A Dispute is a claim filed by a Cardholder or issuing bank that a transaction was fraudulent, a billing error occurred, or a product or service not meeting its advertised expectations for example.

The greater process is referred to as a Chargeback and contains each Dispute stage within:

Chargeback Cycle	Dispute Cycle	Description

Chargeback Cycle	Dispute Cycle	Description
Retrieval	Retrieval	The Issuer is looking for more information about the transaction.
Chargeback	First Chargeback	The Cardholder is disputing the transaction payment and the funds have been reversed from the Merchant’s account.
	Representment	Both the Merchant and Cardholder submit their first round of supporting evidence.
	Pre-Arbitration	The Cardholder lost the first Dispute and both parties will submit more evidence.
	Issuer Accepted Pre-Arbitration	Only applicable to Fraud and Authorization Dispute types that occur on the Visa card brand network. The Issuer has accepted the Merchant’s evidence and has decided in favor of the Merchant.
	Issuer Declined Pre-Arbitration	Only applicable to Fraud and Authorization Dispute types that occur on the Visa card brand network. The Issuer has declined the Merchant’s evidence and has decided in favor of the Merchant.
	Arbitration	The Cardholder lost the second Dispute and both parties will arbitrate further with the card brand for a final decision.
		The final decision made by a third party for the Merchant or Cardholder to receive full, partial or no credit.
Resolution
Resolution	Reversal (If Applicable)	The Issuer has acknowledged that the transaction is valid and will return funds back to the Merchant.

Tip: Review the guides for Responding to a Chargeback Dispute using your preferred method:

Final = Dispute is final. The case is closed and can no longer be responded to.
Green = Chargeback results in the Merchant receiving a credit.
Orange = Chargeback results in the Merchant being debited.
Yellow = No financial impact to the Merchant.
Grey = Not valid.

Stage	Won	Lost	Open

Stage	Won	Lost
First	Final	Final
Re-presentment		Final
Pre-Arbitration
Arbitration	Final	Final
Retrieval
Reversal	Final

Dispute Decisions

When a Dispute cycle action occurs, such as new evidence being uploaded, or a Merchant Accepting Liability for the Dispute, a decision can be made by the Issuer in favor of the Cardholder’s Dispute, or in favor of the Merchant’s transaction validity.

These decisions are shown as either Won (in favor of the Merchant) or Lost (in favor of the Cardholder):

Won - This status refers to a Dispute cycle being ruled in favor of the Merchant from the Issuer.
Lost - This status refers to a Dispute cycle being ruled in favor of the Cardholder from the Issuer.

Final Decisions

A final decision can be provided by a reviewing Issuer during the review of these phases:

First Chargeback: Won or Lost
Representment: Lost
Arbitration: Won or Lost
Reversal: Won

This final decision can be escalated by a Cardholder, with compelling evidence, even after a final decision of “Won” has been reached, except after Arbitration.

Conversely, a Merchant cannot appeal a final decision of “Lost” at any time if it has been reached, and the Merchant must accept liability for the Dispute.

Inactivity Warning: If a Merchant does not respond to a Dispute cycle request by the provided due dates given to each Chargeback process, the Issuer will automatically make a decision for either Won or Lost status for the Chargeback.

The Issuer will typically make a final decision in favor of the Cardholder when a Merchant does not respond to a request after the First Chargeback stage.

Available Response Options

Using our Portal or our API, you can easily respond to Dispute cycle changes during a Chargeback up to Arbitration.

To view more details about each individual Dispute cycle response options and background context, continue reading below. To see the step-by-step guide for responding with your workflow of choice, click the applicable link below:

Tip: Click here to view steps to respond to Disputes using the Portal.

Chargeback Dispute Response Evidence

Evidence supporting the Merchant’s transaction validity is crucial to creating the best outcome possible for the Merchant when following the recommendations to minimize Disputes.

A Merchant’s Dispute response should include all formal & informal evidence supporting their side of the Dispute, presented clearly and concisely for the issuing bank.

