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Chargebacks - The Jargon Buster

July 26, 2019 at 2:00 PM

There’s so much jargon in the payments industry generally. One area not immune from this is dispute resolution and chargebacks, which have a number of specific terms. Here’s a handy reference explaining the key terms.



Comes at the end of the dispute resolution process where after having reviewed the evidence submitted by both the acquirer and issuer, the card scheme decides which party is financially liable for the disputed transaction.



When a previously-processed card sale is returned. The cardholder or their card issuer may be disputing the transaction, for example, if it is fraudulent, if services are not provided, merchandise is not received, is defective or not as described. The cardholder’s bank or provider returns the transaction (i.e. charges it back) to your card acquirer or provider. Chargebacks reflect consumer protection regulations in many countries and have been part of card scheme rules for many years.


Chargeback Group

The various types of chargebacks are organised into groups for ease of reference. These include fraud, authorisation, processing error, cancelled/returned, non-receipt of goods/services.


Compelling Evidence

Proof that the cardholder participated in the transaction. This depends on the sales channel and nature of the goods or services sold. Examples include delivery confirmations, the cardholder’s signature on a pickup form, details of the cardholder’s IP address or e-mail address for the delivery of digital media. This may help you and your acquirer defend a chargeback, although it is not in itself a full remedy for a chargeback.



In the dispute resolution context, this is an instance where an acquirer or issuer suffers a loss and there is no valid chargeback or representment right. Either party may bring a compliance case, demonstrating that the counterparty has not complied with scheme rules.


Delayed Transaction

A transaction for goods, services or other charges that remain unpaid and for which a cardholder has given prior consent to charge to their card. For example, room service or breakfast on the morning of check-out when staying in a hotel.


Guaranteed Reservation

A reservation made by a cardholder who provides a card account number but no payment at the time of reservation. This ensures that the accommodation, merchandise or services will be available as reserved and agreed with the merchant.


No Show

A charge levied by the merchant if the cardholder does not cancel a guaranteed reservation in accordance with the merchant’s properly disclosed policy. Or fails to show up to claim the reservation.



A stage in the dispute resolution process, which occurs after one presentment of the card transaction, one chargeback and one representment. The card acquirer and issuer may enter the pre-arbitration stage to attempt to resolve the dispute between themselves. This is before they defer to the card scheme to rule on the matter.


Prepayment Transaction

Full or partial payment in advance for goods or services to be delivered at a later date.



A cleared card transaction record that the acquirer presents to the issuer for payment.


Reason Code

If a card issuer returns a transaction to an acquirer, they must do so using card scheme-specific codes that define the reason the transaction is being disputed. Mastercard and Visa number their reason codes slightly differently.



After having received a chargeback, the second time an acquirer presents a cleared card transaction record to the issuer for payment.


Retrieval Request

When the cardholder’s bank or provider requests more information about a transaction, sometimes to jog the cardholder’s memory about an unrecognised purchase on their statement. This sometimes also known as a ‘request for copy’. A retrieval request is not in itself a chargeback.


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Tags: Commerce, Payments

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