Chargeback Lifecycle

Prerequisites

Before diving into the lifecycle, understand:

• Chargeback basics and terminology
• Reason codes and their evidence requirements
• Chargeback metrics you should track

TL;DR

• Inquiry/Retrieval (optional): Bank requests info before filing chargeback - respond immediately
• First Chargeback: Cardholder wins by default; you have 20-45 days to respond (representment)
• Pre-Arbitration: If you won representment, issuer can challenge with new evidence
• Arbitration: Card network makes final, binding decision - loser pays $500-1,000+ in fees
• Full cycle can take 2-6 months; only ~2% of chargebacks reach arbitration

Overview

The chargeback process has multiple stages, with opportunities to resolve the dispute at each step. The further you go, the more expensive and time-consuming it becomes.

Retrieval Requests: The Pre-Chargeback Warning

A retrieval request (also called a "request for information" or "RFI") is when an issuer asks for transaction documentation before deciding whether to file a chargeback.

How Retrievals Work

Step	What Happens
1	Cardholder questions a charge
2	Issuer requests transaction documentation from acquirer
3	Acquirer passes request to merchant
4	Merchant provides documentation (typically 10-20 days)
5	Issuer reviews and decides: resolve or escalate to chargeback

Retrieval Request by Network

Network	Retrieval Frequency	Response Window
Visa	Rare (most skip to chargeback)	20 days
Mastercard	Rare (most skip to chargeback)	20 days
Amex	Common (inquiry process)	10-20 days
Discover	Moderate	20 days

Why Retrievals Matter

• Respond immediately. Non-response often triggers automatic chargeback.
• No ratio impact yet. Resolving at retrieval doesn't count as a chargeback.
• Opportunity to prevent. Strong documentation can prevent escalation.
• Lower cost. Retrieval fees are typically lower than chargeback fees.

What to Submit

Document Type	Purpose
Transaction receipt	Proves transaction details
Signed authorization	Card-present proof
Delivery confirmation	Physical goods delivery
Customer communication	Context and acknowledgment
Product/service description	What was purchased

Retrieval Response Rule

Treat every retrieval request as urgent. Respond within 48 hours even if you have 20 days. Fast, complete responses have the highest deflection rate.

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Inquiry vs. Dispute: Understanding the Stages

Before a formal chargeback, transactions can go through inquiry stages. Understanding these stages helps you intervene earlier.

Stage Definitions

Stage	What It Is	Ratio Impact
Customer inquiry	Cardholder asks issuer about charge	None
Order Insight / Consumer Clarity	Issuer looks up transaction details	None
Retrieval request	Formal request for documentation	None
First chargeback	Formal dispute filed	Yes
Pre-arbitration	Challenge to representment	No additional
Arbitration	Network final decision	No additional

Intervention Points

Stage	How to Intervene	Tools
Customer inquiry	Rich merchant descriptors	Order Insight, Consumer Clarity
Retrieval request	Fast, complete response	Document repository
Alert notification	Proactive refund	Ethoca, Verifi CDRN/RDR
First chargeback	Representment	Processor portal

Why Early Intervention Wins

Resolution Stage	Cost to You	Ratio Impact
Customer recognizes charge	$0	None
Alert + refund	Alert fee (~$35)	None
Retrieval resolved	Minimal	None
Won representment	Time + chargeback fee	Counts
Lost chargeback	Full transaction + fees	Counts

Key insight: Even winning at representment doesn't protect your ratio. The chargeback was filed; it counts. Stop disputes before they become chargebacks.

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Stage 0: Pre-Dispute (Prevention Window)

Before a chargeback is filed, there are opportunities to resolve the issue:

Customer inquiry phase:

• Customer reviews statement, doesn't recognize charge
• Customer contacts bank with question
• Bank may query Order Insight/Consumer Clarity for transaction details
• If customer recognizes charge, no dispute filed

Alert phase:

• If customer asks bank to dispute, alert services (RDR, CDRN, Ethoca) may notify you
• You can refund proactively to prevent chargeback filing
• See Chargeback Alerts for details

Stage 1: Inquiry/Retrieval Request

Some card networks initiate an inquiry before filing a formal chargeback. This is a request for information about the transaction.

Who uses inquiries:

• American Express and Discover: Common
• Visa and Mastercard: Rare (mostly skip to chargeback)
• Mexico domestic transactions: All brands use inquiries

Timeline:

• You typically have 7-20 days to respond
• If you don't respond, it may escalate to a chargeback automatically

What to do:

• Respond immediately with transaction details
• Provide proof of delivery, authorization, customer communication
• A good inquiry response can prevent the chargeback entirely

Fees: Inquiry fees are often priced similarly to chargeback fees by acquirers. If it escalates to a chargeback, you typically won't be charged twice, but confirm with your processor.

Stage 2: First Chargeback

When a cardholder formally disputes a transaction, the issuing bank files a chargeback. At this point:

• Funds are immediately debited from your merchant account
• You're charged a chargeback fee ($15-100 depending on processor)
• The chargeback counts against your ratio
• You must decide whether to accept or fight

Timeline by Network

Network	Cardholder Filing Window	Merchant Response Time
Visa	120 days (some codes shorter, e.g., 75 days)	30 days
Mastercard	120 days (some codes shorter, e.g., 45 days)	45 days
American Express	120 days	20 days
Discover	120 days	20 days

Note on filing windows: Some reason codes have shorter filing windows. Visa's "540-day rule" applies when goods or services are expected to be delivered much later than the transaction date (e.g., event tickets, travel bookings). Always confirm specific windows with your acquirer for your MCC and reason codes.

