A Dispute refers to an available action a cardholder 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 Dispute is a cardholder Cardholder complaint to the Merchant. The Merchant should first engage directly with the cardholder 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 Dispute and chargeback. |
A dispute Dispute is first initiated by the cardholder 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.
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Dispute Stages are the primary milestones that a Merchant can expect to see when handling disputesDisputes. These six stages
Stage | Description |
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Retrieval | The Issuer is looking for more information about the transaction. |
First Chargeback | The cardholder Cardholder is disputing the transaction payment. |
Representment | Both the Merchant and Cardholder submit their first round of supporting evidence. |
Pre-Arbitration | The Cardholder lost the first dispute Dispute and both parties will submit more evidence. |
Arbitration | The Cardholder lost the second dispute Dispute and both parties will arbitrate further with the card brand. |
Reversal | The Issuer has acknowledged that the transaction is valid and will return funds back to the Merchant. |
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Warning: Please note that the platform does not offer steps to handle disputes Disputes in the Arbitration stage and must be discussed directly with the Issuer’s Card Brand, such as Visa or MasterCard. |
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Dispute Status | Description |
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Needs Response | The Issuer is awaiting the Merchant’s evidence, or to Accept Liability, for the disputeDispute. |
In Review | The Issuer is in the process of reviewing submitted evidence to reach a decision. |
Won | The Issuer has reached a decision in favor of the Merchant. |
Lost | The Issuer has reached a decision in favor of the Cardholder. |
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| title | Click here to see a detailed list of all Dispute Stage and Status combinations and actions. |
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Stage | Status | More Information |
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Retrieval | Needs Response | The Issuer is requesting supporting documentation for the transaction in question, such as terms & services or proof of purchase. This is a precursor to an actual chargeback. The chargeback cycle of Retrieval will not change and there is no financial impact on the merchant. | First Chargeback | Needs Response | A first dispute Dispute payment chargeback has been opened and has not yet been responded to by the Merchant. The Merchant has two available options: Accept Liability: Voluntarily concede to the Dispute & debit the held funds from the Merchant to the cardholderCardholder. Representment: Proceed to the next cycle of the Dispute and send provide evidence to the Issuer to reinforce the validity of the transaction.
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Warning: If the Merchant does not respond by the provided due date to with one of the decisions above, the Issuer will automatically make a decision for either Won or Lost status for the Chargeback. |
| Won | An incoming chargeback was pre-determined as “Won” in the Merchant’s favor. This decision is final. | Lost | An incoming chargeback was pre-determined as “Lost”, or against the Merchant. This decision is final. | Representment | Needs Response | The Merchant has decided to support their transaction’s validity by providing evidence. Upload Evidence: The Merchant must provide evidence by a pre-determined date given by the Issuer and shown in the Portal or applicable API response. In addition to the documentation recommended for Retrieval, supporting evidence for Representment includes, but is not limited to:
Note: This evidence must be provided in either a document file extnesion PDF or DOC, or image file type PNG, JPG, or GIF. | Tip |
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Tip: Make sure your uploaded evidence is legible. |
| In Review | The evidence provided by the Merchant is currently being reviewed by the Issuer to reach a decision. | Won | After the evidence was reviewed by the Issuer, the chargeback was pre-determined as “Won” in the Merchant’s favor. This decision is final. Result - An unsuccessful First Chargeback from the Issuer after Representment will trigger a credit to the merchant. Next Steps - The cardholder Cardholder can choose to further pursue the dispute Dispute through Pre-Arbitration steps.
| Lost | After the evidence was reviewed by the Issuer, the chargeback was pre-determined as “Lost”, or against the Merchant. | Pre-Arbitration
(Second Chargeback) | Needs Response | The Issuer has rejected the evidence provided by the Merchant during Representment and will continue pursuing the chargeback. The Merchant has two available options: Accept Liability - Voluntarily concede to the Dispute & debit the held funds from the Merchant to the cardholderCardholder. Accept Arbitration - The Merchant accepts and will work directly with the relevant Card Brand to arbitrate and reach a resolution.
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Warning: Arbitration steps incur additional fees. |
| In Review | The evidence provided by the Merchant is currently being reviewed by the Issuer to reach a decision. | Won | After the evidence was reviewed by the Issuer, the chargeback was pre-determined as “Won” in the Merchant’s favor. This decision is final. Result - An unsuccessful Second Chargeback from the Issuer after Representment will trigger a credit to the Merchant. Next Steps - The cardholder Cardholder can choose to further pursue the dispute Dispute through Arbitration steps.
| Lost | After the evidence was reviewed by the Issuer, the chargeback was pre-determined as “Lost”, or against the Merchant. | Arbitration | In Review | When the Merchant has chosen to Accept Arbitration (or ask the card network to make a final decision at a cost). | Won | After all evidence and arbitration has been completed by the Issuer, the chargeback has reached a final decision of “Won” in the Merchant’s favor. | Lost | After all evidence and arbitration has been completed by the Issuer, the chargeback has reached a final decision of “Lost”, or against the Merchant. | Reversal | Won | This decision is final. |
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When a Dispute is initiated, the Issuer may request a detailed explanation of the problem from the cardholder Cardholder to determine whether a cause for a legitimate dispute Dispute exists.
Reasons for disputes—those Disputes—those reasons that may be of assistance in an investigation include the following:
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Evidence Type | Description |
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Formal Evidence | This includes official documentation directly related to the transaction. Formal evidence includes, but is not limited to: Signed credit card receipt Completed credit card authorization form Corresponding Invoice with cardholder Cardholder contact information Signed proof of delivery or Satisfactory Services
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Informal Evidence | Informal evidence is relevant documentation that is not directly related to the transaction. Informal evidence includes, but is not limited to: Logs of correspondence between the Merchant & cardholderCardholder Screenshots of the Merchant’s website and/or published Terms of Service Pictures of the merchandise A summary of the incident written by the Merchant
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Warning: If the Merchant doesn't submit a response, the chargeback is automatically ruled in the cardholderCardholder's favor. |
See the content below for recommendations for supporting documentation or evidence submissions for Disputes:
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| title | Click here to see Dispute Supporting Documentation recommendations. |
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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 cardholderCardholder-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.
Type of Evidence | Description |
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Credit Card Authorization Documentation | Card brands also consider the following acceptable ways of documenting a cardholderCardholder's approval for a transaction: For a Mail/Phone Order Transaction a signed order/authorization form. Details and a copy of the ID presented by the Cardholder Evidence of Transaction completion by a member of the Cardholder's household or family (if not by the cardholderCardholder).
| Proof of Delivery or Satisfactory Services | Cardholder goods receipt or satisfactory service rendering confirmation is one of the best protections a merchant can have. Some of the best details are indicated below: Photos, Screenshots, Emails, or Recorded Phone Calls proving that the Cardholder disputing the Transaction has, or is currently using the products or services. Product or service pick-up form with the Cardholder’s signature. Evidence of procut delivery date and time with the same physical address that returned an AVS match of Y or M. (Signature not required.) A neutral third-party opinion to help corroborate your claim against the cardholderCardholder.
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Dispute Stage Processing Flows
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A Dispute and a Chargeback are two distinct processes related to payment disputesDisputes.
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 Issuer or credit card company during the preliminary Chargeback proceeding or an informal process where concerns are raised by the cardholder Cardholder directly and discussed with the Merchant to seek a resolution.
A Chargeback occurs when a cardholder Cardholder bypasses the Merchant entirely to dispute Dispute the transaction with their issuer 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.
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