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Stripe is a popular third-party payment platform that also allows customers to manage payment disputes. But how does Stripe’s dispute resolution mechanism work? This article will explain why it is a handy tool, and provide more general guidance about how to take proactive steps so that disputes do not occur in the first place.

Stripe’s Dispute Resolution Mechanism

You might use Stripe if you are selling goods or services online. Stripe’s way of processing payments means that some arduous manual tasks become automatic, like:

  • sending payments;
  • receiving payments; and
  • keeping proper financial records.

Situations can arise where a customer may dispute a payment you have debited from their account. The dispute could arise for a number of reasons, such as:

  • they have simply forgotten about the payment;
  • the customer does not recognise the business name on their statement;
  • they never received the product;
  • the product was not acceptable; or
  • they cancelled a subscription, but you still charged them the subscription fee.

When a customer disputes a payment, your Stripe dashboard will show the payment dispute. You will have between 7 and 21 days to respond to the dispute. Stripe does not have the final say in who is right or wrong – this decision is left up to the card issuer, i.e. the bank with which the customer has their credit card account. The dispute can be resolved in one of the following ways:

  • the customer withdraws the dispute;
  • you accept the dispute and refund the amount; or
  • the card issuer makes a decision.

The main advantage to Stripe’s dispute resolution system is that it helps you communicate with the card issuer throughout a dispute. You will need to submit documentation, such as your terms and conditions and evidence of shipping, depending on the kind of dispute. For example, if the customer claims they never received their product, you should upload evidence to Stripe that the item was shipped and delivered. This evidence could be tracking information from Australia Post or a courier service.

Strategies to Prevent Disputes

Stripe provides a useful dashboard for you to help manage a dispute, but it is still limited. While it is a helpful tool once disputes arise, it does not help you to prevent disputes arising in the first place. Preventing disputes should be a priority; proactive measures will save you time and money, and encourage customer satisfaction and goodwill.

You need to protect your business by having a number of strategies in place. These strategies will serve to both minimise the occurrence of disputes and help to resolve disputes easily when they occur.

Terms and Conditions

Your terms and conditions need to outline how you conduct business. These terms include:

  • how you deal with shipping;
  • when responsibility for an item is transferred to the customer after shipping; and
  • when a customer can ask for a refund.

Having well-drafted terms and conditions in place is crucial because the customer agrees to them when they make a purchase. This means that if the customer then disputes the transaction, and your terms and conditions address the nature of their dispute, you can rely on them.

If the customer pursues the dispute through Stripe and the dispute goes to the card issuer for decision-making, your terms and conditions could be the deciding factor.

Tracked Shipping

Tracked shipping is expensive, but worth it to avoid disputes over whether items were delivered. If a customer argues that an item was never delivered, you can provide evidence of tracking to prove that delivery did take place.

Similarly, if a customer’s item has gone missing in transit, tracked shipping is the most effective way for you to provide an answer and a solution as quickly and hassle-free as possible.


Having appropriate business insurance is invaluable. Effective insurance protects you in situations where you need to reimburse a customer and find yourself out of pocket. Stripe does not arrange for insurance. For this reason, you should speak to a good insurance broker to ensure your business is protected, and disputes do not cause you significant financial stress.

Key Takeaways

Stripe helps users to manage their payment disputes. It does so through Stripe’s dispute resolution mechanism, which provides a dashboard to keep track of disputes. Stripe’s dispute resolution system also helps users to correspond with card issuers about disputes. While these tools are useful, they are not a substitute for well-drafted terms and conditions. You should also implement practical measures such as tracked shipping and business insurance, which help to stop disputes arising in the first place. The best case scenario for your business is an empty Stripe dashboard, because disputes only keep you away from your business and cost you time and money.

If you need more advice on Stripe’s dispute resolution process, or you would like your business terms and conditions drafted or reviewed, contact LegalVision’s e-commerce lawyers on 1300 544 755 or fill out the form on this page.


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