PayPal dispute vs chargeback in the UK: what each means for your shop

PayPal calls it a dispute. Your customer's bank calls it a chargeback. Mix the two up and you can answer the wrong one, on the wrong deadline, with the wrong evidence.

The difference between a PayPal dispute and a chargeback is who decides. A dispute is a conversation in PayPal's Resolution Center, a claim is PayPal's own ruling, and a chargeback is the buyer's card issuer overruling both. Each has its own deadline and evidence, so settle the PayPal dispute vs chargeback question first and identify which one you have.

Last updated: 9 October 2026. Written by the ChargeFix team.

The 30-second answer (TL;DR)

• A PayPal dispute is opened by the buyer in PayPal's Resolution Center. PayPal places a temporary hold on the funds for that transaction until it is resolved or closed. At this stage you and the buyer talk, and nobody rules.
• If you cannot settle it, the buyer can escalate to a PayPal claim. PayPal's UK help page says buyers have 20 days from opening the dispute to do this. PayPal then decides the claim.
• A chargeback is separate. The buyer goes to their card issuer, and the issuer decides, not PayPal. PayPal passes on the evidence you give it, then follows the result.
• PayPal Seller Protection can cover a loss even when you lose a chargeback, but only on eligible transactions. Friends and family payments are not covered, according to the Financial Ombudsman decisions we read.
• PayPal's user agreement, as quoted in one ombudsman decision, allows a £12 dispute fee. Check the current agreement, because fees change.
• In any PayPal dispute vs chargeback case, winning early is cheaper than winning late. Fast, documented replies in the Resolution Center stop most cases before a bank gets involved.
• Some points are not covered in the sources we reviewed, including claim response deadlines and the full list of Seller Protection conditions. The post flags each one.

From dispute to decision

Stage	Who decides	What happens	What you do
Dispute	Nobody. You and the buyer talk.	PayPal holds the funds for that transaction.	Reply fast, propose a fix, keep it polite.
Claim	PayPal	The buyer escalates, usually within 20 days of opening the dispute.	Send evidence to PayPal when it asks.
Chargeback	The card issuer	The buyer's bank or card provider reviews the payment.	Give PayPal what it needs to defend.
Outcome	PayPal or the issuer	If you lose, PayPal can take the money back.	Check whether Seller Protection applies.
Complaint	Financial Ombudsman Service, in some cases	A route if PayPal handled it unfairly.	Complain to PayPal first, then consider the ombudsman.

What is the difference between a PayPal dispute and a chargeback?

A PayPal dispute runs inside PayPal, between you and the buyer, with PayPal holding the money. A chargeback runs through the buyer's card issuer and the card scheme. PayPal does not decide a chargeback. It acts as the go-between, then follows the issuer's decision.

That one sentence explains most of the PayPal dispute vs chargeback confusion. Merchants use the words interchangeably, but the two routes have different decision-makers, different evidence and different consequences.

Here is how the three names line up:

Term	Where it happens	Who decides	What the buyer needs to do
Dispute	PayPal Resolution Center	Buyer and seller, no ruling	Open it and talk to you
Claim	PayPal	PayPal	Escalate a dispute that was not settled
Chargeback	The buyer's bank or card provider	The card issuer, under card scheme rules	Contact their issuer, bypassing PayPal's process

Notice the last row of this PayPal dispute vs chargeback table. A buyer who chooses the chargeback route does not have to use PayPal's dispute process at all. PayPal's help page makes this point itself: PayPal does not decide the validity of a chargeback, that is the issuer's job.

So the first job in any PayPal dispute vs chargeback situation is to find out which one you have. Read the email subject and the first paragraph. If it mentions the Resolution Center, it is a dispute or claim. If it mentions a card issuer or a bank, it is a chargeback.

For the card side of this story, see our Shopify chargebacks UK guide. Shopify's own response form is built for Shopify Payments card chargebacks. We did not review how Shopify shows PayPal cases, so use PayPal's own emails and Resolution Center for the PayPal side.

How does a PayPal dispute work, step by step?

The buyer opens a dispute in the Resolution Center. PayPal emails you and puts a temporary hold on the funds for that transaction. You reply, suggest a fix, and aim to settle. If you cannot agree, either side can escalate to a claim, and PayPal then decides.

