Cash App Dispute & Chargeback Guide for Merchants (2024)

I’ve considered using Cash App and was curious about how they handle chargebacks. That led me into a rabbit hole, which I’ll share my findings in this guide.

I’ll explain how Cash App handles chargeback disputes, what to expect as a merchant, and how to handle them.

Let’s dive in.

Key Takeaways

• Cash App has an internal dispute process for non-Cash App card transactions.
• Cash App’s dispute process extends to their Cash App debit card.
• Cash App doesn’t 
• Chargebacks happen outside of Cash App on bank’s platforms.
• Cash App does have chargeback fees, but they don’t specify the amount.

Does Cash App Have Chargebacks?

Yes. It depends on the payment method used, though.

Customers can use Cash App to send money through their debit/credit/prepaid card or through their bank account.

If they transfer money through their bank account, they don’t have protections from these bills:

• Fair Credit Billing Act: Allows filing chargebacks from credit card transactions.
• Electronic Fund Transfer Act: Allows filing from debit and prepaid card transactions.

Without protections from these bills, they can’t file chargebacks. But they can file a dispute. This is Cash App’s own process of dealing with unfair transactions. I’ll go over the details in a bit.

In short, it’s a process where customers contact Cash App to undo a transaction. The app will investigate the transaction for malpractice and make a decision. If they favor the customer, they’ll refund the transaction.

If not, nothing happens.

Unlike chargebacks, which’ll result in chargeback fees and monitoring programs. Yeah, if you have too many chargebacks, card networks will place you in particular programs. These come with higher chargeback fees and review fees.

Review fees can cost tens of thousands of dollars…

And if a chargeback happens, the customer will have to start it outside the platform with their bank or card network.

Summary: Cash App users can dispute transactions but can't file chargebacks unless paid with a card.

Transactions That Customers Can Dispute

Customers can dispute the following transaction types through Cash App:

• You charged the customer twice.
• They weren’t charged the correct amount.
• A fraudster made a transaction with the buyer’s account.
• You keep charging customers after they cancel a subscription.
• They didn’t receive the goods they purchased.

They can’t file a dispute if they didn’t attempt to contact you first, a family member made the purchase, or they just didn’t like the item.

Summary: Buyers can dispute transactions if there is merchant error or fraud. They can’t file disputes for family fraud — accidental purchases from family members.

Time Limits

Cash App requires merchants to respond to chargeback requests within 15 days of their request. Otherwise, you’ll automatically lose the dispute and you’ll have an irreversible chargeback.

Buyers also have time limits.

You should know what they are to predict how they might react:

• Dispute a Transaction (Through Cash App): Within 60 days of monthly statementsome text
  • Monthly statements come within 5 days of end of month
• File a Chargeback:some text
  • Visa: 120 days
  • Discover: 120 days
  • American Express: 120 days
  • Mastercard: 90 – 120 days

Again, this will vary by reason code.

The number I found from Cash App came from their “Cash App Card” dispute page [1]. And the 60-day limit matches with the requirements from the Electronic Fund Transfer Act. Thus, this limit may not be for all disputes.

Does Cash App Have a Chargeback Threshold?

Cash App does not have a chargeback threshold. However, they may see you as a high risk if you have too many chargebacks. And from there, one of the following situations may follow [2]:

• Delayed payouts
• New processing fees
• Suspension of your account.

Cash App’s Payment Terms page, nor any of their other pages, says what these fees are. They also said, quote, “If you have - or if we think you are likely to have - too many chargebacks.” This is vague…

Cash App Dispute Process

• How Long a Dispute Takes: 10 - 45 days

Here’s the lifecycle of a Cash App dispute [3]:

1. Customer submits a dispute.
2. Cash App investigates their claim and gives buyer a provisional credit
3. They collect evidence from the merchant (maybe)
4. Cash App decides the winter:some text
   1. Seller wins: Provisional credit is returned.
   2. Shopper wins: Provisional credit becomes permanent.

