Most chargebacks begin when a cardholder reports a problem to the card issuer (such as J.P. Morgan). The acquirer (for example, the merchant bank or the merchant’s financial institution) and the merchant may also be involved.
The following steps describe the typical life cycle of the chargeback for a dispute:
The cardholder initiates a dispute for a transaction.
The issuer sends the transaction back to the acquirer electronically.
The acquirer receives the chargeback and then either resolves it or forwards it to the merchant.
The merchant either accepts the chargeback or addresses it and resubmits it to the acquirer.
The acquirer reviews the information from the merchant, agrees that it addresses the chargeback, and represents the chargeback electronically to the issuer.
The issuer receives the item and either reposts it to the cardholder’s account or submits it to VISA or MasterCard to determine financial liability if the item is not addressed.
The cardholder receives the dispute resolution information and may be either credited or rebilled for the item in question.