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As a business owner who uses Cash App, a peer-to-peer payment service, it’s important to know the ins and outs of the Cash App dispute process to protect your business from illegitimate chargebacks. Cash App has become a fundamental financial tool for more than 44 million monthly users across the US and UK since 2013. [1]Business of Apps. “Cash App Revenue and Usage Statistics (2022)“. Accessed November 7, 2022. But despite Cash App’s increased popularity and convenience for merchants, the threat of chargebacks is still a great deal of risk for a business that is accepting payments.
In this guide, we’ll explore Cash App chargebacks, how they work for both consumers and merchants, and tips on how to avoid them altogether. Let’s get started!
How Does Cash App Work?
As its name suggests, Cash App is an app-focused platform making it easy for consumers and merchants to send and receive money. As a peer-to-peer money transfer app, Cash App requires users to set up an account and link a debit or credit card to begin. Once a user finishes setting up their Cash App account, sending money to friends, family, and businesses is simple. However, whoever is receiving the funds must also have Cash App. Money received will enter the user’s Cash App balance, which the user can then transfer into their account holder’s bank account.
For merchants, make sure your Cash App account is a “business account.” It’s easy to convert a personal Cash App account to a business account by heading to the “Edit Profile” tab within the app. Once you set up a business account, you can accept payments from customers via payment links and QR codes.
Can You Charge Back on Cash App?
Cash App has an in-house dispute process that begins after a payment finalizes. Unlike traditional payment processing platforms such as merchant accounts, chargebacks on Cash App depend on the payment method. Chargebacks are only relevant to payments transacted on credit or debit cards through the app, so bank transfers and transfers from Cash App balances are not eligible.
The Cash App Chargeback Dispute Process
As a merchant using Cash App as a payment option, it’s useful to be aware of their chargeback process. The Cash App dispute process is very similar to the normal chargeback process regarding its operations, but the main difference is that as a merchant, you won’t pay those hefty chargeback fees each time one comes through. Cash App encourages its users to contact merchants to resolve refunds or other disputes before lodging an official dispute. If the merchant and Cash App user cannot agree, the user can then file a dispute, and Cash App will contact the merchant for further clarification. After collecting evidence from both parties and assessing the relevant details, Cash App will decide whether or not to refund the customer.
How Does a Cash App Chargeback Affect Merchants?
Overall, the lack of official chargebacks within the Cash App platform provides a range of benefits to merchants. With a traditional merchant account, you see an increase in your chargeback ratio if a customer disputes a transaction. With Cash App, there is no chargeback ratio related to your account however, this does not mean you are safe from any consequences of a large number of chargebacks. If Cash App deems your business fraudulent or too high-risk, they may ban you from using their platform without any notice.
Additionally, the dispute process with Cash App will not come at a significant cost to you as there are no chargeback fees on Cash App. However, please understand that Cash App disputes do take some time. You’ll need to present evidence regarding the transaction’s legitimacy to further plead your case, making the dispute process a timely endeavor.
While Cash App’s likelihood of placing your business on the Terminated Merchant File (TMF) list isn’t clear, this may happen in the case of severe fraud. Being on the TMF list can significantly impact your access to payment processing so be sure to handle chargebacks promptly if and when they come through.
How to Manage Cash App Fraud
As with all payment platforms, Cash App is targeted by fraudsters. For consumers, this may come in the form of promises of goods or services that never arrive, or by hacking accounts and transferring money to other parties. In 2021, bank transfer or payment fraud in the United States totaled more than 750 million dollars.[2]Statista. “Value of fraud loss in the United States in 2021, by payment method“. Accessed November 7, 2022.
On the other hand, merchants must deal with individuals filing false disputes. “friendly fraud,” which is one of the leading forms of chargeback fraud, continues to increase in the United States — recent evidence suggests that up to 80% of merchants have experienced an increase in friendly fraud in recent years.[3]Business Wire. “8 Out of 10 Merchants Have Seen an Increase in Friendly Fraud, According to the 2021 Chargebacks911 Field Report“. Accessed November 7, 2022.
If you want to avoid this type of fraud, it’s critical to collect as much information as possible regarding the transaction. For example, keep records of customer addresses, names, shipping tracking numbers, and other core details about your business to verify a transaction. Unfortunately, with this process you won’t have the same access to authorization holds for preventing chargebacks as you would with a traditional merchant account. Therefore, if Cash App contacts your business due to a payment dispute, make sure to provide clear evidence refuting the claim if you believe it’s fraudulent.
Is Cash App Right for Your Business?
When it comes to accepting online payments, offering convenience to your customers can considerably increase your revenue. This is why many businesses have added Cash App to their payment options, making the process easy and secure. Since Cash App only supports payments from other Cash App accounts, it cannot be the sole source of processing for your business. Thus, on top of using Cash App, you’ll need to implement another online payment solution if you want to accept major credit and debit cards.
Final Thoughts on Cash App Disputes
While Cash App reduces your exposure to traditional chargebacks, it’s still beneficial to understand the process for when they do arise. Chargeback disputes can severely damage your business’s reputation and cost you hundreds in account fees. Therefore, good business practices such as writing clear return policies, having reliable shipping partners, and providing accurate product descriptions are critical if you want to avoid chargebacks in the future. For businesses that are ready for an established payment service or simply looking for better chargeback prevention tools, consider a merchant account. When you sign up for a merchant account with us, you’ll receive effective chargeback management strategies that can truly save your business.
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FAQs About Cash App Chargebacks
How long will a Cash App dispute take?
The length of a Cash App dispute depends on whether or not a merchant accepts the dispute. In many cases, a dispute takes around ten days to resolve. However, if the merchant contests the dispute, the process can take much longer—Cash App will need to assess all relevant details to make a decision.
Will Cash App refund money if there was a scam?
This depends on the circumstances. If you are the victim of a scam involving Cash App, you can request to cancel the transfer, but a resolution may not occur. For this reason, ensuring you only transfer money to legitimate businesses or individuals is critical. Fortunately, Cash App hosts information on its website regarding common scams and how to avoid them.[4]Cash App. “Avoid Scams and Keep Your Money Safe with Cash App“. Accessed on November 7, 2022.
Can banks dispute Cash App transactions?
The answer to this question depends on the type of transaction, as chargebacks are only applicable to card purchases. For example, if a user sends money on Cash App using a credit or debit card, the user can file a chargeback with their bank. However, a user cannot file a dispute for a bank transfer transaction.
