With the growing crowd of online shoppers and the increased popularity of digital payment, online payment providers have gained quite a remarkable traction. PayPal is one of the top rankers on this list.
The United States Security and Exchange Commission’s report showed that 19.3 billion payments were made through PayPal in 2021.
While its global presence is one of the reasons for its popularity, users find PayPal credible because of its unmatched security and user protection plan.
But the flip side of their policies has also resulted in increased disputes that businesses must face.
But what exactly is a PayPal dispute? And what does it entail for the merchant? Are there any charges applicable in case of a dispute?
This article will answer all the above questions and break down the intricacies of everything you need to know about PayPal disputes.
In simple words, a PayPal dispute is the process that allows a buyer to raise a claim in case they haven’t received the order or the delivered item was hugely different from what they ordered, was damaged, or was of poor quality.
When a buyer opens a dispute with PayPal, the platform gives the merchant the chance to resolve the issue by opening a dialogue with the customer.
Generally, PayPal gives the seller a window of 20 days to resolve the dispute. But if the merchant does not respond quickly to the dispute, the customer will likely escalate it to a claim in about four days.
PayPal disputes are formal announcements to the seller that an issue has occurred. It directly encourages a quick and amicable resolution between the buyer and the merchant.
PayPal charges a dispute fee to a merchant for each dispute they receive. There is one standard dispute fee of $8.
But for the merchants prone to receiving disputes with a ratio greater than 1.5% and who have 100+ monthly transactions on their business account, PayPal levies $16.
If a buyer reports a transaction to be unauthorized, it will directly become a claim. In such cases, as there is no dispute, the dispute fee will not be applicable.
A buyer can raise a dispute in three possible instances:
For the latter two incidents, a customer can raise a dispute regarding the same in PayPal’s resolution center within 180 days of payment.
If it is the first instance, the buyer can also raise a dispute in PayPal’s resolution center, but it has to be made within 60 days of the payment.
When a customer files a dispute, the merchant immediately receives a notification explaining the reason for the buyer’s dispute. The merchant is expected to provide a prompt solution to the dispute.
If the buyer is unsatisfied with the merchant’s solution, they have 20 days to escalate the dispute to a claim.
As mentioned earlier, disputes are PayPal’s moderate approach to resolving an issue without it resulting in severe escalation.
When a customer raises a dispute, PayPal allows the particular merchant to open a dialogue with the buyer and resolve their issue. This way, the problem can be solved quickly without involving an investigation.
The window for reaching a mutual solution is 20 days. If the merchant does not respond quickly enough or fails to provide an agreeable solution within 20 days, the buyer can escalate it to a claim.
The usual solution in such cases is a refund. But any arrangement between the consumer and the merchant that convinces the buyer to close the dispute also works.
If the dispute escalates to a claim, PayPal intervenes, examines the issue, and decides on the further process.
In turn, if the seller responds to an escalated claim, buyers are expected to revert to the seller within three days.
If a buyer wants a refund, they are usually asked to return the item within ten days from the refund claim. Then, PayPal verifies the return within five days and enforces the outcome of the claim.
If a merchant fails to respond or resolve a PayPal dispute within 20 days, the customer is free to escalate the dispute, which results in a PayPal claim. It is the process that enables PayPal to step in and examine the situation.
Claims can also be raised if a buyer reports that the transaction was unauthorized. In most cases, PayPal claims are investigated in less than 14 days.
However, if the circumstances are gravely severe, PayPal may take 30 days or more to decide the outcome of a claim.
The primary difference between disputes and claims is the interference level of PayPal on that issue. In case of disputes, PayPal only opens up a dialogue between the merchant and the buyer so that they can resolve the issue between them. However, in case of a claim, PayPal acts as the third-party mediator.
If the merchant has enough evidence to support that the claim is false, they are eligible for PayPal’s seller protection. If the buyer claims a purchase was made without their authorization, the seller needs to review the claim and provide a response within ten days.
If you conduct regular business through PayPal, disputes are likely to occur. But how you handle it is the key to a quick resolution. Here are some tips to help you smartly manage an instance of a PayPal dispute:
Frequent and increased number of PayPal disputes, chargebacks, and claims can severely affect your business's credibility. PayPal might flag you as risky and hold more significant funds in the account reserves.
All this can immensely hamper the growth of your business.
This is why fighting and preventing disputes is of utmost necessity if you want a scalable and profitable business. Automating the synchronization will provide you with the real-time progress of an order. This way, you have the chance to communicate and prevent delays.
The two keys to preventing PayPal disputes are smooth communication with your customers and efficient order tracking. You can actively avoid future disputes, claims, or chargebacks with the right strategy.
Firstly, as a merchant, assure your customer that you will always be available to address any issue they might face regarding their purchase directly. If your contact information is accessible, your customers will not take the trouble to report it to PayPal. Instead, they will now reach out to you. This also gives your customers a sense of mutual respect and ensures future orders.
Secondly, avoid manually filling in your order details in PayPal's system. Opt for automated order tracking synchronization instead. This way, you can prevent mishaps and optimize real-time order tracking for yourself and your customers.
TrackiPal is equipped to provide you with efficient and automated order tracking synchronization. It will sync with PayPal's system whenever you ship an order, giving customers real-time notifications of the order status. This way, you can prevent delays in delivery and your customers. With effective order tracking, you can also relieve your customers from any post-purchase anxiety.
With suitable measures in place, the chances of customers raising disputes will significantly decrease, and your merchant record will improve. It will also help you keep proof of delivery handy to fight fraudulent claims.
Prevention is always better than cure. So what are you waiting for?
Install TrackiPal today!
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