A provisional credit is a temporary credit that Cash App gives the customer. This equals the amount of the transaction they’re disputing. If they’re disputing a $100 charge, they’d get a $100 credit.

But wait…

Cash App’s help page specified this process works with their Cash App Card. This is Cash Apps’ own debit card. Hence, it’s only covered by the Electronic Fund Transfer Act. Hence, the 60-day limit.

So long as they use the Cash App Card.

If it’s credit, debit, or prepaid card that isn’t the Cash App Card, the customer would file a chargeback.

Typical Chargeback Dispute Process

• How Long Will it Last: 30 to 60 days (or more)

If a customer goes to their bank to file a chargeback, here’s what that would look like:

1. Cardholder disputes transaction with their bank.
2. Bank initiates chargeback with the card network.
3. Cash App is notified of the chargeback.
4. Cash App investigates the dispute and gathers evidence.
5. Cash App presents evidence to the issuer.
6. Issuer makes a decision on the chargeback.some text
   1. If the chargeback is successful, funds are returned to the cardholder.
   2. If the chargeback is unsuccessful, funds remain with the merchant.

Cash App’s role in the chargeback process is to let merchants know a chargeback has been filed against them. They also collect the seller’s evidence and present it to the customer’s issuer (bank or card network). Cash App doesn’t have the final say on the process.

They only judge their own dispute process.

Since Cash App participates in the chargeback process, does it have a chargeback fee?

Their legal terms specify, “We reserve the right, upon notice to you, to charge a fee for mediating and/or investigating Chargeback disputes.”

Screenshot source: Cash App

This is the only mention their website has of chargeback fees. Nowhere else does it specify the amount you’re charged. It likely will vary by situation. They do mention that you (the merchant) agree to pay all costs incurred by them, like legal expenses.

What Are Cash App Chargebacks?

You could technically label Cash App’s dispute process as a chargeback since it’s a forced refund. So long as the customer wins.

It seems like every card network has its own definition for “chargebacks” and “disputes.”

If we’re getting technical, a chargeback is when a customer goes to their bank or card network (AKA issuer) and issues a dispute. From there, the issuer investigates, collects evidence, etc. They’ll then force a “refund” from the merchant.

If the merchant’s guilty of malpractice, or there’s fraud, the chargeback stays. If not, it returns to the merchant. Chargebacks also come with chargeback fees and can contribute to chargeback rates.

Have a high enough chargeback rate (varies by network), and they’ll place you in a monitoring program.

Such a program comes with review fees that cost tens of thousands of dollars. They also come with higher chargeback fees, which could result in you losing your ability to process a card.

Summary: Cash App disputes resemble chargebacks, with refunds and fees, but lack card network involvement. Actual chargebacks are done through card networks.

How’s This Any Different From a Refund?

Refunds and chargebacks might seem 2 two sides of the same coin — the customer gets their money back, right?

Refunds are a merchant's customer service tool, a way to appease dissatisfied buyers and maintain a good reputation. They're initiated by the seller and are generally seen as a positive interaction.

Initiated by the customer's bank, chargebacks signal a problem with the transaction. Whether it's fraud, a misunderstanding, or a legitimate complaint. They cost merchants money in fees and can damage their standing with payment processors.

Here's where it gets tricky…

Too many chargebacks can also raise alarms. This can trigger excessive chargeback monitoring programs like Visa's Dispute Monitoring Program (VDMP), adding another layer of scrutiny and potential penalties for merchants. Such programs result in higher chargeback fees.

Summary: Refunds are initiated by sellers, while chargebacks are forced by customers' banks and can hurt merchants' reputations and trigger penalties.

How to Prevent Cash App Disputes & Chargebacks

Prevention for Cash Apps is the same as any other platform or network. We talk about specifics in a separate post.

But here are some tidbits:

• Maintain clear communication with customers.
• Provide detailed descriptions of products/services.
• Issue refunds promptly for legitimate complaints.
• Keep accurate records of all transactions.
• Implement fraud prevention measures on your platform.
• Offer excellent customer service to resolve issues quickly.
• Educate customers on how to avoid scams.

