What Is a Chargeback?

A chargeback is a forced reversal of a payment transaction, initiated by a cardholder's issuing bank on behalf of the cardholder. Unlike a standard refund — which is processed directly between the merchant and the customer — a chargeback bypasses the merchant entirely and is governed by the card networks (Visa, Mastercard, American Express, Discover). As a Valpay partner, understanding how chargebacks work is critical to protecting your revenue and maintaining good standing with the card networks.

The Chargeback Lifecycle

A chargeback moves through several distinct stages. Here is a step-by-step breakdown of what happens from the moment a customer disputes a transaction:

Step 1: Cardholder Initiates a Dispute

The process begins when a cardholder contacts their issuing bank to dispute a transaction. Common reasons include:

Fraud / Unauthorized transaction — the cardholder claims they did not authorize the charge
Item not received — the product or service was never delivered
Item not as described — the product or service differed significantly from what was advertised
Duplicate charge — the cardholder was billed more than once for the same transaction
Credit not processed — a refund was promised but never issued

The issuing bank assigns a reason code to the dispute based on the cardholder's claim. This reason code determines what evidence will be needed to fight the chargeback.

Step 2: Issuing Bank Reviews and Initiates the Chargeback

If the issuing bank determines the dispute is valid or provisionally credits the cardholder, they formally submit the chargeback to the card network. The card network routes the chargeback to Valpay (as the acquirer), and Valpay notifies the affected partner.

At this stage, the disputed funds are debited from the merchant's account and held pending resolution. You will receive a chargeback notification in your Valpay portal with the transaction details, reason code, and response deadline.

Step 3: Partner Review — Accept or Dispute

Upon receiving the chargeback notification, you have two options:

Accept the chargeback — if you agree the dispute is valid (e.g., the customer was genuinely charged in error), you can accept it. No action is needed; the funds remain with the cardholder and the case is closed.
Dispute the chargeback (Representment) — if you believe the chargeback is invalid or fraudulent, you can fight it by submitting a rebuttal and compelling evidence before the deadline.

Step 4: Representment (Disputing the Chargeback)

If you choose to dispute, you must submit a Rebuttal Letter along with supporting evidence to Valpay. Valpay then packages and submits this to the card network on your behalf. The issuing bank reviews the evidence and renders a decision.

Possible outcomes at this stage:

Chargeback reversed — the issuing bank rules in your favor; funds are returned to your account
Chargeback upheld — the issuing bank rules in favor of the cardholder; funds remain with the cardholder

Step 5: Pre-Arbitration (If Applicable)

If the chargeback is reversed in your favor but the cardholder's issuing bank still disagrees, they may escalate to pre-arbitration. At this stage, you again have the option to accept or continue disputing. Continuing will escalate the case to card network arbitration.

Step 6: Arbitration

Arbitration is the final stage, where the card network (Visa, Mastercard, etc.) makes a binding decision. This process can take several weeks and involves significant fees — regardless of the outcome. Valpay strongly recommends evaluating the financial merits carefully before proceeding to arbitration.

Key Timelines & Deadlines

Chargeback deadlines are strict. Missing a deadline means forfeiting your right to dispute the chargeback. Below are the standard timeframes you need to be aware of:

Stage	Timeframe	Notes
Cardholder dispute window	Up to 120 days from transaction or expected delivery date	Varies by card network and reason code
Partner response deadline	Typically 20–30 days from chargeback notification	Deadline is shown in your Valpay chargeback notice — do not miss it
Issuing bank review (representment)	30–45 days after submission	Valpay will notify you of the outcome
Pre-arbitration response	Typically 30 days	Only applies if the case is escalated
Arbitration resolution	30–90 days	Card network's binding decision; fees apply

Important: Always refer to the specific deadline listed in your Valpay chargeback notification, as deadlines can vary based on card network and reason code.

Evidence & How to Dispute a Chargeback

A strong dispute depends on submitting the right evidence for the specific reason code. Below is an overview of what you should gather based on the type of dispute:

For Fraud / Unauthorized Transaction Claims

Proof of card-present transaction (e.g., signed receipt, EMV chip data, PIN verification)
AVS (Address Verification Service) and CVV match confirmation
Signed cardholder agreement or authorization form
IP address, device ID, and geolocation data (for card-not-present transactions)
Previous purchase history from the same cardholder showing a pattern of legitimate use

For Item Not Received Claims

Proof of delivery (carrier tracking, delivery confirmation with signature)
Date and time of delivery relative to the chargeback filing date
Communication records showing the customer acknowledged receipt

For Item Not as Described Claims

Screenshots or archives of your product/service listing at the time of purchase
Photographs or specifications demonstrating the item matched the description
Any customer communication showing satisfaction or acknowledgment of the product
Your refund/return policy as shown to the customer at checkout

For Credit Not Processed Claims

Documentation showing the refund was issued (date, amount, reference number)
Processing timelines explaining any delay in the credit appearing

Writing Your Rebuttal Letter

Your rebuttal letter should be clear, factual, and concise. It should:

Reference the chargeback reason code directly
Summarize the transaction and why it was legitimate
Point to each piece of evidence and explain how it refutes the claim
Avoid emotional language — keep it professional and fact-based

Valpay's partner support team can assist you in structuring your rebuttal. Reach out via the Valpay portal or contact your account representative for guidance.

Chargeback Fees

Each chargeback — regardless of outcome — may incur a processing fee as outlined in your merchant agreement with Valpay. If a case escalates to arbitration, additional fees are assessed by the card network. Review your agreement or contact your Valpay representative for the specific fee schedule that applies to your account.

Chargeback Thresholds & Monitoring Programs

Card networks monitor merchant chargeback rates and will place merchants with elevated rates into formal monitoring programs. These programs come with additional fees and, if the rate is not brought under control, can result in termination of processing privileges. The general thresholds are:

Visa: Chargeback Monitoring Program (VCAMP) triggered at >0.65% monthly chargeback ratio; Excessive at >0.9%
Mastercard: Excessive Chargeback Program (ECP) triggered at >1.0% with more than 100 chargebacks per month

Valpay monitors your chargeback ratio and will proactively reach out if your account is approaching these thresholds. If you have concerns about your chargeback rate, contact your Valpay account representative.

Getting Help

If you have questions about a specific chargeback case or need help submitting your dispute, Valpay's partner support team is here to help. You can reach us through: