A dispute occurs when a customer contacts their bank to contest a payment. When a dispute is filed by a customer, the payment provider (i.e. Stripe) takes the following steps:
- Notifies the merchant of the dispute.
- Debits the disputed amount, plus fees, until the dispute is resolved.
- Gives an explanation of the dispute and access to the customer’s claim from their bank
- Provides a process for submitting convincing evidence to counter the dispute.
Note: A dispute is sometimes referred to as a chargeback. In general, a dispute represents the first step of contesting a charge, while chargebacks are typically penalties that may be imposed when the charge reversal is finalized.
Some card networks have a preliminary phase before issuing a formal dispute. During this phase, Stripe updates the payment to a status of “inquiry” and the merchant typically has an opportunity to process the refund before incurring any further dispute costs.
ZonePayments will not pull “inquiry” disputes into NetSuite as funds have not been officially withdrawn from the account. ZonePayments will wait until the status transitions to either a “refund” or a full “dispute”.
Example of an "Inquiry" status in Stripe:
Reconciling Disputes
Disputes initiated through your payment provider will result in the automatic creation of the appropriate NetSuite Transactions (Credit Memos and Customer Refunds) to record the reversal. Similarly to how refunds are handled, these records are generated the next time the ‘Reconcile Payments’ automation runs.
When a dispute is processed through the payment provider for payments applied to Invoices, an unapplied Credit Memo is created from each of the Invoices, and a Customer Refund is then created and applied to the Credit Memo(s). This process ensures that the original payment is reversed by the Customer Refund. Partial disputes are handled in the same manner as Partial Refunds.
Payouts and Disputes
The impact of a dispute is generally reflected in two separate payouts. The first payout deposits the original charge amount and the second includes the reversal amount and any additional dispute fees. Dispute Fees, which Stripe categorizes as ‘Adjustments,’ can be mapped to a specific GL account in NetSuite via Account Mapping Profiles.