How to Handle Disputes in Payment Integration with Razor pay

Disputes Overview

Disputes arise when a customer or their bank questions a payment's legitimacy. Common reasons include:

• Unauthorized transactions (customer claims they didn’t authorize the payment).
• Non-receipt of goods or services.
• Billing errors or overcharging.

When a dispute is initiated, the payment is put under review, and the customer’s bank may reach out to the merchant for resolution.

Dispute Phases

1. Fraud: The bank suspects fraud and raises a dispute.
2. Retrieval: The customer requests more details about the transaction (a "soft" chargeback).
3. Chargeback: The customer’s bank starts an official inquiry for a refund.
4. Pre-Arbitration: A chargeback that you won is challenged again by the customer.
5. Arbitration: The chargeback is challenged for the third time, involving card networks, leading to potential high costs.

Dispute Statuses

• Open: The dispute has been created and is under review.
• Under Review: The bank is assessing the dispute details.
• Won: Your evidence was accepted, and the money stays with you.
• Lost: Your evidence was rejected, and the money is refunded to the customer.
• Closed: The dispute is resolved, either by refunding the customer or providing sufficient information.

Dispute Process Flow

1. Dispute Initiation:
   • By Issuing Bank: The bank detects fraud and requests an explanation.
   • By Customer: The customer reports unauthorized charges to their bank.
2. Notification:
   • You receive a dispute notification.
3. Accept the Dispute:
   • Fraud Cases: Refund the customer manually.
   • Other Cases: Razorpay handles the refund automatically.
4. Contest the Dispute:
   • Provide evidence that the transaction was legitimate.
5. Bank Review:
   • The bank reviews your evidence and makes a decision.
6. Outcome:
   • Lost: The disputed amount is deducted and refunded to the customer.
   • Won: You retain the amount if your evidence is accepted.

Managing Disputes on Razorpay

Using Razorpay Dashboard

1. View Disputes

• Log in to the Razorpay Dashboard.
• Navigate to Transactions > Disputes.
• Click on a Dispute ID to see details.

2. Accept Disputes

• If the dispute is valid, accept it.
• Steps:
  • Log in to the Dashboard.
  • Go to Transactions > Disputes.
  • Click on a Dispute ID, then Accept Dispute.
  • Confirm by clicking Yes, Accept.

3. Contest Disputes

• If you believe the dispute is invalid, contest it with evidence.
• Steps:
  • Log in to the Dashboard.
  • Go to Transactions > Disputes.
  • Click on a Dispute ID, then Contest & Upload Evidence.
  • Choose full/partial contest, provide an explanation, and upload supporting documents.
  • Click Submit Evidence and confirm.

Using Razorpay APIs

1. View Disputes

{% raw %}
GET /v1/disputes
GET /v1/disputes/{dispute_id}
{% endraw %}

2. Accept Disputes

{% raw %}
POST /v1/disputes/{dispute_id}/accept
{% endraw %}

3. Contest Disputes

{% raw %}
POST /v1/disputes/{dispute_id}/contest
POST /v1/documents
{% endraw %}

Subscribe to Webhooks

Get real-time dispute notifications by subscribing to webhook events.

How to Subscribe:

1. Log in to the Razorpay Dashboard.
2. Navigate to Account & Settings > Webhooks to subscribe.

Webhook Events:

{% raw %}
payment.dispute.created
payment.dispute.won
payment.dispute.lost
payment.dispute.closed
payment.dispute.under_review
payment.dispute.action_required
{% endraw %}

For more details, refer to Razorpay’s Webhooks Documentation.

Accepting the Dispute

Fraud Cases:

• If the dispute is fraud-related (e.g., unauthorized transactions), refund the customer manually.
• Use the Refund API or Razorpay’s Dashboard to process the refund.

Other Cases:

• Auto-Refund: If the dispute is not fraud-related (e.g., delivery issues), Razorpay automatically handles the refund.

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Handling disputes effectively ensures smooth payment processing and better customer relationships.