Understanding Disputes

TL;DR

A dispute (chargeback) is created when a cardholder questions a posted transaction and asks their issuing bank to reverse it. The issuer communicates the dispute through the card network to the acquirer/PSP, which then notifies the merchant. The merchant can respond by submitting evidence (a rebuttal) to prove the transaction’s validity. The issuer reviews the evidence and returns a decision, or escalates to arbitration if necessary.

Payment Ecosystem

Understanding the payment ecosystem makes disputes easier to navigate. Below is a summary of the key parties involved and their core responsibilities.

Entity	Description	Primary responsibilities	Examples
Cardholder	The person who owns or uses the payment card.	Makes purchases, provides card details at checkout, and can file a dispute with their bank if they contest a charge.	Buyers, consumers, end customers
Merchant	A business that sells goods or services and accepts card payments.	Takes orders, requests payment authorization, fulfills orders, issues refunds, and responds to disputes and chargebacks.	Online stores, physical retailers, SaaS vendors
Issuing Bank	The bank that issued the card to the cardholder.	Maintains the card account, approves or declines authorizations, posts charges to the cardholder’s account, and manages disputes on behalf of the cardholder.	Bank of America, Barclays, local banks that issue Visa/Mastercard cards
Acquiring Bank	The bank that processes card payments for the merchant.	Provides the merchant account, forwards transactions to the card network, and receives and deposits settlement funds to the merchant (net of fees).	Worldpay, Bank of Merchant’s choice, regional acquiring banks
Card Network	The network that routes messages between issuers and acquirers and sets transaction rules.	Connects the issuer and acquirer, defines rules and fees, and manages clearing, settlement, and dispute workflows.	Visa, Mastercard, American Express, Discover
Payment Service Provider (PSP)	A provider that helps merchants accept and manage payments.	Supplies gateways, SDKs, risk tools, and reconciliation services, and often connects the merchant to one or more acquirers or networks.	Stripe, Adyen, PayPal.

Dispute Lifecycle

After a transaction posts, cardholders typically have up to 180 days to open a dispute. Below is a clear, step-by-step description of how a dispute moves through the system and what each stage means for a merchant:

Step	What happens	How Chargeflow helps
Cardholder files a dispute	The cardholder contacts their issuing bank (often via the bank’s app) to contest a charge. The bank records the reason and starts the dispute process.
Issuer opens a case	The issuing bank creates a formal dispute with a reason code and sends it through the card network to the merchant’s acquirer.
Chargeback posted to the acquirer	The issuer posts a provisional reversal and routes the case to the acquirer. The disputed amount is temporarily removed from the merchant’s balance.
Merchant notification	The acquirer or PSP notifies the merchant and provides the dispute data, including the reason code and any supporting details. The merchant can accept the dispute or prepare a rebuttal.	Chargeflow ingests disputes from all connected PSPs and presents them in a single dashboard so you see every case in one place.
Representment (merchant rebuttal)	The merchant gathers evidence and builds a clear, factual narrative to challenge the dispute. This evidence may include receipts, delivery proof, authentication logs, and customer communications.	Chargeflow consolidates and enriches your data and drafts a focused rebuttal.
Submission	The merchant submits the evidence and rebuttal to the acquirer or PSP, which forwards it to the issuer for review.	Chargeflow submits the rebuttal on your behalf.
Issuer decision	The issuer reviews the submission and issues a ruling: merchant-favored (funds returned) or cardholder-favored (reversal stands).	Chargeflow tracks the outcome, updates case status, and notifies you.
Pre-arbitration/arbitration (optional)	If a decision is contested or network rules require it, the case may escalate to pre-arbitration or arbitration. The card network then adjudicates the dispute. Arbitration is usually slow and expensive.	Chargeflow advises on escalation and supports documentation and preparation for arbitration when needed.

Note

Exact timelines and steps vary by card network, reason code, and region. Typical windows include quick retrieval requests (often 24–72 hours), merchant response windows (commonly 7–30 days), issuer review (often several weeks), and arbitration timelines that can run for months. Chargeflow provides all relevant information through dispute events (webhooks) so you can act immediately and keep your systems in sync.

