Disputes & Chargebacks

A dispute (also called a chargeback) occurs when a cardholder questions the validity of a transaction and contacts their card-issuing bank to demand a refund. The bank files the dispute through the Visa or Mastercard network. It is not a refund request. A dispute debits the transaction amount from your upcoming payout balance, imposes a PHP 800 dispute fee, and triggers a formal resolution process with fixed deadlines and financial penalties.

This guide covers how disputes work, what you are required to do when one is filed, how to respond, and how to prevent them.

Prerequisites

• An active PayMongo merchant account processing card payments
• Access to your PayMongo dashboard (dispute notifications and evidence submission occur here)
• Familiarity with issuing refunds through PayMongo (see Refunding a Payment)

How disputes differ from refunds

IMPORTANT: If a customer asks you for a refund and you delay, the customer can escalate the matter to their bank as a dispute. At that point, you lose the ability to resolve it directly. The funds are held for the duration of the process, and if you lose, you forfeit both the transaction amount and the PHP 800 dispute fee. If you win, the dispute amount and the fee are returned to you.

Once a dispute is filed, you cannot refund that transaction through PayMongo. Attempting to do so may result in a double loss: the refund you issued plus the disputed amount reversed by the bank.

The dispute lifecycle

Visa and Mastercard define the dispute process. PayMongo acts as the acquirer-side intermediary. The lifecycle follows this sequence:

1. Cardholder files a dispute

The cardholder contacts their issuing bank and claims the transaction was unauthorized, not received, not as described, or otherwise invalid. The bank evaluates the claim and, if it meets network criteria, files a formal dispute.

• Visa: Cardholders have up to 120 days from the transaction date (up to 540 days for certain fraud or non-receipt cases).
• Mastercard: Cardholders generally have up to 120 days (up to 540 days for specific exception categories).

2. PayMongo notifies you

You receive a dispute notification by email and in your PayMongo dashboard. The notification contains the reason code, disputed amount, and the deadline for your response.

You must act on this notification immediately. Ignoring or delaying your response is equivalent to accepting the loss.

3. You submit evidence or accept the dispute

You have 5 working days from the date of notification to submit sufficient compelling evidence through the PayMongo dashboard. If you do not respond within this window, the dispute is automatically resolved in the cardholder's favor.

4. The issuing bank reviews evidence

The bank evaluates your submission against the cardholder's claim. This review follows Visa or Mastercard network rules and typically takes 60–90 days.

5. Resolution

• Won: The transaction amount and the PHP 800 dispute fee are returned to your PayMongo wallet.
• Lost: You forfeit the transaction amount and the dispute fee permanently.

Your obligations

Visa and Mastercard hold you accountable for the following. These are not recommendations — they are requirements of card acceptance.

Process refunds before disputes are filed

When a customer requests a refund through any channel (email, chat, phone, or social media), process that refund through PayMongo promptly. A refund processed before a dispute is filed prevents the dispute entirely. A refund delayed until after the dispute is filed cannot be applied and may cause a double loss.

Respond to every dispute notification

Every dispute notification requires a response within the stated deadline. There is no scenario in which the bank or PayMongo automatically resolves a dispute in your favor without your participation. If you do not respond, you lose by default.

Maintain transaction records

Retain the following for a minimum of 540 days from the transaction date:

• Customer and order details (billing and shipping details, order descriptions, expense breakdowns, and order confirmations).
• Proof of delivery or service completion (tracking numbers, photo proof of delivery, signed receipts, and access logs).
• Customer communication records (emails, chat transcripts, and support tickets).
• Proof of received payment and transaction logs showing authorization and fulfillment.
• Proof of properly disclosed Terms and Conditions, cancellation and refund policy, and evidence that the customer accepted those terms.
• IP address, device identifiers, or login data for card-not-present transactions.

Monitor your dispute ratio

Both Visa (through the Visa Acquirer Monitoring Program, VAMP) and Mastercard (through the Excessive Chargeback Merchant Program) penalize merchants whose dispute-to-transaction ratio exceeds defined thresholds. Excessive disputes can result in additional fees, mandatory remediation plans, or termination of card acceptance privileges.

When to contest vs. accept

Contest the dispute only if you have compelling evidence that directly addresses the dispute reason. Submitting generic or irrelevant documentation does not improve your outcome.

Contest when:

• You have proof of delivery or service completion that matches the transaction.
• The cardholder's claim is contradicted by your records (e.g., they claim non-receipt but tracking shows delivery and signature).
• You can demonstrate prior undisputed transactions from the same cardholder using matching identifiers (relevant under Visa Compelling Evidence 3.0).

Accept when:

• You cannot produce sufficiently compelling evidence that directly addresses the dispute reason.
• The refund should have been issued and was not.
• The cost of assembling evidence exceeds the transaction value.

Responding to a dispute

1. Open the dispute in your dashboard

Navigate to Transactions > Disputes in the PayMongo dashboard. Locate the dispute by transaction ID or date. Review the dispute reason, disputed amount, and response deadline.

2. Identify the reason code category

The reason code determines what evidence is relevant. Match the code to one of the categories below and gather the corresponding evidence. This list is required but not exhaustive.

Reason code 13.6 (Visa) / 4860 (Mastercard) — Credit Not Processed — is the code most commonly triggered when a merchant delays a refund and the customer escalates to their bank.

3. Assemble and submit evidence

Upload your evidence through the PayMongo dashboard before the 5-working-day deadline. Provide sufficient compelling evidence that addresses the cardholder's dispute claims. Submit all available documentation, as a comprehensive response significantly increases the likelihood of a successful resolution. Label each file clearly (e.g., tracking-proof-of-delivery.pdf, customer-email-refund-request.png).

4. Wait for resolution

After submission, the issuing bank reviews the evidence. This typically takes 60–90 days. You will be notified of the outcome in your dashboard and by email.

Common misconceptions

Preventing disputes

1. Process refunds immediately. Every day a refund is delayed is a day the customer may file a dispute instead.
2. Respond to all dispute notifications within 24 hours of receipt, even if your full evidence package takes longer to assemble. Acknowledge receipt and begin preparation.
3. Use clear billing descriptors. Make sure your business name on the cardholder's statement is recognizable. Unrecognized charges are a leading cause of disputes.
4. Communicate proactively. Send order confirmations, shipping notifications, and delivery confirmations. Provide accessible support channels.
5. Document everything. Assume every transaction may be disputed. Retain proof of delivery, customer communications, and signed terms for at least 540 days.
6. Set accurate expectations. Disputes frequently originate from misaligned expectations on delivery timelines, product specifications, or subscription terms.
7. Require customers to accept your Terms and Conditions before completing a purchase.

Verification

After submitting evidence for a dispute:

• Confirm the dispute status in Transactions > Disputes shows under_review (not expired or lost).
• Verify you received a confirmation email from PayMongo acknowledging your evidence submission.
• Set a reminder for 90 days to check the final resolution status.

Error handling