PayPal has many fans in the online business community. Without PayPal, many merchants would struggle to find an affordable, easy-to-use platform for accepting payments over the internet. PayPal also offers its merchants a good deal of protection and security, but PayPal is not invulnerable to scams and transaction disputes, and even payments made over PayPal are subject to chargebacks.
When it comes to fighting and avoiding transaction issues, knowledge is power. The first thing PayPal sellers should familiarize themselves with are the several types of transaction issues they might encounter.
PayPal Transaction Issues
For buyers, the first step in disputing a transaction is to make a complaint to the PayPal Resolution Center. The seller will be notified about the buyer’s complaint and is given 20 days to give the buyer a refund or find some other way to resolve the dispute. If they don’t come to an agreement, the buyer can escalate the dispute, and it becomes a claim.
When a dispute is escalated to claim status, PayPal steps in. They will contact both parties, gather and review information, investigate the case, and make a final determination as to whether the merchant gets to keep the funds or not.
Buyers always have the right to take their transaction issues up with their banks, but because PayPal serves as a middleman facilitating the transaction, they will still be involved in disputes that are initiated outside the PayPal Resolution Center. Buyers can make bank claims on payments made with debit cards and bank accounts. The funds will then be withdrawn from the seller’s account, and they will have to provide PayPal with compelling evidence in order to fight the claim and have it reversed in their favor.
Many disputes arise due to disagreements or miscommunications between the buyer and seller that could have been avoided with better customer service, clearer communications, or more careful record-keeping.
We have found these five habits to be highly effective at eliminating the confusion and conflicts that lead to disputes and chargebacks:
It’s not possible to avoid every dispute or problem that might come up, but better business practices and excellent customer service can make a huge difference. Don’t let problems fester until your customers throw up their hands and complain to PayPal—be proactive about resolving their issues and working with them to create satisfactory outcomes.
Businesses that process e-commerce and other card-not-present transactions—including the over 17 million who use PayPal for payments—are quickly learning about the risks and realities of chargebacks.
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