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Disputes for ACH payments

Unlike credit and debit card payments, ACH disputes cannot be contested, though they are more difficult for customers to initiate. In addition, retrieval of funds is also affected by the 7 day settlement time period that comes with ACH transfers.

Customer Dispute Initiation

Unlike credit and debit payments, where your customer can dispute a charge simply by clicking a button in their online account, in order to dispute an ACH payment, your customer must inform their bank in writing within 60 days of the original payment.

There are basically only three reasons allowed by the banks for your customer to dispute an ACH payment:

  • The transaction was never authorized by your customer or their authorization was revoked
  • The transaction was processed on a date earlier than authorized (any date after is OK)
  • The transaction is for an amount different than they authorized

Potential for Double Crediting with Refunds and Disputes

Due to longer settlement time periods and the nature of how banks process ACH transactions, there’s potential for confusion between you, your customer, your customer’s bank, and Stripe. For instance, your customer may contact both you and their bank to dispute a charge. If you proactively issue your customer a refund while the customer’s bank also initiates the dispute process, your customer could end up receiving two credits for the same transaction.

Because of this, when issuing a refund, it’s important to let your customer know immediately and inform them that it may take up to 2-5 business days for the refund to appear in their bank account.

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