Dispute Reasons

Dispute reasons originate with the issuing bank and are mapped to the card network’s reason-code list. Chargeflow combines the network reason code with transaction signals and any evidence you submit to generate the most effective rebuttal and to improve our automation over time. To simplify handling and speed understanding, Chargeflow groups network reason codes into clear, actionable reason categories.

Dispute reason category	Description
`fraud`	The cardholder says they did not authorize or participate in the transaction.
`not_received`	The cardholder says they never received the goods or service.
`not_as_described`	The cardholder says the goods or services are materially different from what was advertised or expected.
`canceled_recurring_billing`	The cardholder says they canceled a subscription but were still charged.
`duplicate_charge`	The cardholder says they were charged more than once for the same purchase.
`credit_not_processed`	The cardholder says a promised refund or credit was not applied.
`other`	Any dispute reason that does not fit the categories above. Network reason codes vary and may include merchant-specific or region-specific categories.

💡 Tip:
Share any additional data you think supports the case. Chargeflow’s Enrichment Engine evaluates submitted artifacts and includes only the items that strengthen the rebuttal.

Note

Chargeflow automatically ingests and enriches the most relevant data for each dispute based on the reason code and historical outcomes from the sources you connected. Subscribe to the dispute.created webhook to view the initial data Chargeflow has, then add targeted evidence using the Update Dispute endpoint so Chargeflow can draft the strongest rebuttal.

Dispute Stages

Disputes can move through several stages, and each stage requires a different approach. Chargeflow manages the whole lifecycle and takes stage-appropriate action to maximize recoveries.

Stage	What happens	What Chargeflow does	Possible next stage
`inquiry`	Also called a retrieval or request for information (RFI). The issuer requests transaction documents instead of immediately issuing a chargeback.	Automatically sends available transaction documents to the issuer to prevent escalation. Lists any missing artifacts and shows a prioritized checklist. Notifies your team and recommends the exact items to add.	The issuer can escalate the `inquiry` to a `chargeback`
`chargeback`	Issuer posts a provisional reversal and notifies the acquirer/PSP. The disputed amount is provisionally removed from the merchant’s balance.	Normalizes dispute data and creates the case record. Consolidates and enriches available evidence (orders, auth, fulfillment, comms). Drafts a targeted rebuttal strategy and a clear evidence letter. Flags any missing high-impact artifacts.	One party (merchant or buyer) can escalate the dispute to a `pre-arbitation` to reopen the case for a second chargeback.
`pre_arbitration`	Also called a second chargeback. One party (the merchant or buyer) challenges the issuer's decision and requests escalation under the network's rules. This may incur fees.	Rebuilds the case narrative for escalation and compiles required supplemental evidence. Advises on likelihood vs. cost and recommends whether to escalate. Requests targeted artifacts from the merchant if needed.	`arbitration` - final decision by the network.
`arbitration`	Final adjudication by the card network. The network issues a binding decision and any applicable fees. Arbitration is rare and can be slow and costly.	Prepares all network-specific documentation and formats.Submits materials and logs outcomes and fees.	N/A

Dispute Statuses

Chargeflow has simplified the dispute lifecycle and unified the dispute status across all sources, enabling you to understand where your dispute stands easily.

Status	Description	Possible actions
`needs_response`	The dispute requires a response from the merchant. Chargeflow prepares to submit a rebuttal unless you add targeted evidence first.	Use the Update Dispute endpoint to add targeted evidence before Chargeflow submits a rebuttal letter on your behalf.
`under_review`	The dispute has been submitted (or the response window has passed), and the issuer is evaluating the case.	N/A
`won`	The dispute was resolved in the merchant’s favor.	N/A
`lost`	The dispute was resolved in the buyer’s favor.	Consider escalation to `pre_arbitration` only after a cost/benefit review; contact Chargeflow for guidance before escalating.