Disputes overview

What disputes are and how the Pismo platform handles them.

A dispute happens when a cardholder calls the bank or card issuer to report an unrecognized or suspicious transaction, requesting a cancellation, or refund. The following table shows different types of disputes.



Merchant error

When a seller charges a different price for the product/service or charges twice for the same product/service by mistake. It's also when the seller doesn't confirm a refund.

True fraud

When a dispute is the result of a stolen identity, stolen data, or a lost or stolen card.

Friendly fraud

When the cardholder requests a refund because they’re unsatisfied with purchased goods or services by calling the bank or the network responsible for the transaction, instead of contacting the original seller. Friendly fraud is also known as chargeback fraud.

Chargeback lifecycle

When a cardholder has a dispute, they're asking for a chargeback to their card. The following shows how a chargeback returns to the cardholder, if they win the dispute.

**The chargeback lifecycle when a cardholder wins a dispute****The chargeback lifecycle when a cardholder wins a dispute**

The chargeback lifecycle when a cardholder wins a dispute

❶ The cardholder disputes a purchase and notifies the card issuer.
❷ The card issuer reviews the dispute and sends it to the card network.
❸ The card network reviews the dispute and sends it to the card acquirer.
❹ The card acquirer reviews the dispute and notifies the merchant.
❺ The bank reviews the dispute.
❻ The card acquirer forwards the dispute to the card network.
❼ The card network resubmits the dispute to the issuer.
❽ After reviewing the dispute, the issuer decides which side wins. If no sides agree, then they go through arbitration.
❾ If the cardholder wins the dispute, then they get a chargeback.

How Pismo handles disputes

So, what's Pismo's role with disputes? Pismo handles them in the following order:

  1. The cardholder disputes a transaction with the card issuer.
  2. The issuer makes dispute API calls to the Pismo platform.
  3. Pismo opens this dispute with the card network.
  4. Once there's a response from the network, Pismo informs the issuer and cardholder about the status of the dispute. To see how to get the status on a dispute, go to List Possible States to Disputes.
  5. If the issuer lost the dispute, the issuer can either accept the loss or file a case with the card network.

Going deeper with Pismo's dispute API

Pismo goes beyond just reporting what the card network says about a dispute. You can use the Pismo platform to provide the context and reasons for a dispute. To do this, you can create a dispute form. When there's an update to a dispute, you can update this form. To create a dispute form, go to Create a Dispute Form. To update a form, go to Update a Dispute Form.

In cases of fraud, you can create a dispute fraud report. When there's an update to the dispute, you can update this report. To create a dispute fraud report, go to Create a Dispute Fraud Report. To update a report, go to Update a Dispute Fraud Report.

If you need to provide evidence files for a dispute, you can upload and list them. If you need to, you can download these files as well.

For information about how to dispute installments, go to Retrieve a Dispute Installment or Create a Dispute Installment.

Resolving a dispute using Pismo API

Issuers can use the Pismo API to resolve disputes. Here’s how an issuer can resolve them:

  1. Identify the reason for the cardholder’s dispute request and its corresponding reason code using your card network chargeback guide. By now, you should've already created a network disputes endpoint to register the dispute being analyzed.
  2. Examine the evidence your customer sent, and see if their dispute is valid according to the chargeback guide. Use the Upload Files endpoint to attach the valid evidence to your case in the dispute.
  3. If you have a chargeback or risk policy for opening disputes, verify the dispute request adheres to it.
  4. If the answer to step 3 is true, then open the dispute within the card network as soon as possible, attaching the files that support your plea. To open the dispute on the card network, use the Change Dispute Status endpoint and change the status of your dispute to OPEN.
  5. Be aware when there’s a status change in your dispute. To do this, sign up to receive the Dispute Status Change events.
  6. If you submit files with unsupported formats or disregard any card network rule, the card network will reject the dispute. Pismo then notifies you with a FAILED_ON_CREATION event. If this occurs, use the Update Dispute endpoint to correct the data and resend your case by changing the dispute status to RESEND.
  7. If an acquirer’s response doesn’t end the dispute, check if it’s compliant with the card network's rules.
  8. Assess the time, operational cost, and disputed amount to determine if going through pre-arbitration or arbitration is appropriate. If not, change the dispute status to ISSUER_LOSS to close the dispute by using Change Dispute Status.
  9. If the acquirer accepts the dispute and its corresponding chargebacks, then you won the dispute. When Pismo notices the status change at the card network, it changes the dispute status to ACCEPTED.

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