Chargeback Arbitration

Chargeback Arbitration is a critical phase in the chargeback dispute resolution process, activated when a merchant and issuing bank cannot mutually resolve a chargeback dispute. This stage involves the card network (e.g., Visa, MasterCard) stepping in to evaluate the evidence submitted by both parties and issuing a binding decision.

Due to the arbitration process’s complexity and potential costs, it’s often considered a last resort for merchants. The arbitration fees, which can amount to hundreds of dollars, are levied against the party that loses the arbitration.

These costs and the risk of an unfavorable decision underscore why proceeding to arbitration is generally deemed inadvisable for merchants. The arbitration process underscores the importance of merchants presenting strong, compelling evidence during the initial stages of a chargeback dispute to avoid the need for arbitration.