Disputes and Chargebacks

What is a dispute?

A dispute (also called a chargeback) happens when someone questions if a transaction was valid. This can be the person who bought something (the cardholder) or the bank that gave them the card (the Issuer). In either case, the Issuer sends the dispute to the company that handled the payment (the Acquirer) to figure things out. Global Payments will either resolve the dispute or send it to the merchant to provide evidence that the transaction is valid and authorized.

When a merchant receives the dispute, they can accept it or they can choose to challenge it by sending evidence to prove the transaction is legitimate. Global Payments will review the evidence to be sure it meets the necessary requirements before sending it to the Issuer. The Issuer will then review the evidence provided and will make a decision on the outcome of the dispute. The customer and the merchant will then be notified of the case decision.

Dispute types and stages

It’s useful to gain an understanding of the different types of disputes, the relevant terminology and their meanings.

Dispute Term	Description
Retrieval	A request for proof that a transaction was valid. To respond to a Retrieval Request you might, for example, provide a copy of the sales draft for the transaction. Funds are not exchanged during retrieval request cases, but if you do not respond successfully, you could be held responsible (liable) for any chargeback cases that result. Retrieval requests are sometimes simply referred to as retrievals.
Chargeback	A Chargeback case is created when the cardholder or Issuer is formally disputing a transaction. As soon as a chargeback case is initiated, the disputed funds are usually transferred from the merchant’s account to the Issuer. With a chargeback you can choose to: Acknowledge it and accept liability Challenge it with supporting documentation
Arbitration / PreArbitration	A PreArbitration can be created when a case is not resolved at the chargeback stage. For this case type, the Issuer and Global Payments attempt to resolve the dispute and avoid Arbitration. You would typically try to avoid arbitration because of the added fees, time lost and potential penalties if you lose the arbitration case. Arbitration, when necessary, is performed by the Card Schemes (for example, Visa and Mastercard).
Compliance / PreCompliance	A Compliance or PreCompliance is a type of case that is based on a violation of the rules that are defined by the relevant Card Scheme. These violations include: The customer agreed to be charged at least once, but the merchant billed for multiple key-entered transactions without the cardholder’s authority (card-present environment). A merchant/acquirer ignored a retrieval request issued for legal proceedings or law enforcement investigations.
Exception Case	The general term Exception Case includes both the incoming and outgoing versions of the following case types: PreArbitration, Arbitration, PreCompliance, Compliance, and Good Faith Collection.