By Rinki Pandey December 24, 2025
Chargebacks can quickly affect cash flow, reputation, and long-term business stability. It is vital for New Castle merchants to know how chargebacks occur and the steps they can take to avoid them. Clear policies, robust proof of transactions, and knowledge of dispute timelines help to minimize risk, prevent unnecessary disputes, and preserve revenue while continuing to build trust with valued customers.
Common Chargeback Reasons
Chargebacks are increasingly becoming common in the growing digital payments market. Understanding why they happen can help merchants reduce losses and maintain a good reputation. The first and most important factor could be fraudulent or unauthorized transactions, where a person conducts a credit card transaction using stolen card details without the permission of the actual cardholder.
The second common reason for a chargeback is due to the nondelivery of goods or services on time. Many times, if the goods purchased are not delivered on time or if there is a disappointment in the services offered, the customers claim refunds by filing a chargeback dispute.
Thirdly, duplicate billing is another reason for disputes. If a customer is charged twice for the same purchase by mistake, they can file a complaint. Sometimes, due to deficiencies or gaps in products or services, or if complaints regarding them remain unaddressed, the customer seeks a refund through a chargeback. A delay in delivery, especially of urgent orders, may infuriate the customers and is one of the major causes of a dispute arising between the parties.
Lastly, the technical error related to defective confirmations and glitches that arise in the system of online payment can also further lead to a dispute if not resolved in a timely manner.
Understanding the Chargeback Process and Policy: From First Dispute to Final Resolution
Most chargebacks are initiated whenever a customer calls their bank to dispute a transaction. Depending on the network and the circumstances, customers typically have anywhere from about 45 to 180 days to raise a dispute and, in special cases, even longer.
The issuing bank will examine the claim for validity, which itself can take several weeks. If the bank agrees there is a problem, it passes the chargeback to the merchant’s acquiring bank or the payment processor, who, in turn, notifies the merchant.
At this point, the disputed amount is temporarily withdrawn from the merchant’s account and credited back to the customer. In the case of such an instance, the merchant is notified and is usually given a small timeframe, about seven to ten days, to respond. If the merchant wishes to contest the chargeback, he must provide sufficient evidence that the transaction was indeed valid. This most commonly includes:
- Proof of Delivery
- Receipts of Transaction
- Matching Billing and Shipping Information
- AVS Verification
This evidence is then passed on by the acquiring bank to the issuing bank.
On receiving the evidence, the issuing bank proceeds to review the same and makes a decision on whether the chargeback is valid. If the merchant’s evidence is found acceptable, the chargeback becomes void, and the amount is again charged to the customer’s account. Sometimes, the bank on the issuing side might initiate a second chargeback, also called pre-arbitration, especially if there is new information or the reason for the dispute has changed.
Not every card network handles second chargebacks identically. Mastercard, Discover, and American Express permit another round of review, whereas Visa allows only one attempt. In this second round, additional or stronger evidence may be requested from the merchant. Everything is reviewed again by the issuing bank, and if the merchant wins, the funds are returned to them. If not, then the chargeback stands.
The last stage of the process is arbitration. This is a process where the card network itself intervenes to make a final decision on the case. Arbitration is very expensive, time-consuming, and usually avoided unless the amount in question within a transaction is very high. The card network reviews all evidence submitted and determines if its ruling is either in the customer’s or merchant’s favor. The party that loses must pay the arbitration fees. When arbitration is finalized, it is final, and the case is closed thereafter.
Key Chargeback Rights Every Merchant Should Know
Merchants have more rights within the chargeback process than many businesses or individuals realize. Understanding these rights empowers businesses to protect revenue and confidently respond when disputes occur.
Firstly, a chargeback can never be greater than the original transaction amount. The bank has the right to dispute only the full amount or part of the amount that has been paid. This total amount can include shipping, handling, or surcharges tied to the purchase, but the bank cannot add extra penalties or unexplained fees. That said, merchants can still be charged separate chargeback fees by their acquirer. These fees cover administrative costs and are billed separately, not added to the disputed amount.