PayPal's UK help page describes the steps:

1. The buyer opens a dispute. PayPal notifies you by email.
2. PayPal places a temporary hold on all funds involved in the transaction until the dispute is resolved or closed.
3. You respond quickly, with suggestions on how to resolve it.
4. If you cannot settle, either party can escalate it to a claim.

PayPal says buyers have 20 days from opening the dispute to file a claim. If the buyer files a claim, PayPal may ask you for information. We did not verify how long you have to respond to that request, so read the deadline in PayPal's email and treat it as final.

During the dispute stage, your aim is simple: end it. A buyer who gets a clear, friendly answer within a day often closes the dispute themselves. A buyer who is ignored escalates, or goes to their bank.

Use this checklist the day a PayPal dispute or chargeback arrives:

• Note the date, the order number and the reason the buyer gave
• Check the order: tracking, delivery proof, refund status, messages
• Reply in the Resolution Center within one working day
• Offer a specific fix: a reship, a replacement, a partial or full refund
• Put a calendar reminder at day 15, five days before the 20-day escalation point
• Save every message and screenshot in one folder

What happens when a PayPal dispute becomes a PayPal claim?

A PayPal claim is a dispute that PayPal itself will rule on. The buyer escalates it, PayPal asks you for information and decides. At this point your evidence matters, so send the strongest proof you hold, labelled and in order, and answer exactly the complaint made.

In a PayPal dispute or chargeback, answer PayPal's questions, not your own. Merchants lose claims by sending a long story when PayPal asked for tracking, or by defending an item not received claim with photos of the product. Match the evidence to the question:

Claim type	PayPal is asking	Send
Item not received	Did the parcel arrive?	Tracking, delivery proof, address match
Item not as described	Does the item match the listing?	Listing, photos, packing notes, messages
Unauthorised or unrecognised	Was this a genuine purchase?	Order record, delivery address, account history
Refund not received	Did you refund?	Refund record with date, return scan

We did not review PayPal's complete list of claim reasons, so use this table as a guide and follow the exact wording in your notice.

Two habits help. First, keep the answer short and factual. Second, do not accuse the buyer. State dated facts and point to exhibits. The reviewer is not interested in how you feel about the buyer.

How does a PayPal chargeback work, and who decides?

The buyer contacts their card issuer, which opens a chargeback. The card issuer decides it under card scheme rules. PayPal asks you for the information it needs, forwards your evidence, and follows the outcome. If you lose, PayPal can take the money back from your account and charge a dispute fee.

The Financial Ombudsman Service has published several decisions on exactly this PayPal dispute vs chargeback issue. Across the decisions we read, the pattern is consistent:

• The chargeback was raised by the buyer with their card provider, not through PayPal's own process.
• PayPal asked the seller for evidence, and included the seller's comments and screenshots in its response.
• The issuer found in the buyer's favour.
• In line with its user agreement, PayPal took the money back from the seller's account, along with a dispute fee.
• That left some seller accounts with a negative balance.

In one decision, the ombudsman explained that PayPal is bound by its relationship with the card scheme to honour the outcome of a chargeback, and that the scheme's operator has the final say on whether a claim succeeds. In another, the ombudsman said PayPal had not acted fairly in how it handled a chargeback on the seller's behalf, because it had not considered whether to take the case further. So PayPal's defence is not always perfect, and a complaint route exists. Those are individual decisions about individual facts, not a promise of any outcome.

What this means for you:

1. A chargeback is not a PayPal ruling, so arguing with PayPal does not change the issuer's decision.
2. The evidence you give PayPal is the whole defence. Send it early and complete.
3. If you lose, the money may leave your PayPal balance quickly. Keep a cash buffer if you sell on PayPal.

How a PayPal chargeback interacts with a refund you issue afterwards is not covered in the sources we reviewed. Ask PayPal before refunding an order that already has one open.

Does PayPal Seller Protection cover chargebacks in the UK?

PayPal's UK help page says Seller Protection covers account holders in the event of a claim or chargeback on transactions that meet its criteria, and that PayPal will cover your loss even if you lose the chargeback, as long as you are eligible. One listed criterion is that the primary residence on your PayPal account is in the UK.

