Afterpay Merchant Dispute Process: Timelines, Responses, and Resolutions (2026 Guide)

Afterpay merchant disputes follow a structured workflow that merchants must navigate carefully to minimize losses. Customers initiate disputes through Afterpay up to 120 days after payment, cancellation, or expected delivery. Merchants then have 13 days to respond via the Business Hub or API, either accepting the dispute or submitting a defense. Defended disputes undergo Afterpay review within 30 days, leading to adjudication if needed. Failure to respond within 13 days triggers an automatic refund to the customer and a reversal against the merchant.

This guide equips Afterpay merchants with the process details to handle disputes effectively. By acting promptly in the Business Hub, merchants can defend claims, avoid automatic refunds, and manage potential fees. Key timelines--120 days maximum for customer disputes, 13 days for merchant responses, and 30 days for Afterpay adjudication--define the entire cycle, as outlined in Adyen Docs and Afterpay Documentation.

How Customers Initiate Afterpay Disputes

Customers start disputes directly with Afterpay or Clearpay when they encounter issues like non-delivery or unresponsive merchants. They must first contact the merchant to resolve problems such as undelivered goods or lack of communication.

Eligibility requires waiting at least 7 days after payment capture for non-delivery claims, with a maximum window of 120 days from payment, cancellation, or expected receipt. This timeline applies across Afterpay and Clearpay processes. Merchants benefit from understanding these triggers to prepare defenses early, as disputes move to formal review once initiated.

Merchant Response Deadlines and Options

Merchants receive notifications of Afterpay disputes in the Business Hub and have exactly 13 days to act. Options include accepting the dispute, which prompts Afterpay to refund the customer and reverse the funds from the merchant, or defending it by uploading evidence.

No response within 13 days results in the same outcome: an automatic refund and reversal. To defend, merchants submit supporting documentation--such as proof of delivery or communication logs--directly through the Business Hub or API. This step is critical to prevent default losses, per guidelines in Afterpay Documentation and Adyen Docs.

Afterpay Dispute Review and Adjudication

Once a merchant defends a dispute, Afterpay or Clearpay reviews the submission within 30 days. This period allows evaluation of the merchant's evidence alongside the customer's claim. If the merchant and customer reach a resolution independently, the dispute closes without further action.

Otherwise, Afterpay adjudicates the case based on the provided information. Merchants challenging disputes must rely on comprehensive documentation submitted via the Business Hub or API, as detailed in Afterpay Documentation.

Costs and Fees in Afterpay Merchant Disputes

Merchants face a $15 chargeback fee in addition to reversed transaction amounts when disputes result in customer refunds. This applies whether the merchant accepts the dispute, fails to respond, or loses after adjudication.

For context, this matches Klarna's $15 chargeback fee structure for merchants, highlighting similar financial impacts across buy-now-pay-later providers, according to analysis in Primer blog.

Best Practices for Merchants Handling Afterpay Disputes

Merchants should prioritize contacting the customer immediately upon dispute notification to seek resolution outside formal adjudication. This approach often prevents escalation.

Key steps for effective handling include:

These practices, drawn from Afterpay help resources, support informed decisions on whether to accept or challenge claims.

FAQ

What is the timeline for merchants to respond to an Afterpay dispute?

Merchants have 13 days from notification to accept or defend the dispute via the Business Hub or API.

How long do customers have to raise an Afterpay merchant dispute?

Customers can initiate disputes up to 120 days after payment, cancellation, or expected delivery, with a 7-day minimum post-capture for non-delivery claims.

What happens if a merchant doesn't respond to an Afterpay dispute within 13 days?

Afterpay issues a refund to the customer and reverses the transaction from the merchant.

Can merchants challenge an Afterpay dispute, and how?

Yes, merchants challenge by submitting supporting documentation through the Business Hub or API within 13 days.

What fees do merchants face in Afterpay chargebacks?

Merchants incur a $15 chargeback fee, plus the reversed transaction amount.

How does Afterpay review defended merchant disputes?

Afterpay reviews defended disputes within 30 days and adjudicates if no merchant-customer resolution occurs.

Monitor your Business Hub regularly for new disputes and keep delivery records organized to streamline responses.