Refunds & Disputes

Manage refunds and handle customer disputes efficiently while Bag assumes liability as the Merchant of Record.

Refunds

Issuing Refunds

Refunds can be issued via:

• Dashboard - Navigate to transaction, click "Refund"
• API - Programmatic refund via REST endpoint

API Example:

POST /api/refunds
{
  "transaction_id": "txn_123abc",
  "amount": 50.00,
  "reason": "customer_request"
}

Refund Types

Full Refund

Refund the entire transaction amount.

Partial Refund

Refund a portion of the transaction. Useful for:

• Partial service delivery
• Pro-rated refunds
• Goodwill gestures

Refund Methods

Stablecoin Refunds

• Funds are returned to the customer's original wallet address
• Refund is sent on the same network used for the original payment (Ethereum, Polygon, Solana, or Base)
• Typically processes within minutes

Card Refunds

• Standard card refund processing via payment network
• Appears on customer's statement in 5-10 business days
• Refund goes to original card used for payment

Refund Timing

• Stablecoins: Near-instant (blockchain confirmation time)
• Cards: 5-10 business days (standard card network processing)

Disputes

When a customer disputes a transaction, Bag manages the investigation and resolution as the Merchant of Record.

Dispute Categories

Disputes are classified by reason:

Fraud - Customer claims they did not authorize the transaction.

Product Not Received - Customer claims they never received the product or service.

Product Unsatisfactory - Customer claims the product or service did not match description or expectations.

Unauthorized Payment - For stablecoin payments, customer claims their wallet was compromised.

Quality Issue - Customer claims the product or service had defects or quality problems.

Subscription Cancelled - Customer claims they cancelled but were still charged.

Billing Error - Customer claims they were charged the wrong amount.

Dispute Process

1. Dispute Opened

Customer files a dispute through their payment provider (card network) or directly with Bag (for stablecoin payments).

Notification: Merchant receives an email notification when a dispute is opened.

2. Evidence Submission

Merchant has the opportunity to submit evidence supporting the transaction:

Accepted Evidence:

• Order confirmation emails
• Delivery receipts / tracking information
• Terms of service agreement
• Communication logs with customer
• Product screenshots or access logs
• Proof of service delivery

Evidence can be submitted via:

• Dashboard (upload files, add notes)
• API (programmatic submission)

Deadline: Evidence must be submitted within 7-14 days depending on dispute type.

3. Investigation

Bag reviews the dispute and evidence:

• For card disputes: Worked with card network to investigate
• For stablecoin disputes: Internal investigation by Bag team

Timeline: Resolution typically takes 14-30 days depending on complexity.

4. Resolution

The dispute is resolved in one of three ways:

Merchant Wins - Evidence supports that transaction was legitimate. Funds remain with merchant. Customer's dispute is rejected.

Customer Wins - Evidence insufficient or transaction genuinely problematic. Funds are returned to customer.

Partial Refund - Compromise reached where customer receives partial refund.

Notification: Both merchant and customer are notified of the outcome via email.

Dispute Fees

For card payments:

Card networks may charge dispute fees (typically $15-25) regardless of outcome. Bag absorbs these fees as the MoR—you are not charged.

For stablecoin payments:

No dispute fees. Investigation is handled internally by Bag.

Chargeback Management

Card Chargebacks:

When a customer initiates a chargeback through their bank:

• Bag is notified by the card network
• Funds are immediately withdrawn from our account (not yours)
• We handle the chargeback investigation
• You may be asked to provide evidence
• Liability stays with Bag regardless of outcome

Stablecoin "Chargebacks":

Blockchain transactions are irreversible, so traditional chargebacks don't apply. However, if a customer claims fraud or unauthorized access:

• Customer files dispute with Bag
• Investigation follows the dispute process above
• If customer wins, refund is issued from Bag reserves
• Merchant is not held liable

Preventing Disputes

Best practices to reduce disputes:

Clear Product Descriptions - Set accurate expectations about what customers will receive.

Responsive Customer Support - Address customer concerns quickly before they escalate to disputes.

Delivery Confirmation - For digital products, send confirmation emails with access instructions.

Transparent Billing - Use clear billing descriptors so charges are recognizable on statements.

Cancellation Policy - Clearly communicate refund and cancellation terms before purchase.

Dispute Analytics

Track dispute performance in your dashboard:

• Dispute rate (disputes / total transactions)
• Win rate (disputes won / total disputes)
• Average resolution time
• Dispute reasons breakdown
• Trends over time

Healthy Benchmarks:

• Dispute rate: <1% of transactions
• Win rate: >50%

High dispute rates may trigger account reviews or additional verification requirements.

What's next