How to Fight a Square Dispute and Win

A Square dispute, also known as a chargeback, occurs when a customer contacts their bank to reverse a transaction made through your Square account. This process is initiated by the cardholder, not directly with Square, and represents a significant financial risk for sellers. This article provides guidance for Square sellers navigating the chargeback process to challenge and potentially win a dispute.

Understanding Square Disputes

A payment dispute arises when a cardholder contacts their issuing bank to challenge a transaction, leading to a “chargeback” against your business. Common reasons include unauthorized transactions, such as when a card is stolen and used fraudulently. Customers may also dispute charges if they did not receive the goods or services, or if items received were not as described or were defective.

Square typically notifies sellers of a new dispute through email, notifications within the Square Dashboard, and sometimes via the Square Point of Sale app. You can also enable SMS notifications for immediate updates. Upon receiving a dispute notification, Square places an immediate hold on the disputed funds, either by withholding them from your Square balance or by debiting your linked bank account.

Timely action is important once a dispute notification is received. Square generally provides a response window of seven days for sellers to submit evidence. This timeframe allows Square to gather your information and prepare it for submission to the card network within strict deadlines. Failing to respond within this period may result in an automatic loss, as Square will proceed with only the information it has on file.

Preparing Your Dispute Documentation

To build a compelling case against a Square dispute, gathering specific and relevant documentation is important. Begin by collecting all transaction details, which often include the date, time, amount, specific items purchased, and the payment method used. Square typically auto-collects some of this information, but cross-referencing it with your records ensures accuracy.

Compelling evidence often includes proof of delivery or service fulfillment. For physical goods, this can mean tracking numbers, delivery confirmations, or customer signatures upon receipt. If you provide services, documentation such as signed service agreements, appointment confirmations, or photos/videos demonstrating completion can be valuable.

Customer communication logs are crucial, including relevant emails, text messages, or chat transcripts that show customer acknowledgment or agreement regarding the transaction. Providing documentation of your business policies, such as clear return or refund policies and terms of service, can strengthen your case, especially if the customer agreed to these terms at the time of purchase. For online transactions, a “click to agree” record serves as strong evidence of policy acknowledgment.

When organizing your documentation, consider compiling all relevant materials into a single, clear file, such as a PDF, to ensure information is presented cohesively. Square accepts file types such as HEIC, JPEG, PDF, PNG, or TIFF, with individual files typically limited to 5MB and a maximum of 15 pages. Focus on presenting factual, concise information, and avoid highlighting documents, as this can interfere with processing your submission.

Submitting Your Dispute Documentation

Once all necessary documentation has been prepared, submit it through your Square Dashboard. Navigate to the “Disputes” section within your Square account, usually found under “Orders & payments.” Here, locate the specific transaction under dispute.

Within the dispute details, Square will often present auto-collected evidence related to the transaction. You will then be prompted to provide additional information by answering key questions and uploading your prepared documents. This is where you will attach your compiled PDF or individual files that support your case.

After uploading your evidence, ensure you review your submission for completeness and accuracy. Confirming the submission sends your documentation to Square’s dispute resolution team. They will then forward your information to the customer’s issuing bank for review.

What Happens After Submission

After you submit your documentation, Square acts as an intermediary, forwarding your evidence to the cardholder’s issuing bank. Square does not charge sellers fees for managing these disputes, and their team works to represent your case to the bank. However, Square does not determine the outcome; that decision rests solely with the card-issuing bank.

The timeline for a decision from the cardholder’s bank can vary significantly, typically ranging from 30 to 90 days. In more complex cases, such as those involving suspected fraud, the resolution process might extend beyond 90 days. Square cannot expedite this timeline, as it is controlled by card networks and the banks involved.

Upon reaching a decision, Square will notify you of the outcome via email and update the status of the dispute within your Disputes Dashboard. If the dispute is resolved in your favor, the held funds from the transaction will be released back to your Square balance. Conversely, if the bank rules in the customer’s favor, the disputed funds will be permanently charged back to the customer, and if your Square balance is insufficient, your linked bank account may be debited to cover the amount. The bank’s decision is generally final, and Square cannot appeal or further challenge the outcome on your behalf once a ruling has been made.