We did not review the full list of conditions, so read PayPal's current Seller Protection terms before you rely on it. Several ombudsman decisions show where sellers ran into trouble:

• Friends and family payments do not qualify for Seller Protection. One ombudsman decision noted that commercial payments carry a fee that pays for things like seller protection, while friends and family payments are free but do not have it.
• Seller Protection is not designed to cover every situation. In one decision, PayPal decided the seller did not qualify in her particular circumstances, and the ombudsman accepted that.
• In another, PayPal's position was that reimbursements made because of a chargeback are not covered under Seller Protection. That sits oddly with PayPal's help page, which is a reason to read the current terms rather than rely on a summary.

So the safe habit is to treat Seller Protection as a bonus you check, not a promise you assume. Before you ship, confirm that the payment is a commercial payment, that your account settings match the terms, and that you are keeping the proof the terms ask for. We did not verify PayPal's proof requirements, such as shipping address and tracking rules, so check them on PayPal's own pages.

What does a PayPal dispute or chargeback cost?

The main cost of a PayPal dispute or chargeback is the order value, plus any dispute fee, plus the goods you can no longer sell. One ombudsman decision quotes PayPal's user agreement as allowing a £12 dispute fee, and in that case PayPal charged £12 for a buyer protection dispute and £12 for a chargeback. Fees change, so check PayPal's current user agreement.

We could not confirm whether the fee is charged when you win. Run your numbers both ways until you know.

Cost	Source	Notes
Order value	The buyer's claim	Taken back if you lose and are not protected
Dispute fee	PayPal user agreement, as quoted by the ombudsman: £12	Check current terms and whether it is returned on a win
Goods	Your stock	Gone if the buyer keeps the item
Time	You	The reply, the evidence pack, the follow-up
Chargeback rate	Card monitoring	Not verified for PayPal. For Shopify card disputes, a win does not remove the dispute from your rate.

What evidence wins PayPal disputes and chargebacks?

In any PayPal dispute or chargeback, evidence that matches the complaint and carries dates wins. For not received disputes, that means tracking and delivery proof. For not as described, it means your listing, photos and messages. In one ombudsman decision, a seller who had no proof of postage had no defence to an item not received claim.

Rank your proof from strongest to weakest before you upload anything.

Evidence	Strength	Why
Signature from the recipient	Strong	A named person accepted the parcel.
Delivery photo with a time stamp	Strong	Shows where the parcel was left.
Tracking with a final delivered scan	Medium	Proves the carrier's claim, not who received it.
Proof of postage only	Weak	Shows you sent something, not that it arrived.
Messages from the buyer confirming receipt	Strong	Their own words contradict the claim.

For UK carriers, Royal Mail captures a photo on delivery for Tracked 24 and Tracked 48 where no signature is needed. Evri offers a Digital Signature add-on with photographic proof, at 60p when we checked, and the price may change. We have not verified DPD's proof options.

Use this checklist when you build the pack:

• The order confirmation, with the address the buyer used
• Carrier tracking from collection to delivery, as a screenshot
• A delivery photo or signature, if the carrier offers one
• The listing as it appeared, with its date
• Messages with the buyer, from first contact to now
• Any refund or reship offer you made, with dates
• Your returns policy, with its publication date

For more on delivery evidence, see proof of delivery for Shopify chargebacks.

Should you fight or refund? Two worked examples

Fight when you hold strong proof and the order is worth the effort. Refund early when the order is small, the proof is thin or the complaint is fair. Run the sums first, because a refund you control usually costs less than a loss you do not.

Both examples are illustrations with invented numbers. The arithmetic is checked.

Example 1: does Seller Protection change the result? A buyer in Leeds pays £150.00 for a coat. The coat cost you £60.00. The buyer raises a chargeback and you lose it. The £12.00 dispute fee is taken as in the ombudsman decisions we read.

