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Disputes

Jansi Hendry
  • Updated

Contents

Overview

A dispute occurs when a cardholder questions or challenges a charge with their issuing bank.

This can happen due to:

  • Fraud or unauthorized transaction
  • Duplicate charge
  • Product or service not received
  • Dissatisfaction with the product or service

When a dispute is initiated, the transaction amount is temporarily withdrawn while the case is reviewed.

Configure Credit Memo Creation for Lost Disputes

By default, when a payment dispute is lost, Ordway performs the following actions:

  • Marks the payment as Disputed.
  • Unapplies the payment from the associated invoice.
  • Creates and applies a Credit Memo to the invoice.
  • Prevents the invoice from being included in future payment collection runs.

For merchants using Ordway Payments, administrators can configure whether Ordway automatically creates a Credit Memo after a dispute is lost.

Availability

This configuration is available only when Ordway Payments is enabled. Customers using other payment gateways or payment providers do not have access to this setting.

Configuration

  1. On the left navigation menu, click Setup > Settings. The Company Settings page is displayed.
  2. Under Payments section, enable or disable the Credit Memo Creation On Dispute Lost toggle.
Setting Behavior
Enabled (Default) When a payment dispute is lost, the disputed payment is unapplied from the invoice. Ordway automatically creates and applies a Credit Memo to the invoice. The invoice is excluded from future payment collection runs.
Disabled When a payment dispute is lost, the disputed payment is unapplied from the invoice. No Credit Memo is created. The invoice remains open with its outstanding balance and is eligible for future payment collection runs.

Accounting Impact

Disabling Credit Memo creation affects only the automatic creation of the Credit Memo.

The following behaviors remain unchanged:

  • Payment dispute processing
  • Payment status updates
  • Refund processing (where applicable)
  • Dispute lifecycle

If your organization generates journal entries (JEs) during dispute processing, they continue to be created according to your accounting configuration.

Future Enhancements

Currently, this configuration applies to all lost disputes, with the ability to exclude Credit Memo creation based on dispute reason codes.

Future enhancements may allow administrators to configure this behavior for:

  • Specific dispute types
  • Additional payment providers (for example, Stripe)
  • More granular dispute reason categories

Access and Manage Disputes

View Dispute Details and Actions

  1. In the left navigation menu, click Ordway Payments → Disputes.
    The Disputes List page is displayed.
  2. The below details are displayed in the Disputes details page:
    • Dispute ID
    • Date
    • Payment ID
    • Customer
    • Status
  3. Locate the required payout in the list.
  4. Click the Dispute ID or click view from the three-dot menu.
  5. The Dispute Details page is displayed. 

Review Dispute Details

  1. On the Dispute Details page, review:
    • Dispute ID
    • Status (example., Information Provided, Won, Lost)
    • Disputed amount
    • Associated payment
  2. Review the Dispute Summary section:
    • Dispute message
    • Submitted evidence
    • Defense material link

View Dispute Timeline

  1. Scroll to the Dispute Timeline section.
  2. Review the events:
    • Dispute opened
    • Dispute defended
    • Funds withdrawn

View Email History

  1. Navigate to the Email History section.
  2. View details:
    • Date
    • Subject
    • Email type
    • Transaction ID
    • Status

View or Resend Dispute Email

  1. In the Email History section, click the three-dot menu.
  2. To view email:
    1. Click View
    2. Review:
      • Recipients
      • Status
      • Date and time
      • Email content
    3. Click Resend if required
  3. To resend email:
    1. Click Resend
    2. The Email Dispute dialog box is displayed.
    3. Review or update:
      • Recipients
      • Subject
      • Email content
    4. Click Send

View Journal Entry

  1. On the Disputes List page, click the three-dot menu for a dispute.
  2. Click Journal Entry.
  3. The Journal Entries page is displayed showing:
    • Journal Entry ID
    • Date
    • Source ID (Dispute ID)
    • Source Type (Dispute)
    • Transaction amount

View Audit Log

  1. On the Dispute Details page, click the three-dot menu.
  2. Click the Audit Log.

Result

  • Dispute details, timeline, and associated transactions are displayed.
  • Email history and communication actions are available.
  • Journal entries and audit logs can be accessed for the dispute. 

Dispute Cycle

Dispute Notification

  • Cardholder raises a dispute with the issuing bank
  • A chargeback is created
  • Notification is received in Ordway
  • Amount and dispute fee are debited

Action:  Review the dispute and decide to accept or challenge it.

The below sample screenshot showing Ordway Instance for Payment PMT–00020 showing the buttons Counter dispute and Accept Dispute

Evidence Submission

  • Submit supporting evidence to challenge the dispute
  • Evidence may include:
    • Invoice or receipt
    • Proof of delivery
    • Customer communication
    • Terms acceptance
  • Status becomes Information Provided

Note:  Deadlines are strict (typically 7–21 days).

The below sample screenshot showing Ordway Instance for Payment PMT–00020 when the user counter’s dispute.

Screenshot showing Ordway Instance for Payment PMT–00020 where the user has uploaded a defense document ready to be submitted.