Prevention comes down to (for the most part) being transparent. If a customer catches a lie, they could use it to support their dispute. And the more evidence the customer has, the more likely you’ll lose a chargeback or dispute.

There’s also fraud prevention, which is crucial.

Cash App is the PCI Data Security Standard (PCI-DSS) Level 1 compliant. This payment processor meets the most stringent industry security standards.

Being PCI-DSS Level 1 compliant means Cash App has added security measures to protect cardholder data. This lowers the risk of data breaches and, by extension, fraud. Thus, reducing fraud.

There’s nothing actionable for you to do with that information. But it’s the only “fraud protection” that Cash App offers. Though, it’s a regulation that all payment processors should be compliant in.

Since there’s no fraud protection on Cash App, the only thing you can do is watch out for suspicious transactions. Or to let customers know how to identify scams on Cash App.

Here are some red flags to watch out for:

• Billing and shipping addresses differ, or the shipping address is a freight forwarder.
• Email address, phone number, or name on the order doesn't match the cardholder's information.
• New customer places a large order, multiple orders are placed from the same IP address.
• Buyer wants quicker shipping, which could be an attempt to get the goods before fraud is detected.
• Email address used looks suspicious (e.g., contains random characters).

If a Cash App order has these red flags, don’t fulfill the order. Conduct further investigation to verify the customer's identity and the legitimacy of the transaction.

This could involve contacting the customer, verifying the shipping address, or checking the transaction details with Cash App. If you can’t verify the legitimacy of the order, cancel it.

Summary: Preventing Cash App disputes involves transparency and fraud prevention measures.

How Do I Fight Cash App Disputes & Chargebacks?

Other than gathering compelling evidence and giving it to Cash App, here’s what you could do to fight a dispute or chargeback:

• Respond promptly to chargeback notifications.
• Submit a detailed rebuttal letter explaining the transaction's validity.
• Work with Cash App to provide additional transaction details.
• If necessary, appeal the chargeback decision to the card network.
• Demonstrate compliance with PCI-DSS security standards.
• Highlight any fraud prevention measures implemented.
• Show a history of good customer service and quick issue resolution.
• Provide clear refund and dispute policies to customers.

Most of what you’d do comes down to following Cash App’s instructions. If you’ve been operating properly, you should have all the evidence to prove your transaction was legitimate. If you don’t, do not fight the chargeback or dispute.

You’ll lose money delegating staff to deal with the chargeback and waste a lot of time. Sellers only win 30% of chargebacks (on average). When dealing with fraud, they win around 9% of chargebacks [4].

In many scenarios, it’s because the card network or bank will generally favor the customer. It could also come down to the merchant not having convincing evidence to prove their case.

Don’t fight a chargeback if you’re not confident you’ll win.

If you encounter one, learn what caused it and fix whatever mistake in your operations led to it. If you have a high chargeback rate (around 1%) hire a chargeback analyst.

They’re experts in lowering chargeback rates and could save you a lot of money in the long run.

Summary: Respond promptly, provide evidence, follow instructions, and only fight if confident in winning.

FAQs

How Do I File a Dispute on Cash App?

Visit the Activity tab of your home screen, select the transaction that you want to dispute, and tap the 3 dots (...) at the top right corner of the screen to select it. From there, tap Need Help & Cash App Support, then Dispute this Transaction, and enter all the information they request.

Conclusion

Cash App’s dispute process happens inside their own platform and doesn’t come with any fees. They’re not as pleasant when it comes to dealing with chargebacks, though. As they don’t specify their chargeback fees.

That’s why it’s best to prevent chargebacks altogether. One tool that’ll help is chargeback alerts. And we’ve partnered with providers like RDR to offer such tools. Learn how we can help.

Sources

• [1] Cash App Support. Dispute a Cash App Card transaction.
• [2] Cash App Support. Cash Payment Terms of Service.
• [3] Cash App Support. Cash App Card Dispute Status and Lifecycle.
• [4] Midigator. Chargeback Report and Statistics