If you sell online in Australia and process payments through Stripe, you will eventually see the word "dispute" appear in your dashboard. A dispute, also called a chargeback, starts when a customer questions a payment with their card issuer rather than asking you for a refund. It is the mechanism the card networks built to let cardholders claw back money they believe should not have been taken, and it sits outside your control as a merchant.
This article explains how that mechanism actually operates: who is involved, what triggers a dispute, the stages it moves through, what evidence decides the outcome, and where Australian law shapes what you can and cannot rely on. It also covers the practical steps that stop disputes arising in the first place, and the points where a lawyer is worth involving.
Who is involved when a payment is disputed
A dispute is not a conversation between you and your customer. Four or five separate parties sit in the chain, and each has a different interest:
- The cardholder: Your customer, who contacts their bank to contest a charge they believe is wrong.
- The card issuer: The customer's bank or credit union. It investigates the claim, files the dispute with the card network, and ultimately makes the decision on who keeps the money.
- The card network: Visa, Mastercard, American Express or another scheme. It sets the rules of the chargeback process, the reason codes used to classify disputes, and the timeframes everyone must meet.
- You, the merchant: The business that received the payment. You choose whether to accept the dispute and refund, or challenge it with evidence.
- Stripe: Your payment processor. It relays notifications, debits the disputed amount from your balance, submits your evidence to the network, and charges you the dispute fees. As Stripe's own documentation makes clear, it facilitates your case but has no influence over the outcome, which is at the sole discretion of the cardholder's bank.
The tension in the system is structural. The issuer's job is to protect its cardholder, and the rules are written to favour the consumer who claims they were wronged. Your evidence packet is the only thing aimed at persuading the issuer that the charge was legitimate, which is why the quality and timing of your response matters so much.
What triggers a dispute
Stripe groups disputes into seven categories: fraudulent charges the customer says they never authorised, products or services not received, products not acceptable or not as described, recurring charges after a subscription was cancelled, credits or refunds not processed, duplicate charges, and a general catch-all category.
In practice the triggers are often mundane. The customer forgot they bought something. They did not recognise the business name on their bank statement, so they assumed fraud. The parcel arrived late or not at all. The product did not match the photos on your website. They cancelled a subscription and you charged them again anyway.
Two triggers deserve special attention for Australian businesses. The first is the unrecognised business name. If your statement descriptor does not clearly identify your business, you will collect "fraud" disputes from customers who simply did not know what the charge was. The second is the genuinely unauthorised transaction, where the customer's card was used without their consent. Those claims are handled by the issuer under the ePayments Code, the ASIC-administered code of practice that most Australian banks subscribe to. The Code sets out the rules for determining who bears the loss for unauthorised transactions, and the issuer applies those rules before it ever files a chargeback against you.
One timeframe worth knowing up front: card networks typically let cardholders initiate a dispute within 120 days of the original payment, and longer in some situations. For future-dated sales such as event tickets or holiday bookings, the window can start from the event date rather than the payment date, so a dispute can arrive months after the money hit your account.
How a dispute unfolds
The process has distinct stages, each with its own deadlines and consequences.
Warnings and inquiries before the formal dispute
Not every dispute begins as a chargeback. Stripe may alert you to an early fraud warning, a signal sourced from reports that card issuers on the Visa, Mastercard and JCB networks generate when they suspect a payment might be fraudulent. No action is required, but you can proactively refund the flagged charge to head off a dispute. Deciding whether to do that is a cost-benefit call: Stripe's analysis suggests refunding is usually only worthwhile on charges around the size of your dispute fee, because most early fraud warnings never become disputes.
American Express and Discover also use a preliminary phase Stripe calls an inquiry, sometimes known as a retrieval request or a request for information. The issuer is asking for transaction clarification, often because the cardholder does not recognise the charge. If you answer with satisfactory evidence, or simply refund, the case can end without a dispute fee. If you ignore an inquiry, it can escalate into a formal chargeback that is likely unwinnable, because failing to respond signals implicit acceptance of the claim. Visa and Mastercard no longer use this preliminary phase.
