A chargeback is a formal dispute initiated through a cardholder’s issuing bank. When a chargeback is received, the disputed transaction amount is debited from the merchant’s account under the applicable card-brand dispute process.
A chargeback is different from a refund. A refund is issued by the merchant, while a chargeback is initiated through the cardholder’s bank.
A Dispute Does Not Mean the Merchant Did Something Wrong
A cardholder filing a chargeback does not mean their claim has been proven. The merchant is given an opportunity to respond and provide information supporting the transaction.
The chargeback process determines who is financially responsible for the card transaction. It is not a court ruling or a professional determination about the quality of the merchant’s products or services.
Why Chargebacks Happen
A cardholder may dispute a transaction for reasons such as:
- They do not recognize or claim they did not authorize the transaction.
- They state that a product or service was not received, was canceled, or was different from what was expected.
- They believe they were charged more than once or for the wrong amount.
- They state that an expected credit or refund was not received.
- A request for transaction information was not answered within the required timeframe.
The reason for the dispute determines what information may be relevant in the merchant’s response.
What Happens When a Chargeback Is Received?
The typical process is:
- The issuing bank initiates the chargeback.
- The disputed amount is debited from the merchant’s account.
- The merchant is notified and receives information about the dispute.
- The merchant may accept the chargeback or submit a response disputing it.
- The issuing bank reviews the information provided through the dispute process.
The chargeback may be reversed, upheld, or continued to another stage.
See Chargeback Life Cycle for a high-level explanation of the complete process.
Why Were the Funds Debited Before I Received the Notice?
The chargeback debit and delivery of the case documentation are separate parts of the process. The funds may be debited before the Official Notice and Bank Documentation arrive.
The documents explain what the cardholder is disputing and provide the response deadline. They do not trigger the debit.
What Should I Do?
Review both the Official Notice and Bank Documentation. These documents explain what the cardholder is disputing, the response deadline, and any specific information that should be addressed.
If you choose to dispute the chargeback:
- Explain what happened and respond directly to the dispute details.
- Include documentation that supports your explanation.
- Submit the response through merlinkresponse.com by the deadline shown on the notice.
Do Not Issue a Separate Refund
If the chargeback amount has already been debited, do not issue a separate refund for the same transaction. Doing so will cause both the chargeback debit and the refund to be taken from your account.
Not Every Dispute Notice Is a Chargeback
Retrieval requests, inquiries, pre-arbitrations, and PIN debit chargebacks may follow different processes and do not all have the same effect on your funds.
See Types of Chargebacks to identify the type of case you received.
PayJunction’s Role
PayJunction does not initiate chargebacks, debit the funds, review the merits of the dispute, process the merchant’s response, or determine the outcome.
PayJunction provides available alerts and helps merchants understand the dispute and response process. PayJunction cannot prevent a cardholder from filing a dispute or require the issuing bank to accept a merchant’s response.
Important — A Favorable Outcome Is Not Guaranteed
Responding with relevant information and documentation may help address the dispute, but no response or document guarantees a favorable outcome.
The issuing bank and, when applicable, the card brand make the final decision—not PayJunction or TSYS.
Need Help?
If you cannot locate the documentation or need help understanding the dispute, contact PayJunction Risk.
Phone: 800-601-0230 x5
Email: risk@payjunction.com