What happens when a customer disputes a card payment
The stages of a card dispute, how long customers have to raise one, how long you have to answer, and what to do with the paid invoice meanwhile.
By Achekam · · 5 min read · For Running a business businesses in South Africa, Nigeria, Kenya
The e-mail from your payment provider usually arrives without warning. A customer who paid by card weeks ago has gone to their bank and said the payment should not stand. The money has already left your gateway balance, a fee has been added, and there is a deadline in the message that is closer than you would like.
Most businesses meet a dispute rarely enough that they have no routine for it, which is exactly why they lose ones they could have won. This article lays out the sequence from the customer's call to their bank through to the final decision, the time limits that apply at each stage, and how to keep your books straight while it runs.
What a dispute actually is
Visa defines a dispute as the reversal of the value, or part of the value, of a transaction by the card issuer to the acquirer and, usually, by the merchant bank to the merchant. Put plainly: the customer's bank takes the money back from your bank or provider, and your provider takes it back from you.
The customer does not ask you first. They ask their bank, which can start the process without your agreement. "Chargeback" is the common name for the formal stage of this process.
Common reasons include a charge the cardholder does not recognise, goods that never arrived, a service that was cancelled, or a belief that they were charged twice. Some are genuine fraud; many are misunderstandings that a clear receipt could have prevented.
How long customers have to raise one
Stripe explains that card networks typically allow cardholders to start a dispute within 120 days of the original payment. There is an important twist for businesses that sell ahead of time: when a customer pays for a future event or service, Stripe says the dispute window generally starts on the event date, not the payment date.
A conference organiser who sells tickets months ahead, a travel agency taking a deposit for a December trip, or a school collecting next term's fees in advance can therefore face disputes long after the money arrived. Our article on card disputes after the event date looks at that case in detail.
The timeline once a dispute opens
Stripe sets out the typical stages and their windows. Response windows vary by card network, so treat these as the usual range, not a promise:
| Stage | Who acts | Typical time, per Stripe |
|---|---|---|
| Dispute opened | Customer's bank | Within 120 days of payment, or of the event date |
| Funds and fee taken | Your provider | When the dispute is opened |
| Your response with evidence | You | Usually 7-21 days |
| Issuer reviews the evidence | Customer's bank | Usually 60-75 days |
| Whole process | Everyone | Can take 2-3 months |
Stripe adds that while a dispute is open, a business cannot issue a refund outside the dispute process, and each dispute raises the business's dispute rate with that card network. If you have already decided to refund, do it before a dispute is opened, not after.
Why silence loses
The response window is the one part of the timeline you control, and it is short. Stripe warns that failing to respond to a dispute inquiry can signal to the issuer that you implicitly accept the claim, and can escalate it to a formal chargeback that is probably unwinnable.
A practical evidence checklist to have ready for any card sale:
- the invoice or receipt, showing what was sold and when;
- proof of delivery, collection or service performed;
- the customer's acceptance of your terms, including cancellation and refund terms;
- correspondence with the customer, especially anything acknowledging receipt;
- for online payments, the pay link and the date it was used.
A note for Nigerian card payments
Stripe states that, due to local regulations, disputes submitted for Nigerian payment methods cannot be challenged by the business. That statement is about payments processed through Stripe; if you take naira payments through another provider, ask that provider how disputes on those payments are handled.
The money held while it runs
Stripe states that when a dispute is opened, the disputed amount plus a dispute fee is debited from the business's balance, and the disputed funds are held for the entire duration of the dispute. You do not get to keep the money while you argue the case; you argue to get it back.
For a small business, that matters for cash planning. Several disputes in one month can take a noticeable bite out of what you expected to be paid, for up to the whole lifecycle Stripe describes.
The paid invoice in your books while the dispute is open
In Achekam, a verified gateway payment is recorded as a receipt against the invoice, debiting that gateway's clearing account and crediting trade receivables, and the invoice shows as paid or part-paid. That was correct on the day the customer paid.
A dispute is fought in the payment provider's own dashboard, not in your accounting system. The same is true of refunds of online invoice payments: Achekam does not send them through the gateway; they are made in the gateway's own dashboard and recorded by a person.
So when a dispute opens, someone needs to record its effect. A manual journal moves the debited amount out of the gateway's clearing account, and the dispute fee goes to an expense account. Because Achekam refuses an unbalanced journal or one dated in a closed month, and a posted journal is corrected only by a reversal, the entries stay traceable when the outcome arrives. The detailed entries, including what to do when you win or lose, are in recording a chargeback and its fee in the books.
A routine for the next one
Pick one person to watch for dispute notices from each gateway, agree that every notice is answered well inside the window, and keep the evidence for each sale where that person can find it in minutes. Stripe's guide to how disputes work, stage by stage covers inquiries, chargebacks, evidence deadlines and how funds and fees move; read it alongside your own provider's terms, because the windows differ between card networks.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
