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A Dispute refers to an available action a cardholder can take to argue against fraudulent charges, billing errors, or issues with the product or service provided not meeting expectations, for example.
Typically, the preliminary stage to a formal dispute is a cardholder complaint to the Merchant. The Merchant should first engage directly with the cardholder where possible to understand their concerns, address potential issues, and work with the customer to resolve any outstanding issues amicably.
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Tip: Open communication between Merchants and customers is one of the best ways to avoid a formal dispute and chargeback. |
A dispute is first initiated by the cardholder (customer of the product or service provided) through their Issuer (the card brand, such as Visa or MasterCard), and goes through a series of reviews, actions, and decisions to eventually rule in favor of the Merchant or Cardholder respectively.
Dispute Stages
Dispute Stages are the primary milestones that a Merchant can expect to see when handling disputes. These six stages
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Warning: Please note that the platform does not offer steps to handle disputes in the Arbitration stage and must be discussed directly with the Issuer’s Card Brand, such as Visa or MasterCard. |
Dispute Statuses
To get started, you’ll want to get familiar with the 4 available Dispute Statuses you’ll frequently encounter:
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Supporting Documentation / Evidence
When a Dispute is initiated, the Issuer may request a detailed explanation of the problem from the cardholder to determine whether a cause for a legitimate dispute exists.
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Card brand Suggested Receipt and/or Invoice Requirements: Card Present: The following are the Visa requirements for all transaction receipts generated from electronic point-of-sale terminals (including cardholder-activated terminals). It is recommended that merchants provide itemized receipts when possible. Card-not-Present Transaction Receipt Requirements: The following are the Visa requirements for all manually printed transaction receipts in the card-absent environment.
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Dispute vs Chargeback
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A Chargeback Dispute and a Dispute Chargeback are two distinct processes related to payment disputes.
A Dispute occurs when a customer is questioning a transaction with their issuing bank or credit card company, typically due to concerns raised around unauthorized charges, billing errors, or overall dissatisfaction with a product or service. This can be a formal process initiated through their issuer or credit card company during the preliminary Chargeback proceeding or an informal process where concerns are raised by the cardholder directly and discussed with the Merchant to seek a resolution.
A Chargeback occurs when a cardholder bypasses the Merchant entirely to dispute the transaction with their issuer or credit card company to reverse a transaction. Chargebacks are typically more formal and can also incur additional fees from a Merchant perspective. Chargebacks are typically initiated due to claims of fraud, or failure to receive goods or services.
Both listed processes above require prompt response from the Merchant with compelling evidence provided to support their transaction’s validity.