Definition
A repudiation (or Dispute ) concerns a payment disputed by your customer. In this case, the funds are automatically refunded to the customer until such time, if ever, as proof is provided that the customer has disputed - wrongly - the payment by bank card.
How does repudiation work for the end customer?
Customers who consult their bank statement and do not understand a particular debit may consider - rightly or wrongly - that their card has been defrauded. In this case, they can initiate a repudiation.
To do this, they report the disputed payment to their bank (e.g."I've never been to this site to buy anything ... this amount debited from my bank card is certainly fraudulent ...").
In this case, the bank is obliged to reimburse its customer (this is an agreement between banks) for the total amount of the disputed sums.
To do this, the (customer's) bank reports the dispute to the professional's bank (in this case, Stripe, which acts as the bank because it collects and disposes of our users' funds), in order to be reimbursed immediately by the latter,
Once the bank (Stripe) has been notified of the repudiation, it is obliged to return the funds to the customer's bank. This is based on an international agreement between banks, as well as the legislative and regulatory provisions of the French Monetary and Financial Code.
For your information, in Europe, cardholders have 90 days to dispute (repudiate) a bankcard payment that they consider to be 'fraudulent'. For non-EU cardholders who have made a payment to a European e-merchant, this period is extended to 120 days.
How does repudiation work for you?
Stripe notifies elloha of the repudiation.
Stripe also retrieves a "generic" reason given to it by the "end" customer's bank:
Credit not processed (the customer claims that the service was cancelled by the pro)
Duplicate (double payment)
Fraudulent (the customer claims that the debit is unjustified)
General (most diverse cases)
Product not received
Unacceptable product
Subscription cancelled
Unknown (the customer does not recognise the payment)
Stripe then refunds the funds to the customer's bank, which in turn withdraws the funds from your account, leaving you with a debit.
However, you have a short period in which to contest the repudiation yourself, providing evidence that it was made wrongly, in good or bad faith:
bad faith: the "end" customer actually went to the destination, stayed at the hotel, left no proof of his visit (no copy of his passport, for example) and subsequently disputed the payment (this type of fraud is very common in the travel industry),
good faith: the 'end' customer no longer remembers having booked at this location, or does not make the connection between the commercial name of the hotel and the company name on the credit card statement. They dispute the payment until they are given proof that it was correct.
Stripe alerts us that we have a short period of time (usually one month) in which to provide proof that the repudiation was wrongly made.
How does Stripe deal with repudiation?
If we consider that the customer has disputed this payment - wrongly, in good faith or in bad faith - we have to provide Stripe with the beginnings of proof (which will be passed on to the customer's bank) to prove that this is not a fraudulent direct debit.
In this case, if the proof is good, the bank and Stripe will return the funds to us.
it is possible to send an email to the "end customer" to ask them if they have not made this repudiation by mistake and, consequently, ask them to reverse their decision: " Hello Sir/Madam, We have noticed that on 2021-06-11, you disputed a payment of €20.00 for a reservation with CITADELLE ET TELEPHERI. We are contacting you to check that your booking was successful and to help you with any problems that may arise. If the dispute turns out to be a mistake, you can easily withdraw it by calling the number on the back of your credit card. Thank you very much! We appreciate your business and look forward to hearing from you".
it is also possible to submit direct proof that the "end" customer has used the service. This proof must be sent to us quickly because you risk losing the funds: it could be a copy of the identity document that the customer asked for when they arrived and which proves that they really did come to you, an email exchange, etc... This evidence is analysed by the banks concerned to decide whether it justifies reversing the repudiation process (and therefore repaying the funds).
Finally, it is also possible to accept repudiation because it may be the result of a technical error (which you recognise) or a collection error made by yourself.
What are the financial consequences for you?
When a bank card payment repudiation is triggered, your Stripe account is debited for the amount disputed by Stripe in accordance with Stripe's own procedures:
if your account is in credit, the sums are debited from your Stripe account,
If your account is in debit, the sums are debited from elloha's "general" account; it is up to elloha to recover these funds from the next outgoing transfers.