Dispute Response Options
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 Stage | Description |
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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. | |
Arbitration |
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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:
Dispute Decisions
When a Dispute stage 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 stage being ruled in favor of the Merchant from the Issuer.
Lost - This status refers to a Dispute stage 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 stage 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 stage changes during a Chargeback up to Arbitration.
To view more details about each individual Dispute stage 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:
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 |
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Formal Evidence | This includes official documentation directly related to the transaction. Formal evidence includes, but is not limited to:
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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:
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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.
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.
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.
Arbitration
In the final Dispute stage 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 stage 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
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