Screenshot showing Ordway Instance for Payment PMT–00020 where the user has uploaded a defense document ready to be submitted and the dispute showing Information Provided

Issuer Review

  • Issuing bank reviews submitted evidence
  • Outcome:
    • Accept evidence → dispute won
    • Reject evidence → dispute lost

Outcome

If Won:

  • Funds are returned
  • Dispute is closed

If Lost

If the dispute is lost:

  • The chargeback remains.
  • The customer retains the disputed funds.
  • Additional dispute fees may apply.
  • The disputed payment is unapplied from the associated invoice.

By default, Ordway creates and applies a Credit Memo to the invoice, preventing it from being included in future payment collection runs.

If Disable Credit Creation is enabled, no Credit Memo is created. The invoice remains open with its outstanding balance and becomes eligible for future payment collection.

Note: This behavior is available only for Ordway Payments.

Screenshot showing the Ordway Instance for dispute details page for the dispute DSPT-0003 for Payment PMT-00257 where the dispute is lost for the Amount $10 for the customer Modulr Demo

Screenshot showing the Ordway Instance for Payment details page where payment PMT-00257 Amount $10 is withdrawn for the customer Modular Demo

 

Screenshot showing the Ordway Instance for Payment PMT-00323 where the dispute of $1500 is won and the funds withdrawn is reversed.

Screenshot showing the Ordway Instance for Payment PMT-00323 where the dispute of $1500 is won and the funds withdrawn is reversed and the status of the payment is processed

 

Best Practices to Reduce Disputes

  • Use clear billing descriptors
  • Communicate refund policies clearly
  • Provide prompt customer support
  • Maintain proof of delivery
  • Issue refunds proactively when needed

Summary

The dispute cycle involves multiple stakeholders:

  • Customer
  • Issuing bank
  • Card network
  • Payment processor

Ordway enables you to:

  • Track disputes
  • Submit evidence
  • Monitor outcomes

Scenarios Where Defense Fails

  • Payment method restrictions (e.g., bank transfers not defendable)
  • Timing issues (outside allowed dispute window)
  • Partial refunds not covering sufficient amount
  • High-risk transactions (no authentication, address mismatch)
  • No defense option available (already accepted/closed)

Screenshot showing dispute screen that’s undefendable A screenshot of a phone AI-generated content may be incorrect.

Simulate Chargeback (Test Environment)

  1. Navigate to the Customer Details page.
  2. Click Add Credit Card.
  3. Enter card details.
  4. Enter “Chargeback” as the account holder name.
  5. Save the payment method.
  6. Create a payment using this card.

Screenshot of Ordway instance showing the Payment Method add form with the Account holder name as “Chargeback” to simulate create chargebacks/dispute

Simulation Values

Scenario Card Holder Name
Chargeback initiated Chargeback
Dispute won Chargeback Reversed
Dispute lost Second Chargeback

Dispute Status

Ordway Dispute Status Meaning
Notice of Chargeback / Chargeback Open A dispute is initiated when an end user raises a chargeback with their issuing bank due to a disagreement (see glossary for “dispute”). The issuing bank sends a Notice of Chargeback, which is received in Ordway via webhook. This marks the initial stage of the dispute, and the payment status is updated to “In Dispute.” The disputed amount along with applicable dispute fees is debited from the customer’s account. Within a few hours, this status transitions to Chargeback Open upon receipt of the webhook. Note: “Notice of Chargeback” automatically transitions to “Chargeback Open” once the webhook is received.
Chargeback Open At this stage, the sub-merchant is required to respond to the dispute. They can either accept the dispute or submit supporting evidence to counter it.
Information Provided Indicates that the sub-merchant has submitted supporting evidence in response to the dispute. The case is under review by the issuing bank, and a final decision is pending.
Won Indicates that the issuing bank has accepted the submitted evidence. The dispute is resolved in favor of the sub-merchant, and the payment status is updated to “Processed.”
Lost Indicates that the dispute is resolved against the sub-merchant. This can occur if: 1. The issuing bank rejects the evidence or raises a second chargeback 2. The sub-merchant accepts the dispute 3. No evidence is submitted before the deadline The payment status is updated to “Failed”, with the reason “Dispute Lost.” By default, Ordway creates and applies a Credit Memo to the associated invoice. If Disable Credit Creation is enabled, no Credit Memo is created, and the invoice remains eligible for future payment collection.

Note:  In production, timelines vary based on issuer bank response. 

For more information, refer to the below:

Handle R29 (Debit Not Authorized)

An R29 (Debit Not Authorized) return code indicates that a corporate customer has informed their bank that the ACH debit was not authorized.

If you receive an R29 return, take the following actions:

  1. Stop retrying the payment.
    Do not attempt another ACH debit until a new authorization has been obtained.
  2. Collect a new ACH mandate.
    Obtain a new ACH debit authorization from the customer before processing future payments.
  3. Ask the customer to allowlist the ACH Company ID.
    The customer should contact their bank and request that the following ACH Company ID be allowlisted to help prevent future ACH debit failures. ACH Company ID: 8263863381

Note: For information about ACH authorization requirements and ACH mandates, see Configure Payment Methods.

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