Chargebacks are a part of the payment processing that happens when the traveler questions the charges that appear on the bank account. They are meant to serve as a form of consumer protection against fraudulent activity. It occurs when the guest disputes transaction with their card issuer or bank, which triggers the investigation of the charge's legitimacy. During the chargeback process, the cardholder and the merchant try to prove that the other is wrong by providing proof. As the merchant, you have every chance to win the dispute if you will use some tips in preventing disputes and provide the relevant evidence to challenge the claim.
There are several parties included in the dispute process:
Cardholder: the customer who disputes the transaction
Card issuer: the bank that issued the card that the customer used for the purchase.
The Card Network: Visa, Mastercard ( can be included in some complicated cases)
Acquirer: payment gateway provider
Merchant: the business that sold the product or service whose charge is being disputed.
Please note: the issuing bank or acquirer may charge a dispute process fee. This fee is returned to you if the case was won and stayed with issuing bank or acquirer if the case is lost.
The chargeback process
Learn more about what happens before, during, and after a dispute.
Step 1: The cardholder disputes a charge
The cardholder alerts their issuing bank about suspicious payments. 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 per 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 issuing bank reviews the dispute
The issuing bank reviews the dispute and determines if it is valid or not. The bank then decides whether to reject the cardholder’s supporting evidence if they are weak or unreliable or accept the dispute and forward it to the acquirer via 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).
Please read our guide on how to respond to a chargeback for help providing evidence.
- 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 dispute's outcome 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 challenging 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
It would be best if you left 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.