, ship replacement orders as fast as possible, and give customers updates.

Implement Digital Security

Fraudulent payments can happen during and after the purchasing process. You will play a crucial part in preventing this from occurring, but you must also keep the customer informed of what is transpiring and whether you suspect fraud against you or your customers.

Indeed, by maintaining an open, communicative, and transparent buying experience, you can ensure that Stripe disputes will not inundate your business.