How is the dispute rate calculated and how do I avoid being charged a dispute fee?

We calculate the dispute rate for a seller by considering the seller’s total value of claims and sales over the previous three months. Total claims include the transaction value of all claims filed directly with and escalated to PayPal, except claims for unauthorized transactions, as well as all chargebacks from card issuers or bank reversals.

A merchant’s dispute rate can change between the Standard rate and the High Volume rate over time. For any given transaction dispute, the applicable dispute fee will be based on the seller’s dispute rate when the case is created.

What is defined as a High Volume Dispute Fee & a Standard Dispute Fee?

If a seller had more than 100 sales transactions in the previous three full months and their dispute rate over that time was 1.5% or more, they will be charged the High Volume Dispute Fee for each dispute. Otherwise, the Standard Dispute Fee will be applicable for each dispute.

How can sellers in the Standard Dispute Fee scenario avoid being charged the fee for a dispute?

Sellers won’t be charged a Standard Dispute Fee for disputes that are:
  • Inquiries in PayPal’s Resolution Center that are not escalated to a claim with PayPal
  • Resolved directly between seller and the buyer and not escalated to a claim with PayPal
  • Filed by the buyer directly with PayPal as an Unauthorized Transaction
  • Eligible for PayPal’s Seller Protection program
  • Claims with a transaction value that is less than twice the amount of the Standard Dispute fee
  • Decided in seller’s favor by PayPal or by the issuer

How can sellers in the High Volume Dispute Fee scenario avoid being charged the fee for a dispute?

Sellers won’t be charged a High Volume Dispute fee for disputes that are:
  • Inquiries in PayPal’s Resolution Center and not escalated to a claim with PayPal
  • Resolved directly between seller and the buyer and not escalated to a claim with PayPal
  • Filed by the buyer directly with PayPal as an Unauthorized Transaction.

How will High Volume Dispute Fee merchants be treated differently than other merchants?

High Volume Dispute Fee merchants will be charged a higher fee for disputes filed by their customers, compared to Standard dispute rate merchants in their market. Merchants in this tier won’t be able to take advantage of certain exclusions and will be charged a Dispute Fee for all claims and chargebacks which are not amicably resolved, regardless of the dispute outcome.

How will PayPal notify merchants of their dispute rate?

PayPal will notify merchants of their Dispute rate periodically.This may include emails to the merchants’ account email address, merchant reports, and in the Resolution center.

Where can I see the dispute rate for my PayPal account?

You will find your Dispute Rate & Dispute Fee Tier in the Resolution Center. 

Where can I see the fee amount charged to my account and my case?

Go to the dispute details on your Case Summary Page to see if you were charged the Dispute Fee. 

Will High Dispute Fee merchants be provided any notice prior to the implementation of the Dispute Fee?

Merchants who would fall into the High Dispute Fee tier will be given a 90-day grace period after User Agreement changes related to the Dispute Fee become effective for their region. They can use this time to bring down their dispute rate to avoid being charged higher fees associated with their claims.

Will fees be reimbursed if the merchant appeals and wins a case?

Yes, if a merchant appeals and wins the case, both the disputed amount and the Standard Dispute Fee may be reimbursed.  The High Volume Dispute Fee, if applicable, will not be reimbursed because it does not depend on the case outcome.

Does the Dispute Fee impact Chargeback fees on unbranded (DCC) PayPal transactions?

Disputes on unbranded transactions will not be charged a Dispute Fee, but will continue to be charged the Chargeback fee, according to the existing Chargeback fee policies and Seller Protection eligibility.