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The Four Phases of a Chargeback

Chargebacks are governed by the Card Scheme rules in handling card payment disputes, known as Chargebacks. To help better understand the Chargeback life cycle, we have outlined the four phases of a card payment dispute.

Retrieval Request

A Chargeback may be preceded with a request for information also known as Retrieval Request.

At this stage, the Issuer or the Cardholder requests for a copy of the transaction receipt to obtain information about a charge on the card before the request is converted into a Chargeback.

Retrieval Requests take place when a charge on the Cardholder's statement is either not recognised or the cardholder is asking for additional information regarding the transaction before they request for a credit.

The Issuer sends the request to Zai and will require our Merchants to respond within three business days from the date Zai notifies the Merchant of the Retrieval Request. Non-response to the Retrieval Request will likely result in a Chargeback being raised.

The Merchant may provide documents to confirm the transaction is genuine however, when a transaction is deemed fraud or Cardholder is valid for a credit, you may consider issuing a refund to resolve the dispute before it escalates to a Chargeback, which can be hard to defend.

Note: It's only during Retrieval Request that a dispute can be resolved by issuing a credit to the Cardholder. Refunding a transaction after a Chargeback has been raised violates Zai agreement with the Acquiring bank.


A Chargeback refers to a card payment dispute that is lodged by the Cardholder or the Issuing bank, and is a demand by the Issuer for the Merchant to make good the loss on a fraudulent or disputed transaction.

When successful, a Chargeback results to funds being returned to the Cardholder at the expense of the Merchant. For our purposes, the Merchant is yourself as a platform. You may pass the expense along to your sub-merchant depending on your contract agreement.

The Merchant is given the opportunity to dispute a Chargeback; however, the Issuing bank has the option to reject the evidences provided in favour of the Cardholder.

Pre-Arbitration / Second Chargeback 

When the Issuer denies the representment made by the Acquiring bank (where evidences is sent to the Acquirer by the Merchant) on a Chargeback case, the Chargeback is filed to a Pre-Arbitration (Visa) or Second Chargeback (MasterCard) in an intent to pursue the dispute to Arbitration.

Before the dispute goes to Arbitration, the Pre-Arbitration or Second Chargeback stage is the next step to provide an opportunity for an Issuer to negate the Merchant's claim and may even change the original Reason Code in the event that the Cardholder provides additional or new information which may change the course of the dispute. 

If either party (Cardholder/Issuer or Zai’s Acquirer) disagrees with the decision following the Pre-Arbitration/Second Chargeback, the case will then move to Arbitration.

Zai’s Acquirer takes careful consideration when responding to Pre-Arbitration / Second Chargeback due to the costs associated when an Arbitration case is lost.


Arbitration is the final step in the Chargeback stage. If both Issuer and Acquirer cannot resolve the dispute between the Merchant and the Cardholder/Issuer, the case will now turn over to the Card Scheme provider (Visa, MasterCard, AMEX, or Discover) to make the final decision.

The filing party must submit the dispute to Arbitration within 6 weeks of the Pre-Arbitration / Second Chargeback. Both parties are given the the opportunity to supply documents and information to support their claims.

There are higher fees involved in an Arbitration that may take up to $1000.00 USD for filing and review that will be charged against the losing party. In addition, a technical fine of $100 USD per incident will be charged against any party with a technical violation of the scheme rules, regardless of whether the party wins the case.

Zai’s Acquirer rarely enters into an Arbitration case. Only when the evidence and documents provided are strong and have a good chance in winning the case.