How are disputes handled for payments created using direct charges on Stripe?

When transactions are processed on Stripe through direct charges, the responsibility for any disputes or chargebacks primarily falls on the connected account that received the payment. This means that if a customer disputes a charge, Stripe will debit the connected account associated with that transaction to cover the potential loss incurred from the dispute.

The reason this is the correct process is because, under direct charges, the connected account is the one that typically bears the financial responsibility for the transaction. This setup aligns with the understanding that the connected account is managing its own payment processing and customer relationships, and therefore is accountable for any issues that arise directly from the charges they process.

This handling protects the platform from the financial liabilities that arise from disputes, ensuring that the connected account manages its risks effectively. In contrast, while options involving debiting the platform account or creating a transaction record are relevant to how payments are managed, they do not specifically address the mechanism of responsibility in disputes related to direct charges, hence they are not the correct answers. Similarly, automatically resolving disputes does not accurately reflect the necessary actions taken in the event of a dispute; rather, disputes require review and intervention, so this choice does not apply in the context of how payment disputes are appropriately addressed.