Chargeback Management

Managing Disputes in PayPal Resolution Center

PayPal Resolution Center

PayPal has come a long way since the days when it first arrived on the ecommerce scene, back when eBay buyers were still mailing paper checks to sellers. Today, they offer a wide range of merchant services, including functioning as a payment processor and an acquirer.

Familiarity and convenience draws many merchants to PayPal, but one of its biggest advantages is the PayPal Resolution Center, which is designed to resolve merchant disputes without involving the customer’s issuing bank. In other words, it helps merchants avoid chargebacks. How can merchants make best use of the PayPal Resolution Center to keep their customers happy and protect their revenue?

The PayPal Resolution Center is located within PayPal’s website and serves as a place where buyers can resolve issues with their account or transactions, such as:

  • Getting a restriction on their account lifted
  • Reporting a problem with a transaction
  • Reporting an unauthorized account activity

New call-to-actionWhen a transaction issue cannot be resolved to the buyer’s satisfaction, they can choose to escalate the issue, turning it into a dispute. PayPal will evaluate the claim and render a decision.

Even when a dispute is filed and PayPal sides with the buyer, it’s a much better outcome than getting hit with a chargeback. PayPal disputes don’t affect your chargeback ratio—the rate of chargebacks to transactions that payment processors use to determine how “high risk” you are.

However, they do charge a dispute fee of up to $20 per transaction. While recovering a sale is always the preferable outcome, and a merchant-initiated is the next best thing, a PayPal transaction reversal is still less damaging than a chargeback.

How Does the PayPal Resolution Center Work?

The first thing that happens when a buyer goes to report a transaction issue at the Resolution Center is that PayPal will have them communicate directly with the seller to attempt to resolve the issue directly.

If you’re the seller on the receiving end of a Resolution Center message, this is a great opportunity to figure out what will satisfy the buyer and give it to them. Usually, a refund or a replacement product is all it takes, and that’s a small price to pay to keep a customer happy and avoid the hassle of a dispute.

When the buyer and seller cannot reach an agreement, the buyer can escalate the dispute. PayPal will take the transaction amount back from the seller until they adjudicate the matter.

PayPal will investigate the transaction and may ask for additional information from both parties. Once they reach a decision, they will return the held funds to the victorious party.

Buyers who use their credit cards to fund their PayPal account still have the ability to call their issuing bank and dispute their credit card transaction with PayPal. When this occurs, PayPal will determine which transaction the chargeback relates to, debit the seller’s account, and open a dispute in the PayPal Resolution Center.

At this point, the seller will have 10 days to submit evidence that the chargeback should be reversed. PayPal may then attempt to represent the charge along with the seller’s evidence. If they beat the chargeback, they will return the seller’s funds.

How Does the PayPal Resolution Center Avoid Chargebacks?

When merchants process online payments through PayPal, it functions as a shield that absorbs all of the actual chargeback activity when disputes occur. This is not to say that PayPal chargebacks are harmless, simply that they protect merchants from the consequences of an excessive chargeback ratio, like the unpredictably rising fees of a high risk payment processor.

Because PayPal’s buyers and sellers share the same platform, it’s easy for PayPal to put them directly in contact with each other when disagreements crop up. By facilitating communication, they increase the odds that a mutually agreeable solution can be reached.

Lastly, while buyers can dispute PayPal transactions with their bank if they used a bank card to make the purchase, they cannot do this if they used PayPal funds or PayPal Credit—the PayPal Resolution Center is their only option.

What Other Protections Do PayPal Sellers Have?

PayPal Seller Protection is a program offered at no charge to all sellers who qualify. Qualified sellers must have a business account with PayPal, must be located in the United States, must be selling tangible physical goods, and must meet certain other shipment and transaction criteria.

The program protects seller from liability for two dispute categories:

  • Item Not Received
  • Unauthorized Transaction

Download the eGuide, 4 Reasons to Hire a Chargeback Management CompanyThe intent is to protect both buyers and sellers from theft and fraud. Instead, PayPal covers the losses. In the case of “Item Not Received” disputes, the seller must be able to provide proof of delivery to the shipping address provided in the original transaction details.

While not every merchant will qualify for PayPal Seller Protection, it really is a nice benefit that allows for some peace of mind regarding the ever-present threats of online fraud and package theft. Just make sure you follow their requirements carefully and save all necessary shipping and delivery information they ask for.

Conclusion

In terms of filling the roles otherwise filled by an assorted array of banks and processors PayPal has a lot to offer merchants. The PayPal Resolution Center is significant for its streamlined, common sense approach to the dispute process that puts communication at the forefront.

Of course, it’s easier to maintain a streamlined process when it’s entirely contained to a single platform. Outside of the PayPal environment, the dispute process requires various independent stakeholders to work together to create fair and reasonable outcomes—and while checking out with PayPal can be a smooth and painless process for its users, the majority of merchants still have to accommodate their many current and potential customers who, for whatever reason, choose not to use PayPal.

For merchants who accept PayPal payments, use of the PayPal Resolution Center must be factored in as an important part of their dispute and chargeback management process. Merchants should monitor the PayPal Resolution Center daily to make sure they’re responding to all messages and inquiries as timely as possible, and PayPal disputes should be analyzed along with other chargeback data in order to determine the root causes of your chargebacks. PayPal may protect you from some disputes, but it’s still important to learn how to prevent them in the first place.

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