# Disputes

## Overview

**Disputes** are a mechanism to resolve conflicts that arise during the course of a transaction. These occur when there is a disagreement between the buyer and seller regarding the terms of a transaction, such as the quality of goods or services provided, delivery issues, or payment disputes.

Disputes can be initiated by either party involved in a transaction, and they typically involve a review process where evidence is presented, and a resolution is determined. This process is crucial for maintaining trust and integrity within the Ryft ecosystem.

## Types of Disputes

Disputes are categorised as follows:

- **Fraud**: when the cardholder claims that the transaction was unauthorized or fraudulent;
- **Processing Errors**: when there are mistakes in the transaction processing, such as duplicate charges or incorrect amounts;
- **Cardholder**: when the cardholder is dissatisfied with the product or service received, leading to a request for a refund or reversal of the transaction;
- **Authorization**: where the cardholder disputes the validity of the authorization for the transaction (e.g., they did not authorize the payment or incorrect amount presented).


Once raised, the disputed amount **and** an additional fee will be held in the Ryft account until the dispute is resolved. The fee is charged to cover the administrative costs associated with handling the dispute. The dispute fee is charged by the card network and is non-refundable, even if the dispute is resolved in favor of the merchant.

## Dispute Flow

Managing disputes can be broken down into several key steps:

1. **Dispute Initiation**: A cardholder initiates a dispute by contacting their bank or card issuer, stating the reason for the dispute. This will in turn create a dispute under the merchant who processed the transaction.
2. **Acknowledgment**: The merchant is notified of the dispute and can opt to either accept the dispute (which means they agree with the cardholder's claim) or challenge it (which means they believe the transaction was valid).
3. **Accepting a Dispute**: If the merchant accepts the dispute, they will not contest the claim, and the funds will be returned to the cardholder.
4. **Challenging a Dispute**: If the merchant chooses to challenge the dispute, they must provide evidence to support their case. This evidence can include transaction details, communication with the cardholder, and any other relevant information.
5. **Review and Resolution**: The card network reviews the evidence provided by both parties. Based on this review, they will make a decision regarding the dispute. If the evidence supports the merchant's case, the dispute may be resolved in their favor, allowing them to retain the funds. If the evidence supports the cardholder's claim, the funds will be returned to the cardholder, and the merchant will incur the dispute fee.


## Dispute Fees

Similarly to refunds, disputes incur fees that are charged to the merchant's account. Despite this, a key difference is that every dispute incurs an **additional** fee. For example:

- Cardholder makes a purchase for £10;
- At a later date, the cardholder claims they never received the product and initiates a dispute;
- The £10 is immediately taken from the merchant's account and returned to the cardholder;
- A fee (e.g., £20) is also taken from the merchant's account to cover the dispute handling costs;
- The merchant is debited a total of £30 (£10 for the transaction and £20 for the dispute fee).


Dispute fees are never reclaimable, even if the dispute is resolved in favor of the merchant. This is a standard practice across payment networks to ensure that the costs associated with managing disputes are covered. Based on the example above, the merchant could potentially reclaim the £10 transaction amount if the dispute is resolved in their favor.

## Next Steps

To learn more about how to manage and respond to disputes, please refer to the [Disputes](/documentation/get_started/manage_payments/disputes) section.