Disputes are a reality in the world of card payments. Whether it's fraud, a billing mistake, or a package that never arrived, cardholders want quick answers, and it's up to issuers to deliver.
Dispute management is all about how card issuers handle transactions that a cardholder flags as problematic. That could mean anything from suspected fraud to a double charge, a product that never arrived, or a service that didn't live up to expectations.
Once a cardholder raises an issue, the issuer steps in to investigate. If the dispute is valid, the issuer might initiate an attempt to reverse the transaction through a chargeback. The full process includes everything from the first complaint to gathering evidence, working with merchants and card networks, and closing the case fairly and on time.
In some cases, issuers and merchants may also resolve disputes through pre-dispute collaboration tools offered by card networks, such as Visa Rapid Dispute Resolution (RDR) or Mastercard Collaboration, allowing merchants to automatically refund transactions or provide compelling evidence before a formal chargeback is initiated.
Suppose pre-dispute efforts don't lead to a resolution. In that case, the process moves into the chargeback stage, where the issuer formally disputes the transaction on the cardholder's behalf, reversing the payment and debiting the merchant. The merchant then has the option to respond with supporting documentation (such as proof of delivery or customer communication) during second presentment (also called representment). If the issuer finds the evidence insufficient or new information emerges, they may escalate the case through pre-arbitration, giving the merchant one final opportunity to either accept liability or continue challenging the claim. If neither party concedes, the dispute advances to arbitration, where the card network makes a binding decision based on the submitted evidence.
A well-defined dispute management framework ensures this entire process is handled with consistency, transparency, and timeliness, minimising financial loss and protecting the customer experience.
A well-oiled dispute management process is essential for card issuers, as it plays a big role in your financial institution's performance and reputation.
Fraud-related disputes are expensive. Issuers often issue temporary refunds during investigations, and depending on the regulations, might end up absorbing the cost if the dispute is upheld. Strong processes help you spot fraud faster, resolve cases more accurately, and limit losses.
Cardholders expect disputes to be handled quickly and fairly. A smooth process shows them you have their back and builds long-term trust. On the flip side, delays or poor communication can frustrate users and push them to other banks.
Many banks still rely on manual, time-consuming workflows. That slows things down and eats into resources. With the right tools and automation in place, teams can resolve disputes faster and focus on higher-value work. Our Amiko solution is designed to automate the entire dispute lifecycle, from intake to resolution.
Issuers operate under strict regulations, along with rules from Visa, Mastercard, and others. These come with deadlines, documentation needs, and penalties for falling short. A clear and compliant process helps you avoid trouble.
How you handle disputes says a lot about your financial institution. A transparent, fair process shows customers and partners that you're reliable and trustworthy, especially when things go wrong.
With more transactions happening every day, especially online, the volume of disputes is growing fast. Add in new fraud tactics and savvier cardholders, and you've got a recipe for complexity that can overwhelm even seasoned teams.
Many issuers still rely on spreadsheets, emails, and legacy tools, wasting time and increasing errors. Limited visibility of dispute backlogs hinders prioritisation by deadlines, exposure, or KPIs, leading to missed scheme limits and workload spikes.
Cardholders want regular updates. So do internal teams. Managing expectations across the board is tough, especially when disputes involve multiple parties and channels.
Regulations and card network rules set hard deadlines for responding to disputes. Missing them doesn’t just mean losing the case, and repeated non-compliance can result in network penalties or placement in dispute monitoring programs.
Some disputes stem from "friendly fraud", valid transactions disputed by mistake or misuse. Often tied to reason codes like "transaction not recognised", they need smart tools and evidence. Amiko connects to Ethoca and Verifi to resolve disputes before they turn into chargebacks.
Web, mobile, call centre, and disputes can start anywhere. Without a connected system across all those channels, it's easy for things to fall through the cracks.
Visa, Mastercard, and others regularly update how disputes should be handled. Issuers need to stay on top of these changes and adjust their workflows accordingly, which isn't easy without a flexible system.
Between staffing, tools, and lost revenue, dispute management is expensive. And if your process isn't optimised, those costs can add up quickly.
Now let's shift gears and look at what works. These are the tactics high-performing issuers use to stay ahead of the curve and manage disputes more effectively.
Manual processes don't scale. Automation helps you move faster, reduce errors, and free up your team for the work that really matters. But it's not just about speed... it's also about visibility. With Amiko, issuers can not only automate everything from intake to resolution (including decision-making) while staying fully compliant, but also maintain a real-time view of the entire dispute backlog. That means teams can prioritise effectively based on deadlines, risk, and workload, ensuring the right cases are worked at the right time.
Offer multiple channels, web, app, and phone, for customers to raise disputes. Then, keep them in the loop with regular updates. The more transparency you provide, the more trust you build. However, to make the most of automation features, there should be a strong integration between the channels and the dispute tooling.