Merchant Options

1. Accept the chargeback: Don't respond. Customer keeps the refund. Chargeback counts against your ratio.

2. Representment: Challenge the chargeback by submitting evidence that the transaction was legitimate. See Representment.

Stage 3: Representment

Representment is your formal response to the chargeback. You "re-present" the transaction to the issuer with evidence supporting your case.

What you submit:

• Rebuttal letter explaining why the chargeback is invalid
• Compelling evidence (proof of delivery, authorization records, customer communication)
• Documentation specific to the reason code

Outcomes:

• You win: Funds returned, but chargeback still counts against your ratio
• You lose: Customer keeps refund, you've spent time/money for nothing

Win rates: Industry average is 20-40%. With strong evidence and proper process, some merchants achieve 60%+.

For details, see Representment and Compelling Evidence.

Stage 4: Pre-Arbitration

If you win representment, the issuer can challenge your victory by initiating pre-arbitration. This happens when:

• The issuer has new evidence from the cardholder
• The issuer believes your representment was insufficient
• The cardholder provides additional documentation

Timeline:

• Visa: Issuer has 30 days to initiate; you have 30 days to respond
• Mastercard: Issuer has 45 days to initiate; you have 45 days to respond

Your options:

1. Accept liability: You lose the funds but avoid arbitration fees
2. Challenge: Provide additional evidence and proceed toward arbitration

Important: Pre-arbitration is your last chance to settle before the expensive arbitration stage.

Stage 5: Arbitration

Arbitration is the final stage. The card network (Visa, Mastercard, etc.) acts as a neutral third party and makes a binding decision.

How it works:

1. You or the issuer files for arbitration (within 10 days of pre-arb decision)
2. Both parties submit final evidence (usually same evidence from representment)
3. Card network reviews and issues ruling
4. Decision is final and cannot be appealed

Costs:

Network	Filing Fee	Review Fee	Total (Loser Pays)
Visa	~$500	Varies	$500-1,000+
Mastercard	~$500	$150-250	$500-1,000+

Timeline:

• Visa: 1-3 months for decision
• Mastercard: 3-6 months for decision

Win rates: Merchants rarely win at arbitration. The card network typically sides with the cardholder unless evidence is overwhelming.

When to pursue arbitration:

• Transaction value significantly exceeds arbitration fees
• You have strong, new evidence
• Matter of principle (pattern of abuse from specific customer)

When to avoid arbitration:

• Low-value transactions
• Same evidence as representment (unlikely to change outcome)
• Tight cash flow (fees are non-refundable even if you win)

Complete Timeline Example

Day 0: Customer makes purchase Day 45: Customer contacts bank, claims fraud Day 46: Bank files chargeback (Stage 2) Day 47: You're notified, funds debited Day 60: You submit representment Day 90: Bank reviews, rules in your favor Day 105: Cardholder provides new evidence, issuer files pre-arbitration (Stage 4) Day 120: You respond to pre-arbitration Day 135: Issuer rejects your response, you file for arbitration (Stage 5) Day 180-240: Network issues final ruling

Total elapsed time: 6-8 months for a fully contested dispute.

Stage-by-Stage Costs

Stage	Your Cost if You Lose	Your Cost if You Win
Pre-dispute (alert)	Alert fee ($20-40)	Alert fee ($20-40)
First Chargeback	Transaction + chargeback fee	Chargeback fee only
Representment	Transaction + fee + time	Time only (funds returned)
Pre-Arbitration	Transaction + fee + time	Time only
Arbitration	Transaction + fees + arbitration fee ($500+)	Time + filing fee (sometimes refunded)

Key Takeaways

1. Earlier is cheaper: Resolve disputes at the earliest possible stage—see Chargeback Alerts
2. Respond to everything: Missing a deadline = automatic loss—see Time Frames
3. Document everything: You can't submit evidence you don't have—see Compelling Evidence
4. Know when to fold: Arbitration is rarely worth it for low-value disputes
5. Track your data: Understanding why you get chargebacks helps prevent them—see Chargeback Metrics

Next Steps

Just received a chargeback?

1. Check the reason code - Understand what you're fighting
2. Review representment process - Decide whether to fight
3. Gather evidence - Prepare your response

Want to prevent chargebacks?

1. Set up alerts - Stop disputes before they hit
2. Review your descriptors - Reduce "I don't recognize" disputes
3. Track your metrics - Know your ratio before problems

Approaching threshold?

1. Read Zero Point Nine Panic - Emergency response
2. Understand network programs - Know the consequences
3. Follow the playbook - Step-by-step crisis guide

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See Also

• Chargeback Prevention - Prevention hierarchy
• Chargeback Alerts - RDR, Ethoca, CDRN
• Representment - Fighting chargebacks
• Compelling Evidence - Evidence requirements
• Monitoring Thresholds - Network program limits
• Time Frames - Response deadlines
• Reason Codes - Dispute categories
• Winning Evidence - What wins disputes
• Fraud vs. Friendly - Classification
• Chargeback Vendors - Representment services
• Friendly Fraud - First-party abuse
• Chargeback Metrics - Tracking dispute rates