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For business owners, receiving payments is the most important part of operations. However, it’s inevitable that, at some point, a payment dispute may come up. Whether it’s a chargeback or a refund request, these situations can be stressful and time-consuming. It’s crucial for business owners to understand how to handle payment disputes effectively to protect their business and reputation. Being aware of best practices on how to handle payment disputes is a good start in minimizing the risk of disputes occurring in the first place.

An unfortunate reality of doing business today is chargebacks. There are two types of fraud – true and friendly fraud. With the former, a bad actor has obtained sensitive card data of which they are not the owner and uses that information to make a purchase (aka identity theft). In the case of friendly fraud, a less malicious form of chargeback, a request for chargeback happens largely due to customer confusion. The customer may have made a purchase and then forgot, may not recognize a charge made by another family member, or perhaps simply misunderstood a return policy.