A customer disputed your payment: what to do next

A dispute needs a timed response, not an angry reply or an automatic second refund. Open your payment processor directly, confirm the real case, and record its exact response deadline and time zone. Some complaints are valid. The purpose is to establish what happened and follow the correct process.

This guide covers an operational response. It does not promise a win or advise you how to pursue legal debt collection. A payment link, signature, or “no refunds” sentence does not eliminate dispute rights.

Identify the type of notice

Notice	What to check
Customer asks you for a refund	Investigate the request under your terms and applicable obligations; check whether a formal dispute is already open.
Inquiry or information request	Follow the provider’s inquiry process. It may precede a formal card dispute.
Card dispute or chargeback	Use the processor’s case workflow, reason, deadline, and evidence requirements.
Bank-payment return	Use the specific bank-payment process; card-dispute instructions may not apply.

Stripe distinguishes inquiries from chargebacks and requires a new response if an inquiry escalates. Its response instructions describe a limited window and one final evidence submission. Use your actual dashboard deadline rather than a day count from another merchant’s story.

1. Make a case record today

Download the payment-dispute incident log and evidence checklist. Replace the fictional example. Keep the files private; record references to protected evidence rather than putting full customer files in a widely shared tracker.

Record the processor, case ID, transaction/order reference, reason, disputed amount and currency, deadline with time zone, person responsible, and next action. Keep CAD and USD separate. Save the notice from inside the verified dashboard and add a calendar reminder before the deadline with time to check your response.

Do not sign in through an unexpected email link or send card details to a caller. If the case is missing, ask the provider through a known support route. See account security.

2. Check the facts and the customer’s complaint

Match the payment to the order, accepted quote, service date, and communications. Was the job completed as agreed? Was something cancelled? Was the customer charged twice? Did the statement show a confusing business name? Investigate before deciding that the customer is dishonest.

When appropriate, contact them calmly:

Hello [name], we received a payment dispute concerning [order/reference and date]. I am reviewing what happened. Could you confirm the issue with [specific item or service]? You can reach us at [known business contact]. Please do not send card details. We will handle the payment through [processor]’s dispute process.

Keep the exchange. Do not demand a password, identity document, or unnecessary sensitive detail. A customer’s promise to withdraw does not replace the processor’s required response; check the live case status and instructions.

If the complaint is valid, use the provider’s applicable acceptance or resolution route. For a formal dispute, do not issue a separate refund without checking the processor’s instructions, because the customer may already have received a credit. Inquiry and bank-return workflows can differ.

3. Answer the actual reason with relevant evidence

Stripe’s category-specific guidance helps distinguish claims such as non-delivery, cancellation, duplicate processing, or an unrecognized payment. Choose evidence that answers the claim:

Claim to investigate	Relevant records to review
Goods not received	Order details, delivery address, fulfilment and delivery records
Service not provided or different from agreement	Accepted scope, promised dates, completion records, relevant customer communication
Cancelled or refunded	Cancellation request, terms disclosed when ordering, refund confirmation and dates
Duplicate charge	Separate order references, payment records, and any reversal
Unrecognized payment	Recognizable receipt and descriptor, order and authorization records requested by the processor

This is an organizing aid, not a list that guarantees success. A policy copied onto the website after the sale is not evidence of what the customer agreed to then. Do not fabricate consent, backdate a contract, or submit unrelated message histories.

Use a short factual chronology with readable supporting files. Remove irrelevant personal information while preserving the evidence needed for the case. For regulated or sensitive customer records, ask the appropriate compliance adviser about a safe submission.

4. Submit once the response is complete

For Stripe, assemble the material before the final submission: it cannot be amended afterwards. Follow the dashboard’s file limits and accepted formats; external links are not a substitute for evidence the bank can review. Save the confirmation and the submitted version. Stripe’s instructions also distinguish a dispute-received fee from a dispute-countered fee; the countered fee is returned on a win, while the received fee is generally not, unless the contract says otherwise. Check your account’s current fee terms before deciding to counter. No numeric fee is assumed here.

Square in Canada

Use Square’s Canadian dispute workflow and the Canadian account dashboard. Square says it does not charge a dispute-management fee. Disputed funds may be held from the balance or debited from the linked bank account. The card issuer decides the outcome; Square submits the response through its process. Ensure the person handling the case has the required response permission, not just permission to view notifications.

Square in the United States

Use Square’s US dispute workflow. Disputed funds can affect the Square balance or linked bank account. Follow the actual response deadline and document the submitted evidence. The card issuer decides card-dispute outcomes. Square distinguishes other payment processes, including ACH bank-payment returns; do not assume the card-evidence route applies to them.

For another provider, start with its official country-specific process. Neither the dispute deadline nor the fee treatment should be copied from Stripe or Square without verification.

5. Plan cash and prevent repeats

Treat the disputed money as unavailable while you check the balance and payout schedule. Record the eventual decision, fees, refunds, and recovered amount in your books. Avoid counting the original payment and a later recovery twice.

Improve the quote-to-payment chain: a clear scope, acceptance, recognizable receipt, accurate statement descriptor, visible contact route, and appropriate fulfilment records. Stripe’s prevention guidance supports clear policies and communication. A process change should address the actual complaint, rather than add friction to every sale.

Retain original records according to the business’s applicable tax, privacy, contractual, and processor requirements. Canadian and US requirements differ; the invoice guide’s retention section provides the separate authority links. Back up needed records using the backup workflow.

Your outcome: a verified case has an owner, the correct response is submitted before its deadline, the money is reconciled, and a specific preventable cause has been addressed where possible.