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. The reason code determines what evidence will be needed to fight the chargeback.
Step 2: Issuing Bank 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, and ValPay notifies the affected merchant by email.
At this stage, the disputed funds are debited from the merchant's account and held pending resolution. The notification email contains the transaction details, reason code, response deadline, and a direct link to the Dispute Manager in the ValPay portal.
Step 3: Merchant Review in the Dispute Manager — Accept or Defend
The merchant signs in to the ValPay portal and opens the Disputes section. The Dispute Management dashboard lists every dispute on the account with filters for dispute type, status, date range, PSP reference, and store name. Clicking a dispute reference opens the case detail page, which shows the full transaction and an alert banner with the defense deadline.
From there the merchant chooses one of two actions:
Accept Chargeback — the disputed amount is debited and credited back to the cardholder; the case is closed as resolved.
Defend Chargeback — the merchant selects a defense strategy (for example, Services Provided) and uploads supporting evidence.
Step 4: Submitting the Defense
Evidence is uploaded directly in the Dispute Manager — no rebuttal letter is emailed separately. Accepted file formats and size limits:
PDF — maximum 2 MB
JPG / JPEG — maximum 7 MB
TIFF — maximum 7 MB
When documents are uploaded, the merchant clicks Submit Defense and sees a confirmation banner that the case is under review. ValPay packages the submission to the card network on behalf of the merchant.
Possible outcomes:
Chargeback reversed — the issuing bank rules in the merchant's favor; funds return to the merchant's account
Chargeback upheld — the issuing bank rules for the cardholder; funds remain with the cardholder
Step 5: Pre-Arbitration (If Applicable)
If the chargeback is reversed but the cardholder's issuing bank disagrees, they may escalate to pre-arbitration. The merchant again has the option to accept or continue disputing. Continuing escalates the case to card network arbitration.
Step 6: Arbitration
Arbitration is the final stage — the card network makes a binding decision. This process can take several weeks and involves significant fees regardless of outcome. ValPay strongly recommends evaluating the financial merits before proceeding to arbitration.
What Your Merchants Will See
So you can coach merchants through the flow, this is the sequence they experience end-to-end:
Notification email — sent to all users registered for the affected store. Lists transaction date and amount, card summary, reason for dispute, defense deadline, days remaining, and a direct link to the Dispute Manager.
Sign in to the portal — the link opens the ValPay portal login; after authentication the merchant goes to Disputes in the left-hand menu.
Locate the case — the Dispute Management dashboard lists all disputes; filters include dispute type, status, date range, PSP reference, and store name.
Review details — the dispute detail page shows the transaction and the issuer's reason. An alert banner shows the deadline.
Defend or Accept — Defend asks the merchant to pick a defense strategy, then upload PDF (2 MB max) / JPG-JPEG (7 MB max) / TIFF (7 MB max) evidence and click Submit Defense. Accept debits the merchant and credits the cardholder immediately; the case status shows as resolved.
Key points to emphasize with merchants: the deadline is strict, Accept is final, and evidence must be clear and directly relevant to the reason code.
Key Timelines & Deadlines
Chargeback deadlines are strict. Missing a deadline means forfeiting the right to dispute. Standard timeframes:
Stage | Timeframe | Notes |
Cardholder dispute window | Up to 120 days from transaction or expected delivery date | Varies by card network and reason code |
Merchant defense submission | Typically 20–30 days from chargeback notification | Authoritative deadline is shown in the Dispute Manager |
Issuing bank review after defense | 30–45 days | ValPay will notify the merchant of the outcome |
Pre-arbitration response | ~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 shown in the Dispute Manager for the case in question.
Evidence by Dispute Type
A strong defense depends on submitting the right evidence for the specific reason code.
For Fraud / Unauthorized Transaction Claims
Proof of card-present transaction (signed receipt, EMV chip data, PIN verification)
AVS 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 the product/service listing at the time of purchase
Photographs or specifications demonstrating the item matched the description
Customer communication showing satisfaction or acknowledgment
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
Selecting a Defense Strategy
When defending a chargeback in the Dispute Manager, the merchant picks a defense strategy (such as Services Provided) that frames their evidence. Choose the strategy that most accurately reflects the situation — the evidence you upload should support that strategy directly. If you're helping a merchant structure a defense, reach out through the ValPay Partner Portal or your account representative.
Chargeback Fees
Each chargeback — regardless of outcome — may incur a processing fee as outlined in the merchant agreement with ValPay. If a case escalates to arbitration, additional fees are assessed by the card network. Review the merchant agreement or contact the ValPay representative for the specific fee schedule that applies to the account.
Chargeback Thresholds & Monitoring Programs
Card networks monitor merchant chargeback rates and place merchants with elevated rates into formal monitoring programs. These programs come with additional fees and, if the rate isn't brought under control, can result in termination of processing privileges. General thresholds:
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 chargeback ratios and will proactively reach out when an account approaches these thresholds.
If a Merchant Is Still on the Legacy Workflow
Accounts that have not yet migrated to the Dispute Manager can continue to respond via email and view chargebacks under Payments → Quick Filters → Chargebacks in the portal. Merchants on the legacy flow submit evidence to chargebacks@valpay.com with the chargeback reference number, business name, and supporting documentation. Once an account moves to the Dispute Manager, the email path is superseded by the in-portal Defend/Accept flow above.
Getting Help
If you have questions about a specific case or need help structuring a defense, the ValPay partner support team is here to help:
ValPay Partner Portal — submit and track chargeback disputes directly in the Dispute Manager
Email: chargebacks@valpay.com
Phone: contact your dedicated account representative