Simple hacks that can help you win "Credit Not Processed" PayPal disputes

“Credit Not Processed” PayPal disputes happen when a customer returns a purchased product or cancels a transaction, but you have not yet provided a refund or credit.


Tom-Chris Emewulu

3 years ago | 5 min read

“Credit Not Processed” PayPal disputes happen when a customer returns a purchased product or cancels a transaction, but you have not yet provided a refund or credit.

If you look at Google trends for credit not processed PayPal dispute, you will see a significant spike in search activities in the last few months. 

The reason is simple. Credit not processed PayPal disputes forms part of a 40% chargebackreason code basket classified under merchant error.

The problem is, chargeback reason codes are often misleading. They don’t always reflect the actual reason why a customer wants to dispute a transaction. The major card networks have different reason codes for chargebacks, which, although useful for representment, can be confusing and challenging to keep track of accurately. 

For example, MasterCard classifies credit not processed as Reason Code 4860, while Visa has it as Reason Code 85. Although the stipulations on those set of reason codes are similar, sometimes, the information an issuer received from a consumer gets altered as it travels from the issuer to the card association, then to the acquirer, maybe some other ISO before finally reaching the vendor.

But not just that, a great many PayPal disputes are meritless. Hence, many vendors lose ungodly amounts of resources in chargeback and dispute mediation processes.

To help you avoid the significant pit holes merchants face while addressing credit not processed PayPal disputes, I want to share a list of proven hacks with you in this article. 

You will learn the key steps you need to take to overturn any illegitimate credit not processed dispute, what to include in your response, and how to future-proof your company against chargebacks and disputes.

Is it worth your time to address “Credit Not Processed” PayPal disputes?

The first question many merchants regarding dispute mediation efforts is whether they will be worth the time. And factually, that’s a legitimate concern because of the lengthy back-and-forth time involved in such arbitration processes.

However, ignoring customer disputes can have a significant negative impact on your e-commerce business. This article has further details on that.

PayPal gives customers a 180 days time limit from the transaction date to initiate a dispute on a transaction. And if your customer filed a credit not processed dispute against you, you’ll have 20 days to work out the differences.

Suppose both parties are unable to come to reach a favorable compromise on the dispute. In that case, PayPal allows the customer to have the option of escalating the dispute to a Claim, giving PayPal authority to help the disagreeing parties find common ground. 

The time it takes to resolve a Paypal dispute often pales compared to the damages that can arise from neglecting them. Aside from the fact that each dispute that escalates to a claim or chargeback costs you money in dispute fees and other ancillary expenses, the reputational damage is equally enormous. If your PayPal dispute or claim rate is too high, PayPal could place some limitations on your account, and in some instances, terminate it altogether.

Thus, it’s always wise to anticipate that between 0.10-0.30% of your sales could result in PayPal disputes or chargebacks and take adequate measures to respond to them.

Why merchants file Credit Not Processed PayPal Dispute

From extensive industry analysis, we have found two triggers of credit not processed PayPal disputes. It’s either the merchant didn’t do a decent job in an order fulfillment/return process, or some internet shoplifter sees you as cheap cheese fries and wants to get something for nothing.

That said, please take note of the following potential causes of credit not processed PayPal dispute, as regards to a merchant’s error:

  • The seller did not disclose their refund policy at the time of purchase.
  • The seller charged multiple times for the same product or service.
  • The cardholder returned merchandise or canceled services, and the seller did not issue credit.
  • The merchant reduces the credit amount without notifying the cardholder.
  • The merchant inadvertently processes the credit as a debit.
  • The merchant failed to process a credit.

If you realize they were entitled to a refund that you didn’t provide or in the case of any of the above scenarios listed, it makes sense to accept the dispute or engage with your customer to find a middle ground. The end goal is to secure your business without pissing off potential legitimate customers.

How to respond to Credit Not Processed PayPal Dispute

As much as 86% of all chargebacks are indeed probable cases of friendly fraud. And people who commit such acts and go scot-free are likely to hit again within six months. But it’ll be counterproductive to assume that EVERY credit not processed PayPal dispute is fraudulent and a precursor to an eventual claim. 

The best dispute response starts with you contacting your customer. When you understand what their complaint is, only then can you resolve it or clarify the issue. If you’re able to resolve the issue with your customer, you can ask that they withdraw the dispute.

However, if you cannot resolve the issue and escalate the dispute to a claim, to overturn it, you have to prove that you’ve issued a refund to your customer through other means or that they aren’t entitled to one. You can’t give a refund while the payment is under dispute. Include the following compelling evidence in your representment:

  1. Your refund policy, as shown or provided to the customer.
  2. A refund policy disclosure clearly shows how and when you offered the customer your refund policy before purchasing.
  3. Your explanation for why the customer is not entitled to a refund.
  4. Correspondence with the cardholder stating why they would withdraw the dispute.
  5. A written statement from their card issuer, confirming that the dispute has been removed if you arrived at a consensus.

How to prevent Credit Not Processed PayPal Dispute

To prevent credit not processed PayPal disputes, you should have a clear return policy and make it easy to find. For customers requesting a replacement or refund, make sure to honor your returns or refund policy promptly. 

Nevertheless, the best way to pre-empt “credit not processed” disputes (and eventual claims or a chargeback) is to automate your dispute mitigation processes. According to industry research, 56% of merchants who used chargeback and dispute prevention alerts in 2019 resolved a significant percentage of their disputes before they escalated to detrimental chargebacks. With accurate data on each transaction, you can mitigate disputes before they happen and saves yourself the trouble of back-and-forth efforts of mediating those disputes.

And comes out higher than every other chargeback and dispute automation service in the industry. has re-invented everything you know about PayPal dispute mitigation. Our software gives you the upper hand in the dispute arbitration process with a simple, full-service automation tool for DT entrepreneurs, by DT entrepreneurs. Get started right away! Sign up and experience the Chargeflow exceptionalism.

This post first appeared on chargeflow.


Created by

Tom-Chris Emewulu

I help entrepreneurs and rising professionals to be successful. I have consulted for brands such as the MasterCard Foundation, GIZ, British Council, and Seedstars, to name a few. And my work has been featured in Forbes, DW, Business Insider, SABC, and many other publications. Besides providing outside insights that help high-growth firms scale up faster, I'm also your guy if you need an SEO content writer to get you on page 1 of Google search ranking. You can find me on Social Media via @tomchrisemewulu.







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