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.

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