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

Disputes glossary

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.

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

Pismo handles disputes 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 dispute with the card network.
4. Once there's a response from the network, Pismo informs the issuer and cardholder about the dispute status. To see how to get the status on a dispute, go to Get possible dispute states.
5. If the issuer loses the dispute, they can either accept the loss or file a case with the card network.

Pismo's dispute API

You can use the Pismo platform to provide the context and reasons for a dispute. Pismo endpoints allow you to do the following after you Create a dispute

• Create dispute form - Create a dispute form to be sent to the network
• Create fraud report - Create a fraud report for cases of fraud. For information on filing a fraud report for Visa, see VISA collaboration questionnaire.
• Upload evidence file - Upload a supporting evidence file
• Create dispute installment - Dispute an installment for a transaction composed of multiple installments.

Using Pismo API endpoints to resolve a dispute

Before you begin, make sure you are set up with disputes access.

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Disputes state machine

Pismo provides a state machine as a framework to help guide clients through the dispute process.

Opening a dispute with Visa

Step 1 - Create dispute

Call Create dispute with Visa required data:

• modality = Enter category, aka Reason: 10 (fraud - card not present), 11 (authorization), 12 (processing error), or 13 (consumer dispute).
• dispute_due_to = Pick best enum reason for dispute. Required if modality = 12 or 13. Not necessary for 10 or 11.
• first_installment_amount - Enter value for this field if the dispute has more than one installment
• is_partial - Set to true if the dispute is for a partial transaction amount and not the full amount.
• comment - Add explanation if dispute is partial and not full

This endpoint returns a dispute ID you need for all other calls related to this dispute.

Step 2 - Upload dispute forms

Call Create dispute form and fill out and upload a collaboration form (collaborationQuestionnaire) if Reason 12 or 13or the allocation questionnaire (allocationQuestionnaire) if Reason 11.

Step 3 - Multiple installments

Call Create dispute installment for each subsequent installment if you have not opted in to automated dispute installment control .

Note: To disable automated dispute installment control for this dispute call Update dispute with stop_automated_installment = true.

Step 4 - Upload evidence

Call Upload evidence file to upload any files with information pertaining to this dispute.

Step 5 - Initiate dispute process

Call Update dispute status with event = OPEN along with other required fields to begin the dispute process with Visa.

Opening a dispute with Mastercard

Step 1 - Create dispute

Call Create dispute with Mastercard required data:

• modality = Reason code (example: 4853 - cardholder dispute). For more information, refer to this quick reference for chargebook codes or consult the Mastercard chargeback guide.
• first_installment_amount - Enter value for this field if the dispute has more than one installment

This endpoint returns a dispute ID you need for all other calls related to this dispute.

Step 2 - Multiple installments

Call Create dispute installment for each subsequent installment if you have not opted in to automated dispute installment control .

Note: To disable automated dispute installment control for this dispute call Update dispute with stop_automated_installment = true.

Step 3 - Upload evidence and dispute forms

Call Create dispute form and fill out and upload a EBDF form. However, If there are files to be uploaded, the client should only use the Upload evidence file endpoint. Mastercard does not allow you to send two evidence files on the same dispute (EBDF and evidence file).

Step 4 - Initiate dispute process

Call Update dispute status with event = OPEN along with other required fields to begin the dispute process with Mastercard.

Opening a dispute with ELO

Step 1 - Create dispute

Call Create dispute with ELO required data:

• modality = Enter dispute code (example: 72 ELO - denied authorization).
• comment- Same as ELO field 32 which is a custom message field that issuing banks can include on card statement or transacton descriptions.
• document_indicator - If there is any evidence to be uploaded, set this field to true so ELO will allow you to attach documents for this dispute through the ELO portal.
• first_installment_amount - Enter value for this field if the dispute has more than one installment

This endpoint returns a dispute ID you need for all other calls related to this dispute.

Step 2 - Multiple installments

Call Create dispute installment for each subsequent installment if you have not opted in to automated dispute installment control .

