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The Chargeback Process: Mastercard®, American Express®, and Discover®
The Chargeback Process: Mastercard®, American Express®, and Discover®

A general overview of the process that Mastercard, American Express, and Discover use to manage payment disputes

Max Jones avatar
Written by Max Jones
Updated over a week ago

The chargeback process is a confusing subject, however a basic understanding of the workflow is important. If you are familiar with how the process works, you can manage chargebacks with high ROI. But if you don’t fully grasp how a dispute unfolds, your bottom line could take a hit.

NOTE: The chargeback process differs slightly for some Visa® disputes. Read this help center article to learn more.

People Involved in the Chargeback Process

In any chargeback situation, there are five main people involved:

  • The cardholder is a consumer who has been issued a credit or debit card. Unless the transaction is fraudulent, the cardholder is the person who makes the purchase.

  • The issuer is the cardholder’s bank.

  • You, the merchant, are a business that has been approved to process credit and debit card purchases.

  • The acquirer is the merchant’s bank.

  • The card brand (Mastercard®, Visa®, etc.) acts as the go-between, facilitating messages and activity between the issuer and acquirer.

These people have different roles to play at each stage of the chargeback process.

The Phases of the Chargeback Process

The chargeback process can be broken down into five different stages, all of which are made up of various tasks that must be completed before the case can advance to the next phase.

  1. Chargeback

  2. Chargeback Response

  3. Pre-Arbitration

  4. Pre-Arbitration Response

  5. Arbitration

NOTE: Usually, the chargeback process is finished after one or two phases. Occasionally, a case will advance through all five stages (this is extremely rare for American Express® and Discover® disputes).

PHASE 1: Chargeback

During the first phase of the chargeback process, the cardholder initiates the dispute and you are notified.

If you decide to respond to the chargeback — which we usually recommend — the process advances to the next stage.

If you use Midigator’s DisputeFlow technology to fight chargebacks, check out our user tutorials. These guides can help you create the most compelling responses possible. Also, we have dozens of blog articles that can help you fight chargebacks and win. You can find them here.

If you use Midigator’s fully-automated technology, our support team can help you adjust and optimize your response strategy at any time. Reach out via the live chat or by emailing

PHASE 2: Chargeback Response

When you respond to a chargeback, the case is sent back to the issuer for review. Based on the information provided, the issuer decides who is responsible for payment.

If the issuer decides in your favor, the cardholder might choose to dispute the transaction a second time which would advance the case to the next phase of the chargeback process.

PHASE 3: Pre-Arbitration

If the cardholder isn’t satisfied with the issuer’s verdict, the transaction is disputed again (this second dispute is technically referred to as pre-arbitration).

Again, you have a decision to make: accept the loss or continue fighting.

NOTE: At Midigator, we encourage you to accept liability if a case advances to pre-arbitration. We do not recommend that you continue fighting.

The reason is because Midigator helps you create the most compelling dispute response possible with all the evidence that is available — we don’t hold any information back. So unfortunately, if you respond a second time, your argument won’t be any more compelling than it was the first time. This means a pre-arbitration response simply increases your costs without increasing your odds of winning.

Instead of using your resources to fight pre-arbitration cases, spend that time analyzing your chargeback data. What are the most common characteristics of winning responses? What elements are missing from responses that result in a loss or pre-arbitration? How can you optimize your response strategy so you win more and lose less?

Our help center has tutorials that explain how to use Midigator’s reports and charts to make this analysis more effective. If you’d like additional help, contact our support team. We’re happy to help you take a deep dive into your data.

PHASE 4: Pre-Arbitration Response

If you choose to keep fighting, you’ll send a pre-arbitration response to the issuer.

Failing to accept liability during pre-arbitration means the issuer has the option to advance the case to arbitration.

PHASE 5: Arbitration

Arbitration is the final phase in the chargeback process. The card brand assigns liability and the case is closed.

NOTE: The losing party must pay all arbitration costs and fees — which is usually a minimum of $520 per dispute — so think carefully about advancing a case to this stage. During arbitration, the card brand will only review the evidence you provided in the chargeback response. Anything shared in a pre-arbitration response will not be considered. So again, if your argument wasn’t compelling the first time, it might not be persuasive enough at a later stage.

Want to learn more? Check out this article on the Midigator blog. It contains a real-world example of how a dispute unfolds.

We know how complex fighting chargebacks can be. That’s why we’re here to help at every step along the way. Reach out to our support team if you have any questions. You can use the live chat in Midigator or email

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