Case	Money from the sale	Fee	Goods cost	Net result
Seller Protection applies, PayPal covers the loss	£150.00	£0.00 (assumed)	£60.00	£90.00
Not eligible, chargeback lost	£0.00	£12.00	£60.00	Minus £72.00

The difference is £162.00, which is the £150.00 order plus the £12.00 fee. That is why checking eligibility before you ship is worth the five minutes. We assumed no fee in the protected case, so check what PayPal actually does.

Example 2: fight or refund a small PayPal dispute or chargeback? A buyer opens a dispute on a £40.00 order. You can refund £40.00 now, or defend and risk the £12.00 fee. If the fee is charged only when you lose, defending costs £52.00 on a loss and nothing on a win. The break-even is £40.00 divided by £52.00, about 77%. You should defend unless you think you are more than about 77% likely to lose.

If the fee is charged either way, defending costs £52.00 on a loss and £12.00 on a win. The break-even is £28.00 divided by £40.00, which is 70%. Defending still wins unless the odds are poor. Both sums leave out the cost of the goods and your time, and a refund does not always avoid the fee.

Situation	Suggested move	Reason
Signature or photo, address matches	Fight	Strong, specific proof.
Delivered scan only, order over £100	Fight, add listing and message evidence	Medium proof, enough at stake.
No delivery event	Refund or reship	You cannot prove arrival.
Friends and family payment	Refund or settle	No Seller Protection, so the loss is yours.
Buyer asks for a refund politely, small order	Refund	Your time costs more than the order.
Chargeback with weak proof	Send what you have, then fix the process	You cannot add proof later.

How do you respond to a PayPal dispute or chargeback day by day?

Treat your first reply to a PayPal dispute or chargeback as day one, and the 20-day escalation point as your clock. In a claim or chargeback, read the deadline in the notice and work back from it. Submit early, because a late response can lose a case you could have won.

Day	Task	Output
Day 1	Log the dispute. Pull the order, tracking and messages. Reply in the Resolution Center.	A reply and a folder.
Day 2	Check delivery proof. Ask the carrier for anything missing.	A gap list.
Day 3	Offer a specific fix: reship, replacement or refund.	A dated offer.
Days 4 to 10	Follow up on the buyer's reply. Keep the thread polite.	A record of contact.
Day 15	Decide: refund, or prepare for a claim.	A decision with a reason.
Day 20	The escalation window closes, per PayPal's UK help page.	Either closed or a claim.
Claim or chargeback	Work back from the due date in the notice.	A submitted pack.

Here is a first reply for a PayPal dispute or chargeback that is still at the talking stage. It states what you know and offers a fix.

Hi [FIRST NAME],

Thanks for opening a dispute about order [ORDER NUMBER]. I want to put this right.

Our carrier shows delivery to [ADDRESS] on [DATE]. Can you tell me what has gone wrong, for example whether the parcel was left somewhere unexpected or the item was not as described?

If you would prefer a refund or a replacement, tell me and I will do it today. I will check this thread again tomorrow morning.

[YOUR NAME]
[STORE NAME]

For a PayPal claim or chargeback, adapt this evidence note. It states dated facts and points to exhibits.

Order [ORDER NUMBER], £[AMOUNT], paid [DATE] by [BUYER NAME].

Summary: The order was dispatched on [DATE] with [CARRIER], tracking [NUMBER]. The carrier recorded delivery to [ADDRESS] on [DATE] at [TIME], with [signature of NAME / photo of the parcel at the address].

Exhibits, strongest first:
1. Carrier proof of delivery (screenshot dated [DATE])
2. Tracking history from collection to delivery
3. Order confirmation showing the delivery address
4. Our messages with the buyer from [DATE] to [DATE]
5. Our returns policy, published [DATE]

We contacted the buyer on [DATE] and offered [RESOLUTION]. We ask PayPal to review the exhibits above and decide in our favour.

Menu wording changes, so follow what the Resolution Center shows for where to upload files. We did not verify file types, size limits or whether a submitted response can be edited before the due date.

PayPal dispute vs chargeback: which one should worry you more?

The chargeback is the bigger risk, because the PayPal dispute vs chargeback gap is a gap in control. In a dispute, PayPal and you can still talk the buyer round. In a chargeback, a card issuer you never deal with decides, and you only get one chance to send evidence.

