Reference
Chargeback Glossary
Everything you need to know about chargeback terminology
A
Acquirer
The bank or financial institution that processes payments on behalf of the merchant. Also called the acquiring bank or merchant bank.
Arbitration
Final stage of the dispute process where the card network (Visa, Mastercard, etc.) makes a binding decision. Arbitration fees can exceed $500 per case.
C
Chargeback
A forced reversal of a payment initiated by the cardholder's bank. The merchant loses both the transaction amount and pays a chargeback fee (typically $15–$100).
Calculate your chargeback costs →Chargeback Rate
The percentage of transactions that result in chargebacks. Card networks impose penalties when rates exceed thresholds: 1% for Visa (VDMP), 1.5% for Mastercard (ECP). Excessive rates can result in account termination.
Compelling Evidence
Documentation that proves a transaction was legitimate. For Visa CE 3.0, this includes proof of two prior undisputed transactions from the same device and IP address.
CNP (Card Not Present)
A transaction where the physical card is not used, such as online purchases, phone orders, or subscription billing. CNP transactions have higher chargeback rates and fewer fraud protections.
D
Dispute
A challenge to a transaction initiated by the cardholder or their bank. Disputes may be resolved through chargeback, retrieval request, or direct merchant refund.
Dispute Resolution
The formal process of resolving a chargeback between merchant and cardholder, governed by card network rules. Typically takes 30–120 days.
Due Date
The deadline for submitting evidence to fight a chargeback. Missing the due date results in automatic loss of the dispute. Typically 7–30 days from notification.
E
Evidence
Documents submitted to prove a transaction was valid. Common evidence includes receipts, order confirmation emails, shipping tracking, delivery confirmation, IP address logs, and signed contracts.
F
Friendly Fraud
When a legitimate cardholder falsely claims a transaction was unauthorized or that goods were not received, despite having made the purchase. Accounts for 60–80% of all chargebacks.
See Visa fraud reason codes →Fraud Rate
The percentage of transactions flagged as fraudulent. High fraud rates trigger monitoring programs from card networks and may result in higher processing fees.
I
Issuer
The bank or financial institution that issued the cardholder's credit or debit card (e.g., Chase, Bank of America, Barclays). The issuer initiates chargebacks on behalf of their cardholders.
Inquiry
A request for information about a transaction before a formal chargeback is filed. Responding to inquiries promptly can prevent chargebacks. Also called a retrieval request.
M
Merchant Category Code (MCC)
A four-digit code that classifies the type of business. MCC affects interchange rates, chargeback thresholds, and which card network rules apply.
Monitoring Program
A card network program that tracks merchants with excessive chargeback or fraud rates. Examples: Visa VDMP/VFMP, Mastercard ECP. Can result in fines of $50–$100 per chargeback.
P
Pre-arbitration
A stage before arbitration where the issuer escalates a dispute after the merchant's initial representment. The merchant gets one more chance to provide evidence before the card network makes a final decision.
Pre-chargeback
Early notification of a potential dispute, sometimes called an alert. Services like Ethoca and Verifi provide pre-chargeback alerts that let merchants issue refunds before a chargeback is filed.
R
Reason Code
A numeric or alphanumeric code that categorizes the type of chargeback. Each card network has its own set of reason codes (e.g., Visa 13.1, Mastercard 4853, Amex C08).
Browse all reason codes →Representment
The process of re-presenting a transaction to fight a chargeback by submitting compelling evidence. A successful representment returns the disputed funds to the merchant.
Retrieval Request
A request for transaction documentation before a chargeback is formally filed. Responding quickly with evidence can resolve the dispute without a full chargeback.
Reversal
Cancellation of a chargeback in favor of the merchant after successful representment. The disputed funds are returned and the chargeback is removed from the merchant's record.
S
Second Presentment
The merchant's formal response to a chargeback, submitting supporting evidence to the acquirer. Also called a rebuttal letter or representment.
Settlement
The transfer of funds between issuing and acquiring banks after a transaction clears. Chargebacks reverse this settlement and claw back funds already deposited to the merchant.
T
Time Limit
Deadline imposed by card networks for responding to chargebacks. Typically 7–30 days for merchants from the date of notification, and 30–45 days for issuers. Missing deadlines results in automatic loss.
W
Win Rate
The percentage of disputed transactions resolved in the merchant's favor. Industry average is 20–30%. Merchants using AI-assisted responses and complete evidence packages typically see higher rates.
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