When a cardholder files a chargeback with their credit card issuer, it means they’re disputing a charge and asking the issuer for a transaction reversal.

Chargebacks are meant to serve as a form of consumer protection against fraudulent activity. They are different from refunds because the cardholder is asking their card issuer to reverse the transaction (and forcibly remove the funds from the property’s account), rather than directly asking you (the property) for the money back.

Learn more about preventing disputes.

The chargeback process

Learn more about what happens before, during, and after a dispute.

Step 1: The cardholder disputes a charge

A cardholder contacts his or her credit card issuer to dispute a transaction. This may be because:

  • They don’t recognize the charge; if the card was lost or stolen, it could have been used to make a fraudulent purchase.
  • They paid with the wrong card.
  • They failed to cancel their reservation in accordance with your policy and don’t want to pay the cancellation fee.
  • They stayed with you as intended but don’t want to pay for their stay because they weren’t satisfied.

Step 2: The issuer reviews the dispute

The card issuer reviews the dispute and determines if it is valid or not. If the dispute is determined to be valid and worthy of further investigation, the issuer passes it on to the card network.

Note: This process is different for American Express. When a chargeback is related to fraud, American Express is more likely to favor their cardmembers and issue an immediate chargeback (without inquiry).

Step 3: The cardholder is reimbursed

The card network sends the chargeback to Mews. If you’re using the Adyen payment gateway, you’ll retain the funds until the cardholder wins the dispute. However, if you’re using Stripe, the cardholder is reimbursed for the disputed amount now (before the case has even been ruled on). Don’t worry though—if you win the dispute, the money will be sent back to your account later.

Note: If the chargeback amount is different from the transaction amount, it may be because:

  • The chargeback was created in a different currency than the original transaction.
  • The customer believes they were billed for the wrong amount.
  • The customer received a partial refund, but they are looking for a full refund.

Step 4: You're notified of the chargeback

The dispute is passed to your payment processor (for example, Stripe), and Mews is notified. We then send you an email informing you of the chargeback.

Tip: If you want to a) change the email address that chargeback notifications are sent to, or b) automatically receive chargeback tasks on the Dashboard every time you receive a chargeback, contact support and they'll set it up for you.

Step 5: You respond to the dispute

When you’re notified about the chargeback dispute, you’re asked to respond within a specific number of days; the time limit to respond begins as soon as you’ve received notice of the dispute and can be anywhere from 10-39 days, depending on the processor).

For help providing evidence, read our guide on how to respond to a chargeback.

  • If you accept the chargeback or don’t respond within the time limit, the cardholder is awarded the chargeback (which means they keep the reimbursement, and you lose revenue).
  • If you want to object the chargeback, you need to provide compelling evidence to prove your claim within the time limit specified by the processor. This evidence must be sent to Mews first, and then we’ll deliver it to the payment gateway provider on your behalf.

Step 6: The card issuer reviews the evidence

If you objected to the chargeback, your compelling evidence is sent from Mews to the payment gateway provider and eventually arrives at the credit card issuer for review. Only the issuer is responsible for reviewing the evidence and deciding in favor of you or the cardholder (this process typically takes around 60-75 days).

  • If the issuer rules in favor of the cardholder, the evidence was not enough to disprove the dispute, and the cardholder keeps the reimbursement.
  • If the issuer rules in your favor, congratulations! The cardholder is informed that the chargeback was declined, and the funds taken from your account are returned (usually about a week after the dispute is won). However, the cardholder can contest the outcome of the dispute by filing a second chargeback (also called an “arbitration chargeback”).

Banks keep their internal review processes confidential, so you may not be given much insight into why the dispute was resolved the way it was.

Step 7: The dispute enters pre-arbitration

If the cardholder files a second dispute, the chargeback enters the pre-arbitration stage, and then arbitration. It is incredibly difficult to win a second chargeback dispute, so we highly recommend reaching out to the cardholder directly to resolve the dispute.

Note: Mastercard holders can initiate a second chargeback within 45-47 days from the time you supplied them with your evidence. In this case, funds are taken from your account (after previously being reversed) and you will not be able to upload any further documents.

Accounting for chargebacks

You should leave chargebacks in the Accounting Ledger until the dispute is resolved. If the dispute is resolved in your favor, the chargeback will be offset by the sum that is returned to you.

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