Below are the different types of evidence a Merchant can provide to help support their claims:

Evidence Type	Description

Evidence Type

Description

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 contact information
Signed proof of delivery or Satisfactory Services

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 & Cardholder
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

Retrieval - Response Options

During Retrieval, the Cardholder’s Issuer requests transaction details from the Merchant (or Merchant’s bank) in response to the customer’s transaction inquiry or Dispute. Merchants must provide relevant supporting documentation as evidence to support the transaction’s validity. This is a critical step for an Issuer to establish a potential first Chargeback.

The Issuer is requesting supporting documentation for the transaction in question, such as terms & services or proof of purchase.

After receiving a Retrieval Dispute cycle, follow the options below to respond accordingly:

Upload Evidence: The Merchant should provide evidence by a pre-determined date given by the Issuer and shown in the Portal. Recommended supporting evidence includes, but is not limited to:

Sales Receipts or Invoices
Refund or Terms of Service policies,
Cardholder Communications with the Merchant

Next Steps: From here, the Issuer will review the initial information about the transaction. No further action is needed for Retrieval.

First Chargeback - Response Options

If the customer’s original Dispute was escalated either by the Cardholder or their Issuer, it will update to a First Chargeback. Here, the Cardholder’s Issuer has formally reversed the transaction back to the Cardholder, debited from the Merchant’s account balance.

The Merchant is notified that they have the opportunity to respond with supporting documentation as evidence to challenge the Chargeback or Accept Liability to concede to the Dispute and accept the reversal of Cardholder funds.

A first Dispute payment Chargeback has been opened and has not yet been responded to by the Merchant. The Merchant has two available options:

Representment: Proceed to the next cycle of the Dispute and provide evidence to the Issuer to reinforce the validity of the transaction.
Accept Liability: Voluntarily concede to the Dispute & debit the held funds from the Merchant to the Cardholder.

Representment - Response Options

Merchants that have chosen to upload evidence during the First Chargeback phase will be given the opportunity to contest the Dispute with compelling documentation to their acquirer.

The evidence the Merchant is submitting demonstrates the legitimacy of the transaction and that the customer received the intended product or service. The Merchant’s Acquirer will then present this evidence to the Cardholder’s bank, in an effort to overturn the First Chargeback.

Pre-Arbitration - Response Options

Also called a “Second Chargeback”, the provided evidence uploaded during Representment was contested by the Cardholder or their Issuer, and additional investigation will begin, where both parties (The Merchant’s Acquirer and the Cardholder’s Issuer) will review the case in more detail.

Merchants can continue to provide more evidence to further support their claim as a last attempt to seek a resolution with the Cardholder’s Issuer before the Dispute advances to the Arbitration stage.

Issuer Accepts Pre-Arbitration - Response Options

Similar to the normal Pre-Arbitration cycle, the “Issuer Accepts Pre-Arbitration” cycle is unique to Fraud and Authorization Dispute types on Visa transactions only.

In this Dispute cycle, the Issuer has decided in favor of the Merchant on their behalf. At this point, the Merchant has Won the Dispute and the funds will be returned to the Merchant.

Issuer Declined Pre-Arbitration - Response Options

Similar to the normal Pre-Arbitration cycle, the “Issuer Accepts Pre-Arbitration” cycle is unique to Fraud and Authorization Dispute types on Visa transactions only.

In this Dispute cycle, the Issuer has decided in favor of the cardholder and declined pre-arbitration on behalf of the Merchant. At this point, the Merchant has initially Lost the Dispute. However, the Merchant may choose to Accept Arbitration and proceed to allow the card brand (Visa) to arbitrate the Dispute to reach a final decision of Won or Lost for the Merchant.

Arbitration

In the final Dispute cycle of the Chargeback process, an independent third party, often the card brand network itself (such as Visa or MasterCard), will assess the Dispute. Both parties (Merchant and Cardholder) will present their arguments for the arbitrator (third party) to decide.

This decision is final and the losing party must accept the decision. As a result, there are no response options available for the Arbitration stage.

Reversals

While not a Dispute cycle to respond to, a Reversal refers to a Chargeback amount returned to a Merchant that was previously debited during a First Chargeback stage as the result of a final decision (“Won”) in favor of the Merchant’s transaction validity. As a result, there are no response options available for the Reversals.

Related Pages

Click the links on the page to access any of the following pages:

Payrix Resource Center

Dispute Response Options