If you were charged a PayPal Dispute Fee, it's typically because a buyer initiated a dispute regarding a transaction you processed. This fee is applied to help manage the dispute resolution process and is generally charged to merchants (sellers).

Why Was I Charged a Dispute Fee?

PayPal charges a Merchant Dispute Fee when a buyer files a dispute for a transaction completed through their PayPal account or PayPal Checkout as a guest. This applies whether the buyer files a claim directly with PayPal or initiates a chargeback through their card issuer or a bank reversal. (PayPal)

How Is the Dispute Fee Determined?

The amount of the Dispute Fee depends on your dispute rate, which is calculated based on the ratio of disputed transactions to your total sales over the past three months. If your dispute rate is 1.5% or more, and you had more than 100 sales transactions during that period, you may be subject to a higher fee. (PayPal)

When Is the Fee Waived?

The Dispute Fee is waived in certain situations, such as:

• The dispute is resolved directly between you and the buyer without escalating to a claim.

• The dispute is filed by the buyer as an unauthorized transaction.

• The dispute involves a transaction value less than twice the amount of the Standard Dispute Fee.

• The dispute is decided in your favor by PayPal or the buyer’s card issuer.

Additionally, if you have Chargeback Protection or Effortless Chargeback Protection, PayPal may waive the chargeback fee and not debit the disputed amount, provided you respond with the required information within the specified timeframe. (PayPal)

How to Avoid Future Dispute Fees

To minimize the likelihood of incurring Dispute Fees:

• Maintain Clear Communication: Ensure prompt and clear communication with buyers to address any concerns before they escalate to disputes.

• Accurate Listings: Provide detailed and accurate product descriptions to prevent claims of items being "Not as Described."

• Timely Shipping: Ship products promptly and provide tracking information to reduce "Item Not Received" claims.

• Monitor Dispute Rate: Regularly check your dispute rate in the Resolution Center and take proactive measures if it approaches or exceeds the 1.5% threshold.