Understanding the Dispute Process

Step 1: Inquiry

The first step in the dispute process is when a customer makes a formal inquiry at the bank regarding a payment. The bank then notifies the card network, who then notifies the merchant.

In this process, no amount is withdrawn. The merchant can reach out to the customer and resolve the inquiry, or submit documents to the card network to prevent this from escalating to a dispute.

Step 2: Dispute

Customers (cardholders) can file a dispute with their bank when they find a payment invalid. This could be either because the customer claims the transaction was fraudulent, the order was cancelled or damaged or any other reason.

When a customer files a dispute, a chargeback is automatically deducted from the merchant’s account along with a fee.

Step 3: Response Submission

When a customer files a dispute, the merchant is notified. There are two ways to respond to disputes after you review the payment:

• Challenge: Challenge a customer’s dispute by submitting evidence against their claim within a specified period.

• Accept: Agree with what the customer has claimed and accept the dispute.

Step 4: Response Review

Once the response has been submitted, it is immediately forwarded to the card network. They review the documents and evidence submitted by the merchant.

Step 5: Dispute Resolution

If the evidence is compelling enough, the card network resolves the dispute in the merchant’s favor and reverses the chargeback. Otherwise, the claim is rejected and ends in the customer’s favor, and the merchant receives nothing.