Disputes Best Practices

Disputes are an inconvenience to both you and your customers so avoiding them is the best strategy. Once a dispute is issued by the bank, the whole process has to be followed; refunds are no longer possible. Also remember that both Omise and the credit card networks closely monitor dispute rates, and high dispute rates can lead to penalties and termination of contract. Merchants with a dispute rate above 0.3% may be asked to find ways to reduce it.

Disputes are split into two categories: Commercial disputes, where the customer is not happy with the provided service or goods received, and fraud, where the cardholder did not approve the charge.

3DS is not supported for accounts registered in Japan.

Commercial disputes

Omise provides you with a portal to upload evidence to decline any received disputes; you may also choose to accept the dispute. For declined disputes, the issuer bank can decide if they insist. They will likely do so if the evidence provided is not clear or does not support the case well enough. In such a case of receiving a second dispute, you can again either accept it or initiate arbitration with the card brand, which will cost between 500 and 750 USD if the dispute is lost (however, Omise will deduct the fee upfront).

It is up to you to consider if the dispute is justified. If you have contact details for your customer, it is ideal that you get in touch with them as soon as possible. Disputes often arise from misunderstandings or unrecognized charges. Confirmation from the customer to confirm the misunderstanding can be used as evidence and help you to win. The customer itself should be asked to contact their bank. This is the easiest and quickest way to resolve a dispute.

Please note that cardholder authentication (3DS) does not provide protection from commercial disputes.

sequenceDiagram Note over Customer, Bank: Within 120 days after goods or
service should have been received Customer->>+Bank: Dispute transaction Bank->>+Omise: Forward dispute Omise->>+Omise: Omise deducts dispute amount
from merchant balance Omise->>+Merchant: Forward dispute Note over Omise,Merchant: Merchant has 7 days to respond alt: Merchant decided to decline dispute Merchant->>Omise: Decline, provide evidence Omise->>+Bank:Forward dispute decline decision alt Bank does not think evidence is sufficient Note over Customer,Bank: Bank has 45 to 90 days to respond Bank->>+Omise: Open second dispute Omise->>+Merchant: Forward second dispute alt: Merchant disagrees Note over Omise,Merchant: Merchant has 7 days to respond Merchant->>+Omise: Request arbitration else rect rgb(255, 0, 0,.2) Omise-X Merchant: Mark dispute as Lost end end else rect rgb(0, 255, 0,.2) Omise-X Merchant: Mark dispute as Won Omise->>+Omise: Credits disputed amount
to merchant balance end end else rect rgb(255, 0, 0,.2) Omise-X Merchant: Mark dispute as Lost end end

Tips to minimize commercial disputes

  • Provide clear details of your product or service to ensure customers know what to expect from your product.
  • Provide communication channels to your customers to handle inquiries in a timely manner. Share contact information prominently on your website.
  • Be generous with your customers. If you know that your customer is unhappy with their purchase and intends to reject the payment, try your best to resolve the issue with them first using a return, refund, or other means.
  • Provide clear return and refund policies visible during the checkout process, otherwise banks and card brands will assume a full refund on request is provided.
  • Keep documentation of all interactions with customers. Have a signed receipt (physical goods) or a download or access log (digital goods) associated to the customer.

What kind of evidence can be used?

In order to resolve disputes, providing information which proves the charge was legitimate and that the goods/services have been successfully delivered to the client usually results in the merchant winning the case. Failing to provide such evidence or, if the charge is proved to be fraudulent, usually results in the merchant losing.

Physical goods

  • Cardholder details: name and shipping address
  • Details of purchase: list of products purchased
  • How and where the purchase was made: Merchant name and store URL
  • Proof that the product was received or used by the cardholder

Digital goods

  • Cardholder details: name and shipping address
  • Details of purchase: list of products purchased
  • How and where the purchase was made: Merchant name and store URL
  • Any log showing that the website or application was accessed by the customer on or after the charge date
  • Any log showing that the product was downloaded or received by the customer including the date and time they were downloaded

Services

  • Cardholder details: name and shipping address
  • Details of purchase: list of services purchased
  • How and where the purchase was made: Merchant name and store URL
  • Proof that the service has been provided to the cardholder

If necessary, we recommend you to submit all evidence with an English translation. For the arbitration stage, where the dispute committee of the card brand (Visa, Mastercard, JCB) will be involved, this is actually required.

