The chargeback process is split into four stages:

1. First Chargeback

  1. Customer complains to their bank about a charge. Customers have 12 months to dispute a charge on a MasterCard transactions, and 18 months to dispute a charge on a Visa transaction. This time-frame can change, depending on the reason for the chargeback.
  2. Bank sends the dispute to the processor.
  3. Processor pulls the funds from the merchant's bank account and holds them in escrow or in a non-interest bearing account.
  4. Processor sends a letter to the merchant advising of the dispute and asking for documents to support the merchant's defense of the dispute. The merchant has 15 calendar days to respond, from the date the processor sends the letter.

2. Second presentment

3. Second chargeback and pre-arbitration

If the situation escalates to this stage, and the merchant still disagrees with the cardholder and their issuing bank, they must file for arbitration.

4. Arbitration