Secondly, cardholders do not have the right to file chargebacks for cash back. If a customer receives cash as part of a purchase, that cash portion cannot be disputed. Similar rules are applied to cash withdrawals or items already returned for cash. For example, if a customer purchased an item with cash back, only the amount for the product can be disputed, but not the cash.
Thirdly, merchants are protected when it comes to late deliveries. If an item arrives after the agreed delivery date, the customer cannot immediately file a chargeback. Instead, they should first try returning the item. Simply being unhappy because of delivery timing isn’t enough to automatically justify a chargeback.
Additionally, in most cases, the customer is supposed to reach out to the merchant before initiating a chargeback. Many chargeback reason codes require proof that the customer tried to resolve it directly. Even when it is not strictly required, chargebacks are meant to be a last option. If a bank allows a chargeback without this step, it undermines merchant rights.
Next, merchants are entitled to understand the reason code behind the chargeback. Reason codes point out why the dispute was filed and guide how the merchant should act. While reason codes are not always accurate, especially in friendly fraud cases, they still define the official basis of the dispute and shape the response strategy.
Also, there is something called a 15-day rule, applied when the transaction is related to refunds. If an item was returned by the customer but the refund has not been posted yet, the bank should wait for 15 calendar days from the actual return before filing a chargeback. This allows the time for the merchant to properly check the refund and avoid the possibility of a chargeback.
Merchants are entitled to the return of products. If a customer says that something was not received, but it is proven that the product was delivered, then the merchant has every right to dispute. If items were received and not returned, then merchants can request the product back and, if it is not returned, take action against the customer.
Not to forget, merchants have the right to representation, which means fighting chargebacks they believe are invalid. This represents one of the essential rights of this process. This prevents misuse, reduces fraud, and results in a more justified environment for merchants, banks, and customers.
Lastly, there is the right to arbitration. If a case reaches this level, the merchant can accept the loss or proceed further with an arbitration and let the card network make the final decision. Arbitration is expensive and time-consuming, but it takes the decision away from the issuing bank and places it in the hands of the card network. Knowledge of these rights puts the merchants in control of the chargeback process, rather than making them helpless in cases of disputes.
Key Evidence to Prevent Chargebacks
One of the best methods of fighting against chargebacks for New Castle merchants is to maintain detailed records of transactions. For every sale, documentation should be clear and well-organized with order details, confirmation of payment, invoice, and communication with the customer. These are records that will help to explain exactly what was purchased, when it was paid, and how the transaction was processed.
Firstly, delivery proof is most important. Tracking numbers, shipping receipts, delivery confirmation, and signed delivery records can clearly prove that an item reached the customer. In case of a customer claiming later that they never received the order, this evidence becomes critical in stopping an invalid chargeback.
Secondly, it’s also good practice to save copies of emails, messages, or support tickets. These copies will prove that the customer was informed and agreed to certain terms. In most disputes, this communication will prove helpful to show that the merchant was fair and met their obligations.
Having all this information in one place makes responding to chargebacks much easier and faster. Since chargeback deadlines are often tight, quick access to strong proof can be the difference between winning or losing a dispute.
For New Castle merchants, consistent record keeping is not only a good practice but a key component in the protection of revenue and reduction of chargeback risk.
How Much Time Merchants Have to Respond to a Dispute?
While card networks set official timelines, for most merchants, the reality is usually much tighter than what is laid out on paper. Most major card networks have a very limited response window with merchants at every stage of the chargeback process. For Visa, American Express, and Discover, merchants typically have as much as 20 days per phase to submit their evidence. Mastercard offers a little more response time, typically up to 45 days for each stage.
However, in real life, merchants hardly ever receive the written timeframe; this is because chargebacks do not flow directly from the card network down to the merchant. A dispute first flows through the acquiring bank and the payment processor. All these take time to forward case details, review the response, and submit the documentation to the network.
