Chargebacks and Disputes: How They Work
Published: October 20, 2026 · By Marcus Hale, Payment Systems Analyst
A chargeback is an issuer-initiated reversal of a card transaction at the cardholder's request. The dispute lifecycle, the reason codes that determine who pays the fee, and the deadlines that govern each stage are the three things most teams get wrong.
Retrieval request or chargeback?
They are different processes with different costs and different deadlines. A retrieval request asks the acquirer to supply the transaction record so the issuer can assess whether the cardholder's complaint is valid. It is a query, not a reversal, and no funds move. A chargeback reverses the transaction and moves the liability back up the chain.
| Aspect | Retrieval request | Chargeback |
|---|---|---|
| Purpose | Retrieve the transaction record | Reverse the transaction |
| Funds movement | None | Debited from the acquirer, credited to the cardholder |
| Typical cost | Low, often no fee | Fee per dispute, plus possible adjustment |
| Common use | Cardholder does not recognise the transaction | Cardholder disputes the transaction quality or legitimacy |
The dispute lifecycle
- Initial request. The cardholder contacts their issuer, which opens a dispute and notifies the acquirer within the network's cycle.
- Acquirer response. The acquirer gathers the transaction record and either represents the transaction or accepts the dispute.
- Issuer decision. If the transaction is not represented, the issuer debits the acquirer and credits the cardholder. The acquirer then passes the charge to the merchant.
- Pre-arbitration. If the merchant disputes the liability shift, the case can be raised again with additional evidence.
- Arbitration. A network-level decision, binding on both parties and subject to a fee in most cases.
Reason codes
Every dispute carries a reason code, and the code determines who bears the financial liability. There are two families: issuer codes, which cover the cardholder's reason for disputing, and network codes, which classify the dispute category.
| Code | Category | Liability |
|---|---|---|
| 10.4 | Other fraud | Issuer (cardholder) |
| 12.6.1 | Not delivered | Merchant |
| 13.1 | Consumer dispute, goods or services not provided | Merchant |
| 13.7 | Consumer dispute, subscription cancellation not honoured | Merchant |
| 13.2.1 | Not as described or defective | Merchant |
| 13.3 | Credit not processed | Merchant |
| 13.6 | Credit processed but not as described | Merchant |
| 15.1.1 | Currency or cash advance not recognised by the cardholder | Issuer |
| 4834 | No cardholder authentication, liability shift applies | Merchant |
| 4853 | Goods or services provided to a cardholder who did not authorise them | Merchant |
Deadlines
Dispute windows are short and measured from the transaction or from the statement date, depending on the reason code. Miss a representment deadline and the liability shift is automatic. The practical rule is to treat every dispute as if it has to be answered the same week it arrives.
- Retrieval requests must typically be answered within 30 to 45 days of the request.
- Representment deadlines are commonly 30 to 45 days from the notification.
- Pre-arbitration must be filed within the window the acquirer sets, often 7 to 15 days after the representment decision.
- Arbitration decisions are final, and a fee applies regardless of outcome.
What actually reduces chargebacks
- Authenticate the transaction properly. Strong cardholder authentication shifts liability for certain fraud categories back to the issuer.
- Make the descriptor match what the cardholder sees on the statement. A mismatch is the single most common trigger for a 13.6 dispute.
- Deliver instantly when the product is digital, and state the delivery in the confirmation.
- Keep the evidence trail: order, IP, device, AVS and CVV results, delivery confirmation, and the customer communications.
- Set expectations at checkout so the cardholder knows exactly what was bought.