Transaction disputes and chargebacks

What is a dispute?

A payment dispute is a claim filed by a cardholder or issuing bank to receive a resolution. It can be processed in one or multiple stages.

The claim may be for incorrect charges, undelivered orders, or unrecognised transactions.

Disputes start at the inquiry stage (Retrieval request) and can escalate to a chargeback if not resolved. Some disputes may skip the inquiry stage and go directly to a chargeback.

There would also be cases where the dispute raised is an upfront chargeback.

Retrieval request

A Retrieval request is a request by the bank for information to support the claims of the cardholder. It typically includes copies of the sales ticket or online order and the transaction authorization. (Note: American Express calls these requests “inquiries” while Visa and MasterCard use the label “retrieval.”)

Merchants reply to retrieval requests by providing the requested information to the bank. When the bank is satisfied with the information supplied, the retrieval request is closed.

If documents don't meet the bank's requirements or aren't submitted in time, the dispute advances to the chargeback phase.

Chargebacks

Chargebacks happen when a cardholder asks their bank for a refund directly or when a merchant doesn't provide necessary documents for a Retrieval request. They’re considered a forced payment reversal.

Cardholders dispute transactions for undelivered, misrepresented, or damaged goods.

If the issuing bank finds the charge illegitimate, they withdraw the amount from the merchant's account and refund the cardholder without merchant input.

Merchants can dispute the chargeback by providing transaction records, shipment details, delivery proof, customer correspondence, and evidence of refunds. Response time frames vary and must be met. If documentation supports the merchant, a chargeback reversal happens.