Understanding Cards and Payments Disputes: What, why, and How ?

In today’s digital-first economy, card payments are the norm. But with convenience comes complexity—especially when things go wrong. If you’ve ever had a mysterious charge on your statement or had to deal with a chargeback as a merchant, you’ve encountered a card and payment dispute.

This blog breaks down the essentials: What a dispute is, why they occur, and how they are resolved.

1. What is a Card and Payment Dispute?

A card and payment dispute happens when a cardholder challenges a transaction on their debit or credit card. This is usually handled through a process called a chargeback, where the issuing bank may reverse the charge after investigating the claim.

• Unrecognized transactions
• Unauthorized or fraudulent activity
• Incorrect or duplicate charges
• Goods or services not received
• Refunds not processed

These disputes are governed by card networks like Visa, Mastercard, and Amex, and they offer protection for both cardholders and merchants.

2. Why Do Disputes Occur?

Disputes arise for a number of reasons, including:

• Fraud: Unauthorized use of the card due to theft or data leaks.
• Merchant errors: Billing mistakes or service failures.
• Customer confusion: Unrecognized merchant names or auto-renewal charges.
• Dissatisfaction: Product not as described or not delivered.

For merchants, frequent disputes can hurt reputation, increase costs, and even lead to penalties from payment processors.

3. How Are Disputes Handled?

The dispute resolution process involves several stages:

1. Cardholder initiates dispute with their issuing bank.
2. Issuer investigates and may provide provisional credit.
3. Merchant is notified and asked to provide evidence.
4. Final decision is made by the issuer or escalated to the card network for arbitration if needed.

Best Practices for Cardholders and Merchants

For Cardholders:

• Review your statements regularly
• Report unauthorized transactions quickly

For Merchants:

• Provide clear billing descriptions
• Maintain accurate transaction records
• Offer responsive customer service

Understanding disputes helps you protect your money, your business, and your peace of mind.