Disputes touch on regulations, network rules, fraud detection, and customer service. Ongoing training helps your team stay sharp, follow processes, and handle edge cases with confidence.
Create standard workflows for different types of disputes, and make sure everyone follows them. Good documentation makes training easier, improves consistency, and reduces compliance risk.
Dispute data holds a ton of insight. Look for patterns in your cases, common merchants, frequent fraud types, and slow steps in your process, then use those insights to prevent future disputes or improve how you handle them.
Platforms like Ethoca and Verifi give you early access to enriched transaction data. That helps you resolve disputes before they become chargebacks, saving time and money.
One of the most common reasons for dispute? "I don’t recognise this charge." Where possible, work with acquirers and processors to ensure merchant descriptors are clear and consistent to reduce unnecessary claims.
Dispute management works best alongside strong fraud controls. Use real-time monitoring, risk scoring, and authentication to stop bad transactions before they become your team's problem.
Measure what matters, like resolution time, dispute win rate, and cost per case. These metrics give you a clear picture of what's working and where you need to improve. Maintain clear case histories and documentation to meet regulatory audit requirements and ensure defensibility during chargeback reviews.
Dispute management isn't static. Cardholder behaviour changes. Fraud tactics evolve. Network rules get updated. Build a process that can adapt and evolve with the landscape.
Dispute management can feel like its own language. Here's a quick cheat sheet to help you get familiar with the core terms.
The bank or payment processor that works with a merchant to accept card payments.
An optional final step that occurs when the losing party (issuer or acquirer) disagrees with the arbitration ruling and believes a network rule was misapplied. Rare, used only in exceptional cases where there’s a strong justification to challenge the initial arbitration decision.
The process of checking if a card is active and if a cardholder has enough funds (or credit) to complete a transaction.
A reversal of a transaction, typically after a dispute is deemed valid. The cardholder gets refunded, and the merchant is debited. Note: Visa often refers to this as a "dispute" now.
The formal request a cardholder makes when they question or challenge a charge on their statement.
When an acquirer submits transaction data to an issuer for clearing.
When a cardholder disputes a real, legitimate charge, sometimes by mistake, sometimes not.
The bank that issued the card to the customer.
When a merchant challenges a chargeback, usually by submitting evidence to prove the transaction was valid. Visa calls this a "dispute response", while Mastercard generally calls it "second presentment", or "representment".
A standardised code assigned to a dispute that explains why the transaction is being challenged, like fraud, services not delivered, or duplicate charges.
The final steps in a dispute process, usually handled by the card network, when the issuer and acquirer can't come to an agreement.
Visa's platform for handling disputes and chargebacks.
Mastercard's dispute management system.
A Mastercard collaboration network that helps issuers and merchants share data and resolve disputes faster.
A Visa company that offers early resolution and fraud prevention tools like CDRN and Order Insight.
Every dispute begins with a reason code, the shorthand that explains why a transaction is being challenged and who may be liable. For issuing banks, these codes serve as both a rulebook and a source of insight: they define deadlines, evidence requirements, and liability shifts, while also revealing patterns of fraud or recurring merchant issues. Understanding Visa and Mastercard codes allows banks to handle disputes more efficiently, reduce financial risk, and strengthen trust with cardholders by ensuring fair and consistent outcomes.
Dispute management is evolving rapidly… and for the better! Here's what to look out for:
AI-powered solutions are playing an increasingly significant role in automating dispute processing, enhancing fraud detection, and improving decision-making accuracy. Amiko leverages Machine Learning through its Virtual Agent to simplify dispute resolution.
More issuers are investing in tools to prevent disputes before they're filed, including clearer merchant data, improved transaction visibility, and real-time alerts. It's all about getting ahead of the problem.
Analytics are unlocking insights into dispute trends, like which merchants drive the most claims or what types of fraud are spiking. Issuers are using that data to fine-tune their workflows and fight back against losses.
Dispute resolution isn't just an issuer problem. Platforms that connect issuers, acquirers, and merchants are making it easier to resolve cases faster, often without a formal chargeback.
Customers expect fast resolutions. Long wait times feel outdated. Issuers that simplify their processes and offer real-time updates will win in experience.
Disputes are operational, but they're also emotional. The way you handle them can build loyalty or lose a customer. That's why more issuers are putting customer experience at the centre of their dispute strategy.
Disputes aren't going away. But the way issuers handle them can and should evolve.
By adopting modern tools, rethinking your workflows, and staying focused on the cardholder experience, you'll not only protect your bottom line, you'll build a dispute process that's faster, smarter, and far more scalable.
And with a platform like Amiko, you don't have to do it alone. From automation to Machine Learning to full regulatory compliance, we help you turn a challenge into a competitive advantage.