About Chargebacks

After a shopper contacts their issuing bank to contest a transaction, the issuing bank submits the case to the merchant as a retrieval request or as a chargeback.

Retrieval Requests

Before creating a chargeback, issuing banks send inquiries or retrieval requests to merchants’ banks, requesting detailed information about a payment in order to investigate a shopper’s claim. American Express refers to these requests as Requests for Transactional Information (RTI) and Discover refers to them as Transaction Retrieval Requests (TRR). Visa and Mastercard no longer require banks to submit retrieval requests.

At the retrieval request stage, the merchant has not been debited for the payment. However, a chargeback can be initiated if the merchant does not provide the information that has been requested. Once a chargeback occurs, the merchant is debited for the chargeback amount.

We recommend that you respond to all retrieval requests to try to avoid a chargeback. A response to a retrieval request doesn’t guarantee a chargeback will be prevented, but in many cases, the cardholder simply does not recognize the transaction, so providing basic transactional information can sometimes be sufficient to end the inquiry or retrieval. Merchants have a higher chance of winning certain chargebacks on American Express and Discover transactions if they respond to a retrieval request.


A chargeback may be created immediately after a shopper files a claim, or after the issuing bank conducts a retrieval or inquiry request. The full chargeback flow is shown below:

  1. Shopper Requests a Chargeback: Shopper contacts their issuing bank and contests a particular purchase, requesting a chargeback.
  2. Issuing Bank Credits Shopper: Once the chargeback has been created, the issuing bank will credit the shopper the chargeback amount and will notify the appropriate card network, which will notify BlueSnap.
  3. Merchant Notified of Chargeback: The issuing bank and card network inform BlueSnap that a shopper has requested a chargeback on a purchase. BlueSnap debits funds from the merchant and notifies them via email and an IPN.
  4. Merchant Responds:
        a. Accepts the Chargeback: The merchant may agree that the shopper’s claim is valid and by taking no action on the chargeback, allow the shopper to retain the funds.
        b. Fights the Chargeback: The merchant may believe that the shopper did authorize the payment and represent or contest the chargeback by using BlueSnap’s chargeback management services. Merchants must provide compelling evidence challenging the shopper’s claim, which is then transmitted to the card issuer.
  5. Issuing Bank Delivers Verdict: The issuer will review the evidence and determine whether it is sufficient to overturn the chargeback.
        a. Win: The issuer agrees with the merchant that the shopper did make the purchase and the funds are returned to the merchant. If a representment is decided in the merchant’s favor, BlueSnap will return the transaction amount to the merchant’s account, this can take up to 65 days.
        b. Loss: The issuer upholds the chargeback, allowing the shopper to retain the funds.

Representing Chargebacks

When a chargeback occurs, if you believe that the shopper did make the payment in question, you should respond to the chargeback with a representment that challenges the shopper’s claim.

You must submit the representment by the Response Due Date, which is approximately 10 days after the date the chargeback was created. If you fail to respond in the time allotted, you will automatically lose the chargeback and the funds will remain with the shopper.

We strongly encourage you to represent every chargeback, even those that have been refunded. This is because a refund does not guarantee the issuing bank will decide the chargeback in the merchant’s favor.

Provide as much compelling evidence as you have on file that challenges the shopper’s claim, such as the shopper’s IP Address, the terms and conditions that the shopper agreed to, the proof of delivery, and any direct communication with the shopper. Your evidence should support your argument that the shopper’s claim is invalid. The chargeback reason code will indicate the reason a shopper gave to the issuer when they initiated the dispute. Certain evidence provides stronger arguments to specific reason codes. Visit Representing Individual Chargebacks Reason Codes for a detailed list of the recommended evidence for each card brand, product type, and reason code.

Pre-Arbitration (formerly known as Second Chargebacks)

The above flow outlines the first chargeback scenario. In Step 5, if the issuing bank continues the dispute with additional evidence, the chargeback process continues with the second chargeback or pre-arbitration process.

The issuer has the right to file a pre-arbitration (formerly second chargebacks) for the same transaction. Reasons for filing a pre-arbitration might include the discovery of new information or a change of the reason code. Upon initiation of a pre-arbitration, the funds would be debited from the merchant's account and the shopper would be credited again, pending a final decision, which would be made after either one of the following items occurs:

  • The merchant accepts the pre-arbitration case and the funds stay with the shopper.
  • Some merchants respond to the pre-arbitration case with additional compelling evidence, moving the case to the arbitration stage. This is risky and not recommended, as cases that are decided in favor of the shopper at the pre-arbitration stage can result in the merchant incurring fees of $500 or more, in addition to any fees they've already paid out during the previous stages.

Since responding to a pre-arbitration may result in high fees (if the merchant loses) and the likelihood of a merchant winning is low, BlueSnap does not support merchants responding to a pre-arbitration.

Common Reasons for Chargebacks

Shopper Disputes

  • The shopper did not receive the product or service
  • The shopper was dissatisfied with the product or service and was not able to reach a resolution with the merchant
  • The merchant did not refund the transaction in a timely manner

Processing Errors

  • The shopper was charged twice for the transaction
  • The shopper was charged an incorrect amount

True Fraud (Identity Theft)

The purchase was not made or authorized by the legitimate card holder due to a variety of fraudulent reasons including identity theft, credit card theft, and scams.

Friendly Fraud (False Fraud)

Friendly fraud or “false fraud” occurs when a shopper (or authorized party) makes a legitimate and authorized purchase, but then files a chargeback falsely claiming it as fraud, services not rendered, or products not received. In some cases, a shopper may commit friendly fraud inadvertently by not fully understanding the process of obtaining a refund and filing a chargeback instead.