Disputes
A dispute refers to a cardholder raising an objection to a transaction, believing that the transaction has issues.
Disputes Process
- Cardholder initiates dispute: The cardholder contacts the issuing bank to explain their objection to a specific transaction.
- Issuing bank review: The issuing bank reviews the cardholder's dispute request and decides whether further processing is needed.
- Communication with merchant: The issuing bank may contact the acquiring bank and merchant, requesting relevant evidence and information about the transaction.
- Resolution or escalation: If the dispute can be resolved through communication and negotiation, the dispute ends; otherwise, the dispute may escalate to a chargeback.
Main Differences Between Disputes and Chargebacks
Stage:
- Dispute is the preliminary stage of chargeback, where the cardholder raises an objection to a transaction.
- Chargeback is the further action taken by the issuing bank after the dispute remains unresolved, formally reversing the transaction.
Processing flow:
- Dispute handling typically involves preliminary communication and negotiation, attempting to resolve the issue without formal reversal.
- Chargeback handling is more formal, involving transaction amount reversal, and must follow payment network regulations and procedures.
Impact:
- The dispute handling stage is relatively flexible, allowing resolution through communication with minimal impact.
- Chargeback has a greater impact on merchants, not only involving fund reversal but also potentially affecting the merchant's reputation and future transaction processing.