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:
The Issuer is looking for more information about the transaction.
The Cardholder is disputing the transaction payment and the funds have been reversed from the Merchant’s account.
Both the Merchant and Cardholder submit their first round of supporting evidence.
The Cardholder lost the first Dispute and both parties will submit more evidence.
Reversal (If Applicable)
The Issuer has acknowledged that the transaction is valid and will return funds back to the Merchant.
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.
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.
A final decision can be provided by a reviewing Issuer during the review of these phases:
First Chargeback: Won or Lost
Arbitration: Won or Lost
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.
Tip: Too little evidence will likely present the Merchant’s claims as uncompelling, but too much documentation may present the Merchant’s claims as irrelevant.
Warning: Once evidence has been uploaded in a Merchant’s Dispute response, it cannot be added to or modified in any way.
Below are the different types of evidence a Merchant can provide to help support their claims:
This includes official documentation directly related to the transaction.
Formal evidence includes, but is not limited to:
Informal evidence is relevant documentation that is not directly related to the transaction.
Informal evidence includes, but is not limited to:
Note: View the current limitations for response file uploads:
Maximum of 8 documents total
A single document can’t exceed 1 MB
The total of all files cannot exceed 8MB
File Format – Must be either TIFF/TIF or PDF
Must be submitted within the Payrix portal or a Jira ticket prior to 5 business days before the due date.
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.
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.
After receiving a Retrieval Dispute stage, 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.
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:
Cardholder-Signed Service Contracts,
Product Photos or Service Descriptions
Note: This evidence must be provided in either a document file extension PDF or DOC, or image file type PNG, JPG, or GIF.
Tip: Make sure your uploaded evidence is legible.
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.
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 Cardholder.
Accept Arbitration - The Merchant accepts and will work directly with the relevant Card Brand to arbitrate and reach a resolution.
Warning: Arbitration steps incur additional fees.
Note: The Platform does not currently offer the ability to manage Arbitration through the Portal. As a result, you will need to work directly with the card brand network during this Dispute stage.
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.
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.
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