The chargeback is filed
When the customer's bank files a formal dispute, the card network debits the disputed amount from Stripe, and Stripe in turn debits your balance for that amount plus a dispute fee. The fee for receiving a dispute is generally non-refundable, and its current size for Australian accounts is published on Stripe's Australian pricing page.
You are notified through the Stripe Dashboard, email, webhooks and the API. The funds are held for the entire duration of the dispute, and while the dispute is open you cannot simply issue a refund outside the dispute process. Your dispute rate with that card network increases regardless of whether you later win or lose, which matters because networks monitor merchants whose dispute rates climb above thresholds.
Your response window
Once the chargeback exists, you have a limited time to respond, usually 7 to 21 days depending on the card network, with Stripe's Australian guide noting response timelines that can run from about 5 days. You have three practical options:
- Accept the dispute: You concede and the disputed amount is refunded to the customer. You still pay the dispute received fee.
- Counter the dispute: You submit an evidence packet to the issuer. A separate counter fee applies, but it is refunded if you win the dispute.
- Do nothing: This is not really an option. If you take no action before the deadline, the cardholder automatically wins, the funds stay with them, and you still pay the fee.
A common misconception is that a customer who withdraws their dispute ends the matter. It does not. Even when the cardholder tells you they have withdrawn the claim, you must still submit evidence for the dispute to be closed in your favour, because submitting evidence is what signals to the issuer that you contest the chargeback and want the funds returned.
The issuer's decision
After you submit evidence, the card issuer has a limited time to evaluate it and decide the outcome, usually 60 to 75 days depending on the network. The full dispute lifecycle, from initiation to final decision, typically takes two to three months, and there is no way to accelerate it except by accepting the dispute.
If the issuer overturns the dispute in your favour, the debited amount is returned to your Stripe balance, and your counter fee is refunded. If the issuer upholds the dispute in the cardholder's favour, the funds stay with the customer. There is no appeal through Stripe: a lost chargeback is the end of the card-scheme road for most merchants.
Disputes you cannot challenge
Some disputes cannot be challenged at all. Under the rules of the relevant card network, or because of local regulations, Stripe closes them as lost as soon as you are notified, and you have no opportunity to present evidence. You will still pay the fee. It is also possible, in rare cases, to receive more than one dispute against a single payment, such as when a customer files a new dispute with a different reason code or the issuer acquires new information.
What evidence wins a dispute
The evidence you submit is the entire basis of your defence, and you cannot edit or supplement your response after it is submitted, so it pays to assemble it properly. Stripe's guidance for Australian merchants points to the evidence types that issuers actually weigh:
- Proof of authorisation: For fraud claims, which make up the majority of disputes for most businesses, you need to show the legitimate cardholder knew about and authorised the transaction. Address verification system matches, card verification code confirmations, signed receipts or contracts, and an IP address matching the cardholder's billing address all help.
- Proof of delivery or service: For "not received" claims, provide shipment and delivery evidence including the full delivery address. Tracking numbers on their own are weak; proof of delivery with fulfilment history is strong. For digital goods, download logs or IP records showing the customer accessed the product serve the same purpose.
- Your terms and conditions and refund policy: Provide a clean screenshot of how these were presented at checkout, with the relevant clause emphasised. The issuer wants to see that the customer agreed to your terms before paying, not that you have a terms page somewhere on your website.
- An organised, concise packet: Issuers review thousands of responses. Stripe recommends a short executive summary that ties your defence to the specific network rule or reason code, evidence arranged chronologically, and only what is relevant to the claim, with personal information redacted.
The strategic point is that most disputes are won or lost on the strength of this packet, not on the merits as you see them. A winnable dispute becomes a loss if your evidence is disorganised, irrelevant or late.
Where Australian consumer law fits in
Your terms and conditions are powerful evidence in a chargeback, but they have a hard limit under Australian law. The consumer guarantees in the Australian Consumer Law (the ACL), which sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth), apply to goods and services supplied to consumers and cannot be contracted out of. Section 64 of the ACL voids any term that purports to exclude, restrict or modify the guarantees or a consumer's rights under them.