Here is the PayPal dispute vs chargeback comparison in the terms that matter to cash flow and workload:

Question	PayPal dispute	PayPal chargeback
Can you talk to the buyer?	Yes, in the Resolution Center	Rarely. The buyer has gone to their bank
Who rules?	Nobody, until it becomes a PayPal claim	The card issuer
How fast is the money held?	A temporary hold on that transaction	PayPal can take the money back if you lose
Can you settle with a refund?	Yes, and it usually ends the case	Ask PayPal first, as this is not covered in the sources we reviewed
How many chances to send evidence?	Several messages	Usually one submission
Best response	Quick, friendly, specific offer	Complete, labelled evidence sent early

Read down the middle column and the right-hand column and you can see why experienced sellers treat a PayPal dispute or chargeback differently. A dispute is customer service with a deadline. A chargeback is a legal-style file review.

Three situations show the PayPal dispute vs chargeback split in practice:

1. A buyer says the parcel never came. Tracking shows delivered to the address. In the Resolution Center you can reply the same day with the tracking link and a calm offer to help look for the parcel. That often closes the PayPal dispute.
2. The same buyer ignores your reply and phones their card provider. Now it is a chargeback. Your tracking still matters, but you must send it as a complete package, because nobody will chat with you about it.
3. A buyer opens a PayPal dispute, escalates to a PayPal claim, and loses. They can still try a chargeback in some cases. We did not review whether PayPal or the card schemes limit that, so do not assume a closed claim is the end.

The practical rule for a PayPal dispute vs chargeback is to treat every PayPal dispute as if it could become a chargeback. Build the evidence file on day one, even while you are still being polite in the Resolution Center. Then if the PayPal dispute or chargeback escalates, you are already ready.

How does the PayPal dispute vs chargeback split change by complaint reason?

The reason the buyer gives decides which evidence matters, and it also decides how likely a PayPal dispute or chargeback is to reach a bank. Item not received and unauthorised complaints are the ones most likely to jump to a chargeback. Not as described complaints are more often settled by talking.

Use this table to see how the PayPal dispute vs chargeback route plays out for each reason:

Buyer's reason	Typical PayPal dispute outcome	Typical chargeback risk	Your strongest proof
Item not received	Settled by tracking, a reship or a refund	High if the buyer cannot find the parcel	Signature or delivery photo
Item not as described	Settled by a return, replacement or partial refund	Medium if the buyer feels unheard	Listing, photos, packing notes
Unauthorised payment	Rarely settled by talking, as the buyer says they did not buy	High, because the card holder may not know the order	Order record, delivery address, account history
Refund not received	Settled by showing the refund	Medium	Refund record with the date
Late delivery	Settled by an apology and a small gesture	Low	Tracking and your delivery promise

Treat this table as a guide, not a rule. We did not review PayPal's or the card schemes' full reason lists, so the label on your notice is the one to follow.

Three habits make the PayPal dispute vs chargeback gap smaller:

1. Answer inside the first working day. A buyer who sees movement in a PayPal dispute is far less likely to ring the bank.
2. Keep the record in one place. When a PayPal dispute becomes a chargeback, the evidence you built for the dispute is the evidence you send.
3. Do not move the conversation off PayPal. If the buyer's only record of your reply is a private email, your Resolution Center history looks empty.

A short triage checklist helps when a notice arrives and you are not sure which route you are in:

• Does the notice mention the Resolution Center? If yes, it is a PayPal dispute or claim
• Does it mention a card issuer, bank or card scheme? If yes, it is a chargeback
• Is there a due date? Write it in your calendar and subtract two days
• Is the payment a commercial payment, so Seller Protection could apply?
• Is the order paid, shipped and tracked, or is something missing?
• Has the buyer already been refunded in part or in full?

Merchants also ask whether a PayPal dispute vs chargeback outcome affects their account. PayPal can take the money back after a lost chargeback, and the ombudsman decisions we read show some accounts going negative as a result. How PayPal scores account health is not covered in the sources we reviewed, so read your account terms and ask PayPal directly if you are worried.

What if you think PayPal handled a chargeback unfairly?

