Disputes - also called chargebacks - occur when a buyer contacts their bank or PayPal to dispute a charge.
This can be for many reasons, that include but are not limited to:
- Fraudulent transactions
- Unrecognized charges
- Disputes against recurring payments
- Disputes against the quality of the product
Disputes are a common part of dealing with online payments and are especially common in the world of software. We recommend that you try to resolve any buyer complaints in the early stages and issue appropriate refunds swiftly to avoid issues escalating into chargebacks.
It’s important that you keep your dispute rate low. To learn more on how to do so, please ensure that you read the “Best Practices” section on our Seller Handbook.
The average dispute rate is in the region of 0.1-0.3% of transactions, however, a figure below 0.65% is acceptable to the card payment networks. When a dispute occurs, Paddle reviews each dispute on a case-by-case basis and - if appropriate - contests the disputed funds on your behalf by submitting the relevant documentation to the payment processor.
Please note that all chargebacks incur a fee of $15, £15, or €15 for card payments and $20, £20, or €20 for PayPal transactions, depending on the currency the buyer was charged in. When a chargeback is received, the chargeback fee is passed onto you, along with the total amount of the disputed transaction is deducted from your Paddle balance. If we win a chargeback case for you, we refund the original transaction amount and chargeback fee to your balance.
Our aim is to protect Paddle sellers from fraud and help keep dispute rates within an acceptable threshold. We utilize third-party prevention tools that provide an additional layer of fraud protection to monitor and intercept transactions that have a confirmed chargeback risk as a result of fraud.
In the event we receive an alert from one of our partners, we automatically refund the transaction to the original card, to avoid receiving a chargeback and stay within the acceptable chargeback ratio. Each alert incurs a $15, £15, or €15 fee, which is deducted from your Paddle balance. This helps keep your account’s dispute ratio within an acceptable threshold, avoiding penalties that can include account closure.