What is a Payment Dispute?

Payment disputes or chargebacks exist to protect cardholders against unauthorized or illegitimate transactions. Payment dispute scan be raised by either the cardholder or the issuing bank (on behalf of the cardholder) for a number of reasons. The difference between a refund and a payment dispute is that when a dispute is raised, the customer’s issuing bank communicates directly with the merchant’s acquiring bank via the card brand, effectively bypassing the merchant. By the time a dispute or chargeback reaches the merchant, it’s often too late to stop thefraud or resolve the dispute with the customer, resulting in revenue loss and damage to dispute-to-transaction ratios.