Complain to PayPal first, in writing, with your evidence and dates. If you are not satisfied, the Financial Ombudsman Service has issued decisions on PayPal chargebacks, so a complaint route exists. We did not verify eligibility rules, so check the ombudsman's current guidance.

The decisions we read show what the ombudsman looks at. The ombudsman does not re-decide the chargeback itself, since the scheme operator decides that. It looks at whether PayPal acted fairly in how it handled the case, for example whether it passed on your evidence and whether it considered taking the matter further. In one decision, the ombudsman found that PayPal should have considered more carefully how the chargeback was defended.

If you go this way, prepare:

• The PayPal notices, with dates
• The evidence you sent, and when
• PayPal's replies
• A short timeline of what happened
• A clear statement of what you want, such as a refund of the amount taken

Do not expect this to be quick. It is a route for large or repeated losses, not for small ones.

How do you prevent PayPal disputes and chargebacks?

Prevent each PayPal dispute or chargeback by shipping tracked, replying fast and keeping your policies clear. Most buyers who get a quick, friendly answer in the Resolution Center never go to their bank. The cheapest PayPal dispute or chargeback is the one that never opens.

Run this checklist once, then review it every quarter:

• Reply to where is my order and return questions within one working day
• Use a tracked service with a signature or photo for higher-value orders
• Save carrier proof of delivery for every PayPal order, not only each PayPal dispute or chargeback
• Send a shipping confirmation with the tracking link, and a follow-up on delivery
• Write your returns steps and refund timeline in plain words, on a dated page
• Check Seller Protection terms before shipping higher-value orders
• Treat friends and family payments as unprotected, and avoid taking them for goods
• Watch the inbox that receives PayPal emails, and name a backup person
• Add a reminder at day 15 of every open PayPal dispute or chargeback

If you split orders across several parcels, delivery proof gets harder to match to one payment. Read split and partial shipment disputes before you ship the second box.

Write your policies so a buyer and a reviewer can follow them. Our shipping and delivery policy template and terms and conditions template give you wording to adapt.

If you also take Klarna or Clearpay, those run on different clocks and evidence rules: see Klarna disputes on Shopify UK and Clearpay disputes for merchants.

What's different for UK merchants

This section is general information, not legal advice.

• PayPal dispute vs chargeback rules for UK sellers: PayPal Seller Protection in the UK: PayPal's UK help page lists a UK primary residence as one criterion. Read the current terms for the rest.
• Fees: The ombudsman decisions we read quote a £12 dispute fee in PayPal's user agreement. Shopify's UK fee for card chargebacks is £10, charged by your bank and returned if you win. These are different systems, so do not mix the figures. See how the Shopify chargeback fee works in the UK.
• Buyer time limits on cards: MoneyHelper describes chargeback as a voluntary card-scheme arrangement, usually claimed within 120 days. UK Finance gives the same period, counted from the transaction or the expected delivery.
• Section 75: This covers credit cards, for purchases between £100 and £30,000, and makes the card company jointly liable. A buyer who pays by card through PayPal may or may not have it. We have not verified how Section 75 applies to payments made through PayPal, so do not assume either way.
• Consumer rights: UK law gives buyers a 14-day cancellation period for goods bought at a distance, with a refund due within 14 days of getting the goods back or evidence of return.
• Carriers: Royal Mail photographs Tracked 24 and Tracked 48 deliveries where no signature is needed. Evri offers a Digital Signature add-on at about 60p. We have not verified DPD's options.
• Bank holidays: We did not verify how weekends and bank holidays affect the deadline on a PayPal dispute or chargeback. Submit early.

Shopify Protect does not cover UK stores, and it has no link to PayPal Seller Protection. Do not count on it for any PayPal dispute or chargeback.

Quick rules to remember about a PayPal dispute vs chargeback

Keep these rules near your desk. They sum up the PayPal dispute vs chargeback difference in a form you can use at 8pm on a Friday.

1. A PayPal dispute is a conversation, so talk. A chargeback is a file review, so send a complete file.
2. A PayPal claim is PayPal's decision. A chargeback is the card issuer's decision. Do not argue with the wrong party.
3. A PayPal dispute or chargeback is cheaper to settle early than to win late.
4. Seller Protection is something you check before shipping, not something you discover after a loss.
5. Treat a PayPal dispute as a chargeback in waiting, and build the evidence file on day one.
6. When the notice and this post disagree on a date or a rule, the notice wins.

