How Long Does a Merchant Have to Dispute a Chargeback?

A chargeback occurs when a customer disputes a transaction with their bank, leading to funds being returned to the cardholder and debited from the merchant’s account. Understanding chargeback dispute timelines is fundamental for sound financial operations. Merchants must navigate rules and deadlines set by card networks to challenge unwarranted disputes. Failure to adhere to these timeframes can result in an automatic loss of the dispute, directly impacting a business’s revenue and financial stability.

Chargeback Lifecycle and Key Timelines

The chargeback process, from cardholder initiation to merchant dispute, involves defined stages with specific time limits. There is no single universal timeline for chargeback disputes; instead, deadlines are determined primarily by the card network involved and, at times, by the specific reason code assigned to the chargeback. Cardholders typically have a window ranging from 45 to 180 days to file a dispute, though in exceptional circumstances, this period can extend even longer. Federal law mandates a minimum of 60 days for consumers to dispute a transaction after a credit card statement is issued, but card networks often grant up to 120 days from the transaction date for cardholders to initiate a chargeback.

Once a chargeback is filed and the merchant is notified, the clock begins ticking for their response. For disputes involving Visa, merchants typically have between 20 to 30 calendar days to submit their rebuttal. This timeframe usually starts the day after the chargeback moves to a new phase in the process.

Mastercard generally provides merchants with a more extended period of 45 days to respond at each stage of the chargeback process. This 45-day window also applies to subsequent stages of the dispute resolution. American Express generally gives merchants a tighter deadline, often around 20 days to respond at each stage of the chargeback process. Discover card chargebacks typically grant merchants 20 days for inquiries and 30 days to respond to the formal chargeback. While card networks set these rules, the specific payment processor or acquiring bank a merchant uses might impose shorter internal deadlines, sometimes as brief as 7 to 10 days. Missing these deadlines typically results in the merchant automatically losing the dispute, requiring a prompt and organized response.

Preparing Your Dispute Documentation

Before submitting a chargeback dispute, merchants must compile comprehensive documentation. The effectiveness of a dispute hinges on the quality and relevance of the evidence presented, which should directly address the reason code provided for the chargeback.

Transaction records are fundamental, encompassing the transaction date, amount, authorization codes, and identity verification data like Address Verification Service (AVS), Card Verification Value (CVV) matches, IP addresses, and device fingerprints for online transactions. Proof of delivery is often key evidence, especially for disputes claiming non-receipt of goods or services. This includes shipping tracking numbers, delivery confirmations, and a signature from the recipient or photographic evidence of delivery.

For service-based businesses, proof of service rendered, such as completion certificates or usage logs, is equally important. Maintaining thorough communication logs with the customer, including emails, chat transcripts, or records of phone conversations, can demonstrate attempts to resolve issues or confirm customer satisfaction. Merchants should also gather copies of the terms and conditions the customer agreed to, alongside sales receipts, invoices, or contracts.

Evidence of fraud prevention measures employed, such as 3D Secure authentication, can also strengthen a merchant’s case. The goal is to provide a clear, factual narrative supported by evidence that disproves the cardholder’s claim and validates the original transaction.

Submitting Your Rebuttal

Once documentation is gathered, the next step is formal submission of the chargeback rebuttal. This procedural phase typically involves working directly with the merchant’s acquiring bank or payment processor, as they serve as the intermediary between the merchant and the card network or issuing bank. Most acquiring banks and processors provide specific channels for submitting dispute documents, which may include online portals, secure email, or even physical mail, often accompanied by specialized forms.

The submission package must include a well-structured rebuttal letter that succinctly summarizes the merchant’s case and clearly references the supporting evidence. This letter should be professional, factual, and directly address the chargeback reason code, explaining how the provided evidence refutes the cardholder’s claim. Merchants must adhere to response deadlines during this submission process. Failure to submit the complete package within the allocated time can lead to an automatic forfeiture of the dispute, regardless of the strength of the evidence.

Potential Outcomes and Next Steps

After a merchant submits dispute documentation, the chargeback process moves towards resolution with several potential outcomes. The most favorable outcome for a merchant is winning the dispute, meaning the chargeback is reversed, and the funds that were initially debited from their account are returned. Conversely, if the merchant’s evidence is deemed insufficient or the cardholder’s claim is upheld, the merchant loses the dispute, and the original debit remains, often accompanied by additional chargeback fees.

In some instances, the dispute may escalate to a “pre-arbitration” stage. This phase offers a final opportunity for the merchant and the issuing bank to resolve the dispute before it progresses to a more formal and costly arbitration. During pre-arbitration, the merchant can either accept the chargeback or choose to escalate the matter further.

If pre-arbitration fails to resolve the dispute, or if the merchant chooses to contest the outcome, the case may proceed to arbitration. This is the final stage of the chargeback process, where the card network (such as Visa or Mastercard) intervenes to review all submitted evidence and render a binding decision. Arbitration involves significant fees, typically ranging from $250 to over $500, which are usually borne by the losing party, in addition to potential technical fines. American Express, however, generally does not utilize an arbitration process for chargebacks. The entire chargeback dispute process, from initial notification to final resolution, can extend anywhere from 45 to 120 days or even longer.