Understanding Merchant Services Chargebacks and Disputes in
When a customer questions or contests a card payment, the transaction may enter either a dispute or a chargeback process. This article explains what these terms mean, how they affect your business, and how Centime supports merchants throughout the process.
What is a Chargeback?
A chargeback occurs when a cardholder contacts their credit card issuer or bank to dispute a transaction instead of working directly with the merchant
Common reasons for chargebacks include:
- Unauthorized or fraudulent transactions
- Goods or services not received
- Product or service not as described
- Duplicate or incorrect charges
- Processing or billing errors
When a chargeback is initiated, the issuing bank temporarily reverses the transaction and returns the funds to the cardholder while the case is investigated.
What is a Dispute?
A dispute is a broader term used when a customer questions a transaction with their bank or credit card issuer.
Disputes may arise due to:
- Unauthorized charges
- Billing errors
- Product or service dissatisfaction
- Questions about a transaction
A dispute may be resolved directly between the customer and the merchant or may progress into a formal chargeback if sufficient resolution is not reached.
Chargeback vs. Dispute
| Dispute | Chargeback |
|---|---|
| Customer questions a transaction with their bank or merchant. | Customer formally requests that the issuing bank reverse the transaction. |
| May be resolved without reversing the payment. | Results in funds being reversed while the case is reviewed. |
| Can be informal or part of the early dispute process. | Is a formal card network process and may include chargeback fees. |
| May escalate into a chargeback if unresolved. | Requires the merchant to submit evidence to contest the claim. |
Chargeback Lifecycle
From a merchant's perspective, a chargeback typically progresses through three stages.
1. RetrievalThe card issuer requests additional information about the transaction before making a decision.
Examples of requested information include:
- Transaction receipt
- Invoice
- Proof of authorization
- Delivery confirmation
If the issuer determines additional review is required, a formal chargeback is created.
The merchant is given an opportunity to provide supporting evidence demonstrating that the transaction was valid.
3. Resolution
After reviewing the submitted evidence, the issuer makes a final decision.
The outcome may result in:
- Funds returned to the merchant
- Funds remaining with the cardholder
- Partial credit to either party
Chargeback Time Limits
Chargebacks may be initiated in different ways depending on the circumstances.
| Type | Time Limit |
|---|---|
| Manual cardholder-initiated chargeback | Up to 270 days from the original transaction date |
| Future delivery of goods or services | Up to 540 days |
| Automated issuer-initiated chargeback | No defined time limit |
How Centime Supports You
If a chargeback or dispute is received for one of your transactions, Centime will notify you directly via Email.
Our support team will:
- Notify you via an Email when a dispute or chargeback has been received from our Payment Processing Partner.
- Explain the reason code and response deadline, when available.
- Request any supporting documentation required to contest the case.
- Review the submitted documentation for completeness.
- Submit the evidence to Payrix on your behalf.
- Keep you informed throughout the process until a final decision is reached.
Note: Merchants are responsible for providing accurate and complete supporting documentation within the requested timeframe. Missing response deadlines may result in the chargeback being automatically decided in favor of the cardholder.
Evidence Merchant May Be Asked to Provide
The documentation required varies depending on the reason for the chargeback. Common examples include:
- Invoice or sales receipt
- Proof of payment authorization
- Signed order confirmation
- Shipping or delivery confirmation
- Tracking information
- Proof that goods or services were received
- Customer communications (emails or messages)
- Cancellation or refund policy
- Refund records (if applicable)
- Any additional documentation supporting the legitimacy of the transaction
Providing clear, complete, and timely evidence improves the likelihood of a successful outcome.
Best Practices for Responding
To maximize your chances of successfully contesting a chargeback:
- Respond as quickly as possible after receiving Centime's notification.
- Submit complete and accurate supporting documentation.
- Ensure customer communications and receipts are retained for your records.
- Keep proof of delivery or service completion whenever possible.
- Retain transaction records in case evidence is required months after the original purchase.
If you receive a chargeback notification and have questions about the required documentation or response process, contact the Centime Support team. We'll guide you through the evidence collection process and submit your response to the Payment Processor on your behalf.