That matters in at least two ways. First, a term like "all sales are final, no refunds" is void as against a customer's statutory rights, so you cannot rely on it in a dispute response. Second, and more importantly, the chargeback outcome is not the end of the story. A customer who loses a chargeback can still pursue their rights against you under the ACL, for example by claiming a remedy under section 259 for goods that fail the acceptable quality guarantee in section 54 or arrive late or not at all. A major failure entitles the consumer to reject the goods and demand a refund, and the guarantee of acceptable quality applies regardless of what your terms say.
The same logic runs the other way. If you win the chargeback but the customer has a genuine ACL complaint, the practical dispute is not over; it has simply moved out of the card-scheme system and into direct dealings, complaints to the ACCC or your state regulator, or a tribunal claim. Treating a won chargeback as a closed file is a mistake.
Preventing disputes before they start
The cheapest dispute is the one that never happens. The measures that prevent disputes are largely administrative:
- Make your statement descriptor recognisable: Use the business name customers will recognise from their purchase, not a holding company name.
- Present clear terms and a clear refund policy at checkout: Customers who understand your shipping, return and cancellation rules before they pay dispute far less often, and the same terms give you evidence if they do.
- Use tracked shipping: Proof of delivery defeats the most common "never received" claims, and lets you chase lost parcels with the carrier quickly.
- Handle subscription cancellations properly: Confirm cancellations in writing, stop charging immediately, and be able to show the customer asked to cancel.
- Respond to pre-dispute warnings: Early fraud warnings and inquiries are the cheapest point to intervene, whether by clarifying the transaction with the customer or refunding a small charge.
- Watch your dispute rate: Networks run monitoring programmes for merchants with high dispute rates, with additional fines that Stripe's Australian guide puts in the range of $50 to $150 per dispute once you are in them. A dispute rate problem is a business problem, not just a payments problem.
- Consider insurance: Business insurance will not stop disputes, but it can cover the out-of-pocket losses and costs they produce. A broker can tell you what your policy actually covers.
When to bring in a lawyer
Most disputes are low-value and not worth legal involvement; you can evaluate the claim, decide whether the evidence exists, and respond within the window. But a lawyer earns their fee at specific points in this process:
- Drafting your terms and refund policy: These documents double as your primary evidence in a dispute response, but they must be drafted within the limits of the ACL rather than against them. A lawyer can draft terms that are enforceable, and that an issuer will recognise as a genuine contract of sale.
- Deciding whether to contest a high-value dispute: When a single chargeback is worth thousands of dollars, the choice between accepting and countering is a real commercial decision, and a lawyer can assess whether your evidence matches the network's reason code requirements.
- Handling a dispute-rate problem: If you are entering network monitoring programmes, or losing disputes you believe you should win, there is usually a pattern to find, whether in your checkout, your descriptor or your fulfilment process.
- After the chargeback: If a customer pursues ACL remedies directly, through a regulator or in a tribunal, the dispute has left the Stripe system entirely and is a legal claim like any other.
A practitioner at Artificer can review your existing terms, build the evidence framework your team uses for responses, and step in on the disputes where the money or the pattern justifies it. A consultation to scope that is often far less expensive than a single lost high-value chargeback.
The deadline decides more disputes than the facts do
If there is one thing to take from how the mechanism actually works, it is this: the 7 to 21 day response window and the quality of your evidence packet determine the outcome of nearly every dispute you will face, because the issuer's decision rests almost entirely on what you submit in time. Disputes are won before the chargeback arrives, by the descriptor a customer recognises, the tracked parcel that proves delivery, and the terms they agreed to at checkout. Get those three things right and your dashboard stays quiet; get them wrong and no amount of arguing after the fact will recover the funds. If you are unsure whether your current terms and processes would survive an issuer's review, that is exactly the question a lawyer can answer in a single conversation.