Navigating the Payment Industry Alphabet - D is for Disputes

D is for Disputes.

This term as evolved over the years and each card network has its own terminology for them.

For example, the part of the process where the merchant tries to get the chargeback reversed - by re-presenting the charge along with evidence to support it - is commonly called representment. However, Visa now refers to this as a "dispute response," and Mastercard calls it "second presentment."

Regardless of what they are called, they play critical part of the risk and compliance conversation.

A dispute occurs when a cardholder questions a transaction and requests their bank (the issuer) to reverse it. This initiates a chargeback, which temporarily pulls funds from the merchant while the transaction is investigated.

Disputes can arise from:
* Fraudulent transactions
* Customer dissatisfaction
* Processing errors
* Authorization issues

[Noted: there is a whole list of reason codes behind the reason for the dispute. My friend, Dom Cirone (chargeback guru and expert) can probably name them all by heart!]

From a compliance standpoint, disputes are governed by card network rules (e.g., Visa and Mastercard), which outline specific timeframes, documentation requirements, and resolution procedures. Merchants and their Acquirers must respond promptly and accurately to avoid financial loss and reputational damage.

Here’s where it gets complex: the responsibility for managing disputes often falls on multiple parties—merchants, processors, Acquirers, and even Sponsoring Banks. Each has a role in ensuring the integrity of the transaction and the resolution process.

Dispute data is also a key indicator in risk monitoring. High chargeback ratios can trigger fines, increased scrutiny, or even termination of merchant accounts.

🔍 Key takeaway: Disputes are more than customer complaints—they’re a compliance signal. Understanding how chargebacks work and who’s responsible is essential for managing risk in the payments space.