Acquirers and processors impose their own deadlines to allow for internal processing. These deadlines are shorter than the official timeline set by the network. This means that merchants have only a very small amount of time once they are notified about the dispute.
Mostly, merchants have realistically only five to ten days to collect evidence, prepare a response, and submit it. Failing to meet this internal deadline often means that the chargeback is lost by default, even when the merchant had strong proof.
A well-laid-out process, well-organized records of transactions, and easy access to order and customer information go a long way in making a difference. Early responses, rather than ones at the last minute, avoid unnecessary losses and keep the chargeback ratios under control.
What Factors Determine a Chargeback Time Limit?
Chargeback time limits are not random. They are strict deadlines set by card networks like Visa and Mastercard, but the exact time frame can change based on several factors. These limits allow customers sufficient time to file a dispute. Knowing what drives these timelines greatly benefits the business in responding better and minimizing unexpected chargebacks.
One of the biggest determining factors is the card network. Each card network has its own set of chargeback rules and timelines. In most cases, customers are given a timeline of 120 days from either the purchase date or the date a problem was noticed in order to file a dispute. However, this can be shorter or longer depending on the reason for the chargeback and the specific policies of the card network involved.
Secondly, goods or services provided on the spot, like downloads, in-store purchases, usually have different chargeback time limits than those products or services supplied at a later date, such as travel bookings, event tickets, or subscription services. Similarly, the reason for the dispute is equally important. There are numerous reasons chargebacks may arise, including unauthorized transactions and low-quality products. Each of these reasons corresponds to a particular chargeback code, and each code has its own time limit. More complex issues allow a longer timeframe because they require further investigation.
The bank of the customer can also affect how much time is allowed. Extra protection is offered by some issuing banks to cardholders, extending the deadline for chargebacks for certain cases beyond the standard rules set by the network. These policies at the bank level aim to gain trust and make customers more confident in using their cards.
While clear return and refund policies of the merchant cannot change the deadlines set by the card network, they can influence customer behavior. If a client misses a store’s refund window or is unable to determine how to start the return process, they may directly opt for filing a chargeback. Legitimate and transparent return policies will help to minimize such risk.
Chargeback timelines are also influenced by local laws and consumer protection rules. A number of regions provide more time to the consumers for disputing a transaction. Such legal protections exist to ensure customers are dealt fairly and have adequate time to act in case something goes wrong.
Dispute Time Limits vs. Response Time Limits
Dispute time limits often get confused with response time limits. In simple words, customers are given much more time to open a dispute than merchants are given to respond to one.
In most cases, cardholders can dispute any transaction for a long period. The length of time can vary between 60 and 540 days after a transaction is made, depending on the card-issuing company or payment service provider. This means clients have a long time to identify the problem, study their statements, and decide whether or not to contest the charge.
On the other hand, merchants have tighter deadlines. Response windows are much shorter and depend on the card network or payment platform. Most merchants have anywhere between seven days and 45 days to present evidence. It is also important to note that card networks are not the only ones setting such deadlines. Issuing banks and acquiring banks must be able to meet network timelines as well. This means the deadline visible to the merchant is usually shorter than the official network limit.
There are two other practical considerations for merchants. First, the response clock usually starts at the beginning of each dispute phase, but merchants may not receive the notice right away. Delays in notification and document delivery can easily consume several days. This makes what appears to be a sufficient 30-day response window shrink rapidly in reality.
Secondly, the start date, often referred to as “Day One,” restarts with each new phase of the chargeback process. The response window reopens with every step in the process of a dispute from one phase to the next. Although the general time limits are well defined, deadlines continue to shift as the case continues.
Card Network Time Limits
Card networks also play the biggest role in setting the rules when it comes to chargeback deadlines. Although each network follows its own process and uses different terms, the overall structure is very similar. There is one timeline for cardholders and another one for merchants. Furthermore, these deadlines change based on the type of dispute being filed. It is also worth mentioning that exceptions may apply depending on the situation at hand.