Fraud disputes

Without 3DS authentication

For fraud disputes that were not authenticated with 3DS, the merchant is liable for any dispute. It is very unlikely that any evidence provided will be accepted either by issuer or in arbitration. Because of that, arbitration can be initiated immediately after the dispute was declined. You are able to decline the dispute with evidence and thus accept arbitration. The arbitration fee will be deducted immediately.

sequenceDiagram Note over Customer, Bank: Within 120 days after capture Customer->>+Bank: Dispute transaction Bank->>+Omise: Forward fraud dispute Omise->>+Omise: Omise deducts dispute amount
from merchant balance Omise->>+Merchant: Forward dispute Note over Omise,Merchant: Merchant has 7 days to respond alt: Merchant decided to decline fraud dispute Merchant->>Omise: Decline, provide evidence Note over Omise,Merchant: Merchant accepts that issuer bank
can and likely will initiate
arbitration Omise->>+Omise: Omise deducts arbitration fee Omise->>+Bank:Forward dispute decline decision alt Bank does not think evidence is sufficient Note over Customer,Bank: Bank has 45 to 90 days to respond Bank->>+Omise: Inform arbitration process Note over Omise: Follow arbitration
process end else rect rgb(255, 0, 0,.2) Omise-X Merchant: Mark dispute as Lost end end

With 3DS authentication

Normally the issuer should not create fraud disputes for charges that had successful cardholder authentication (3DS). Visa does not allow it in their system and Mastercard does not allow it in their policy, however some banks still do and we are required to follow the process. Despite using 3DS, charges can still be fraudulent, mostly due to banks not implementing 3DS in a secure fashion or where the bank's 3DS authentication server is offline. Therefore it is still important to monitor such charges and block or prevent the ones which are likely fraudulent.

Omise allows you to provide additional evidence for such disputes, however Omise will take action and submit a dispute decline decision on your behalf using the successful 3DS authentication as evidence. In very rare cases Issuer banks issue a second dispute, in this case it is up to you to decide if you want to go to arbitration.

sequenceDiagram Note over Customer, Bank: Within 120 days after capture Customer->>+Bank: Dispute transaction Bank->>+Omise: Forward dispute Omise->>+Omise: Omise deducts dispute amount
from merchant balance Omise->>+Merchant: Forward dispute Note over Omise,Merchant: Merchant has 7 days to
optionally respond Merchant-->>Omise: Provide additional evidence Omise->>+Bank: Send 3DS evidence alt Bank does not accept 3DS result/authorization Note over Customer,Bank: Bank has 45 to 90 days to respond Bank->>+Omise: Open second dispute Omise->>+Merchant: Forward second dispute alt: Merchant disagrees Note over Omise,Merchant: Merchant has 7 days to respond Merchant->>+Omise: Request arbitration else rect rgb(255, 0, 0,.2) Omise-X Merchant: Mark dispute as Lost end end else rect rgb(0, 255, 0,.2) Omise-X Merchant: Mark dispute as Won Omise->>+Omise: Credits disputed amount
to merchant balance end end

Tips to minimize fraud disputes

  • Refund early if you see a suspicious charge, contact the customer, and refund if you believe it was fraudulent.
  • Send additional information to improve our ability to do real time fraud protection as well as charge pattern analysis.
    • When creating a token, provide the billing address
    • When creating a charge, provide the customer’s real IP Address using the ip parameter and the product/service name, number of items, or estimated delivery time using the description parameter
    • When creating a customer, provide the customer's name, email, and phone number using the name, email, and description parameters
  • Use Dynamic 3DS (if available) to ensure that low-value charges will not require the customer to provide additional authentication while higher-value ones (e.g. total value larger than 10,000 THB) do. Dynamic 3DS also allows us to require 3DS for suspicious or risky charges.
  • Set charge limits that make sense for your business. You can ask us to configure account-specific charge limits. If you don’t expect anyone to purchase goods for more than 20,000 THB, we can set this as your account limit. We can also limit the number of charges a cardholder can make per hour or per day.