Common mistakes

1. Mixing up the PayPal dispute vs chargeback routes and treating a chargeback as a PayPal ruling. The issuer decides, so arguing with PayPal changes nothing.
2. Ignoring a PayPal dispute or chargeback because no money has moved. PayPal holds the funds, and a silent dispute escalates.
3. Taking friends and family payments for goods. They carry no Seller Protection.
4. Assuming Seller Protection covers every case. The ombudsman decisions show PayPal declining it in some situations.
5. Sending a long story when PayPal asked for tracking.
6. Defending an item not received case with proof of postage only. It shows you sent something, not that it arrived.
7. Missing the 20-day window on a PayPal dispute and finding the buyer has already gone to the bank.
8. Letting the PayPal balance run to zero, so a lost PayPal chargeback pushes the account negative.

FAQ

What is the difference between a PayPal dispute and a chargeback?

A dispute is opened in PayPal's Resolution Center, and you and the buyer try to settle it, with PayPal holding the funds. A chargeback is raised by the buyer's card issuer, which decides it under card scheme rules. PayPal does not decide a chargeback, it passes on your evidence.

How long does a buyer have to turn a PayPal dispute into a claim?

PayPal's UK help page says buyers have 20 days from opening a dispute to file a claim. After that, PayPal decides the claim. Note the day the dispute opens, count 20 days, and settle or prepare your evidence well before that date arrives.

Does PayPal Seller Protection cover chargebacks?

PayPal's UK help page says it covers claims and chargebacks on eligible transactions, and that PayPal will cover your loss even if you lose the chargeback. Eligibility has conditions, and friends and family payments are excluded. Read PayPal's current Seller Protection terms before you ship.

Who decides a PayPal chargeback?

The buyer's card issuer decides, under card scheme rules. PayPal's help page says it does not decide the validity of a chargeback. PayPal contacts you for information, forwards your evidence, and follows the result, so the evidence you send is your whole defence.

How much is the PayPal dispute fee in the UK?

One ombudsman decision quotes PayPal's user agreement as allowing a £12 dispute fee, and in that case PayPal charged £12 for a buyer protection dispute and £12 for a chargeback. Fees change, and we could not confirm whether a fee is returned on a win, so check the current agreement.

What happens if I lose a PayPal chargeback?

PayPal can take the disputed amount back from your account and charge a dispute fee, as in the ombudsman decisions we read. That can leave the balance negative. If you qualify for Seller Protection, PayPal says it covers the loss, so check eligibility straight away.

Can I refund a buyer while a PayPal dispute is open?

Yes, in many cases a prompt refund settles a dispute. How a refund interacts with an open claim or chargeback is not covered in the sources we reviewed, so ask PayPal before refunding an order that already has a chargeback attached.

What evidence do I need for a PayPal not received claim?

You need tracking, delivery proof such as a signature or photo, and the address on the order. Proof of postage alone is weak, because it shows you sent something, not that it arrived. Add your messages with the buyer and the date you offered a fix.

Can I complain to the Financial Ombudsman about PayPal?

The ombudsman has published decisions on PayPal chargebacks, so a route exists after you complain to PayPal first. It looks at whether PayPal acted fairly in how it handled the case, not at the chargeback itself. Check the ombudsman's current guidance on eligibility before you start.

Is a PayPal dispute the same as a card chargeback on Shopify?

No. Shopify's chargeback response form relates to card chargebacks on Shopify Payments, while PayPal disputes and claims are handled in PayPal's Resolution Center. A buyer who paid by card through PayPal can also raise a card chargeback, which then follows card rules. Keep one evidence folder per order.

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Sources

• PayPal UK: Understanding disputes
• Financial Ombudsman Service decision DRN-5897525
• Financial Ombudsman Service decision DRN-5879609
• Financial Ombudsman Service decision DRN-3467940
• Shopify Help Center: Chargebacks and inquiries
• legislation.gov.uk: Consumer Contracts Regulations 2013, explanatory note
• UK Finance: Chargeback and Section 75