Firstly, with Mastercard, most cardholders have up to 120 calendar days to file a chargeback. This timeframe usually begins on the date the transaction was processed or when the customer actually received the goods or services. In some special cases, that window can be much shorter, such as 45 days, while certain disputes may take more than a year to file.
On the merchant side, Mastercard usually gives acquirers and merchants 45 days to respond at each stage of the dispute. However, one important exception is when Mastercard sends a request for information. In that case, merchants must respond within just 18 days.
Visa has a very similar process. Visa cardholders can usually file a dispute within 120 days of the date of the transaction or delivery. However, for some dispute types, Visa reduces the time frame to about 75 days. Merchants and acquirers are also supposed to respond within 30 days from the opening of each phase. If either party wishes to take the dispute to arbitration, they have just 10 days to do so.
American Express handles chargebacks a bit differently. While there used to be no strict filing deadlines for Amex, it now applies a 120-day limit for most disputes. A few situations allow for different starting dates, but those are the exceptions. Cardholders are also limited to only two disputes per transaction.
When a dispute is raised, American Express may either send an inquiry to the merchant or move straight to a chargeback. Merchants usually have 20 days to respond to an inquiry by accepting the dispute or submitting evidence. In many cases, Amex goes directly to a chargeback, and because American Express acts as both the network and the issuer, merchants have very limited appeal options once a decision is made.
The Discover process is closer to Visa and Mastercard. Typically, cardholders are granted as many as 120 days from the date of the transaction to dispute a charge. Merchants have 20 days to provide an initial response, although some banks or processors may require an internal deadline much shorter than that. If merchants want to appeal a representation decision, they must be able to do so within 30 calendar days. If a second chargeback arises, the merchant has 30 days to submit further evidence. When the dispute escalates toward Discover arbitration, merchants have only 15 days to make such a request.
These are network-specific time limits that vary, and it is crucial for merchants to understand them. Where cardholders may have several months to dispute a transaction, merchants have brief periods to respond once they receive a chargeback. The best way to avoid missed deadlines and lost cases by default is to stay organized and respond early.
Practical Tips for Chargeback Prevention for New Castle Merchants
For merchants in New Castle, preventing chargebacks involves clear communication and smart processes. Make your pricing, shipping, cancellation, and return terms easy to find and simple to understand, so customers know exactly what to expect before they buy. Secondly, strong customer support also plays a big role. When shoppers get quick and helpful responses, they are far less likely to turn to their bank.
Thirdly, using secure payment gateways with built-in fraud protection helps to block unauthorized transactions, while closely reviewing high-risk orders, like large purchases or address mismatches, adds another layer of safety. Clear refund and return policies set the right expectations up-front and reduce frustration after purchase. Finally, regularly reviewing chargeback trends helps you spot patterns early and adjust your approach, so you can fix problems before they become repeated disputes.
Conclusion
Chargeback prevention is all about clear policy, solid documentation, and timely action at every stage in the life of a transaction. For New Castle merchants, it can greatly reduce chargeback risk by being organized and responding quickly, as well as by providing an understanding of dispute timelines. By informing and supporting customers, disputes fall, revenue remains secure, and business growth turns into a more stable, predictable path.
FAQs
What is a chargeback?
A chargeback is when a customer contacts their bank and disputes the charge due to not being able to resolve the problem with the merchant themselves.
How long does the merchant have to respond to a chargeback?
The time for answering varies between 7 and 45 days, depending on the payment processor and card network.
What documents help to prevent chargebacks?
Transaction receipts, proof of delivery, customer communication, AVS responses, and refund or return confirmations add to the disputed item defense.
Why do customers file chargebacks instead of refunds?
The most common chargeback disputes filed by customers are due to confusion, delayed responses, unclear policies, or not knowing how to request refunds.
Are chargebacks avoidable?
Chargebacks cannot be entirely avoided, but with clear policies, strong proof, and speedy support, the potential can be significantly reduced.