Note: To disable automated dispute installment control for this dispute call Update dispute with stop_automated_installment = true.

document_indicator - If there is any evidence to be uploaded for this installment, set this field to true so ELO will allow you to attach documents for this dispute through the ELO portal.

Step 3 - Upload evidence via ELO portal

Upload any evidence files for this dispute via the ELO portal.

Step 4 - Initiate dispute process

Call Update dispute status with event = OPEN along with other required fields to begin the dispute process with ELO.

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Dispute status change notification

You are notified when there's a dispute status change if you have signed up to receive event notifications, either in real-time or via files. The status event is called Disppute status changed. This event occurs if the Update dispute status endpoint is called or if the status changes through other means like network processing.

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 status event. If this occurs, update the dispute to correct the data and resend your case by updating the dispute status to RESEND.

If an acquirer’s response doesn’t end the dispute, check if it’s compliant with the card network's rules.

Assess the time, operational cost, and disputed amount to determine if going through pre-arbitration or arbitration is appropriate. If not, call Update dispute status to change the dispute status to ISSUER_LOSS and close the dispute.

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.

Dispute migration

Pismo can migrate an already created Mastercard or Visa dispute to the Pismo platform with a case number (Visa) or a claim ID (Mastercard) and allow a customer to continue the chargeback process.

Dispute migration endpoints

• Create dispute migration
• Create installment migration
• Update dispute migration

Dispute fees

A dispute fee is a way for an acquirer and issuer to exchange money outside the normal chargeback process. Typically, this means reversing a settled chargeback, but not always.

Note: Currently, Pismo only works with Mastercard on processing dispute fees.

Dispute fee scenarios

Issuer realizes chargeback is invalid

An issuer creates a chargeback which the acquirer accepts and pays. Later, the issuer notices that the chargeback is invalid because, for example, the cardholder recognizes the transaction now or because the cardholder reached an agreement with the merchant. At this point, the issuer must give back the disputed amount. This can be done through Pismo's dispute fee process.

Acquirer realizes chargeback is invalid

An acquirer realizes a chargeback was invalid and initiates the dispute fee process with the issuer through Pismo.

Deadline for chargeback missed

An issuer misses the deadline for opening a chargeback. However, the cardholder is still complaining about the transaction. Through email, phone, or other means, the issuer contacts the acquirer and they agree that the acquirer should send a credit for the issuer even though there is no chargeback. In this case, the dispute fee process can take place without a chargeback having occurred.

Dispute fee terms

• Fee collection - How Mastercard refers to the dispute fee.
• Sender - The party sending the amount (credit or debit).
• Receiver - The party receiving the amount (credit or debit).
• TQR4 - The TQR4 file is generated as a result of Mastercard generating dispute items on behalf of the customer, as requested by the customer. Pismo receives this report, also known as a reconciliation report, and sends it to you, usually within two days after a dispute fee is created.

Dispute fee process

1. A dispute fee is created and sent to Mastercard.
2. Mastercard processes the dispute fee and resolves or rejects it. Resolution includes crediting or debiting the sender and receiver accounts.
3. Mastercard sends a TQR4/TQR6 reconciliation report to Pismo who then sends it to the parties involved. Details about what's included in these reports can be found in the Mastercom User Giuide on page 166.

Automated dispute installment control

If an issuer opens a dispute for a transaction that has more than one installment, with installments that can still be posted, the issuer will need to open a dispute for subsequent installments as well. With automated dispute installment control, once you open a chargeback for the first installment, the same information can be used for subsequent transaction installments. You, as an issuer, only have to open a dispute for the first installment. The option for this is configured at the program level, see your Pismo representative if you would like to have this feature implemented for your program.

To stop automated dispute installment control for a specific dispute, call the Update dispute endpoint and set the stop_automated_installment flag to true.

Dispute fee API endpoints

• Create dispute fee - Open a dispute fee with Mastercard. This generates a Dispute fee status created event.
• Get dispute fee - The get and list endpoints return all the same information you can find in the TQR4 report plus the message field that describes the reason for creating the dispute fee.
• List dispute fees
• Update dispute fee