top of page
  • Writer's pictureDevon Harris

Avoiding Missed Deadlines: A Guide to Chargeback Time Limits for Merchants

Chargebacks can be a source of frustration and confusion for many merchants because each card network has its own set of rules for the process. While some of the basics tend to be similar across networks, one area in which they differ significantly is the time limits and deadlines involved. These varying time limits can sometimes cause merchants to miss a deadline they thought was still weeks away, resulting in lost opportunities to dispute the chargeback and possibly even additional fees for failing to respond in time. It is important for merchants to be aware of the specific time limits for each stage of the chargeback process on each card network to avoid missing crucial deadlines. To help with this, we will provide an overview of the current time limits for each stage on the major card networks.

What Are the Justifications for Filing a Chargeback

A chargeback is a request made by a cardholder to reverse a transaction. Cardholders can file a chargeback for several reasons, including:

  • Fraud: This includes cases of lost or stolen cards, stolen payment credentials, and account takeover fraud.

  • Uncooperative merchant: In rare cases, a cardholder may be entitled to file a chargeback if the merchant is uncooperative. This may include instances where the customer was charged twice for the same purchase or if the merchandise was damaged or lost in shipping. Cardholders are required to try to resolve these issues with the merchant before disputing a charge, but this rule is not always followed.


It is important to note that merchants should not attempt to fight legitimate fraud chargebacks. However, if there is reason to believe that the cardholder's claims about fraud are false, it may be worth fighting the chargeback. To avoid chargebacks, merchants can provide easily reachable customer service that can issue refunds to customers with legitimate complaints.


What are the Deadlines for Filing a Chargeback?

The time limits for filing a chargeback vary depending on the card network and issuing bank. However, the legal minimum time limit for filing a chargeback in the United States is 60 days, while most banks give cardholders 120 days to dispute a charge. It is important to be aware of these deadlines in order to ensure that you have enough time to file a chargeback if necessary.


What is the Time Limit for Merchants to Respond to a Chargeback?

The time limit for merchants to respond to a chargeback varies by card network, but the most common deadline is 30 days. It is important to note that this time limit is measured from the day the chargeback was filed, which may be several days before the merchant is notified. In order to effectively manage chargebacks, merchants should be familiar with the specific rules and deadlines for each type of card they accept and make sure to respond promptly to avoid missing any deadlines.

VISA

Time Limits for Cardholders

For Visa, cardholders have a specific time frame in which they may file a chargeback for certain issues. The clock starts ticking on the day after the transaction processing date, and cardholders have 120 days from that date to file a chargeback for issues such as fraud, late presentment, incorrect transaction details, duplicate transaction processing, unreceived merchandise, damaged or defective merchandise, or a canceled recurring transaction.


There is also a shorter window of 75 days for cardholders to file a chargeback for issues related to a card recovery bulletin (for stolen, lost, past-due, or fake cards).

Time Limits for Merchants to Respond

Visa sets specific time limits for merchants to respond to chargebacks. These time limits start counting from the day after the relevant step occurs. In most cases, the deadline for merchants to respond is 30 calendar days. However, a shorter deadline of 10 days applies when deciding whether to file for arbitration.


The merchant has 30 days to contest a chargeback by submitting representment.

The issuing bank has 30 days to initiate a pre-arbitration chargeback after receiving representment. Either party has 10 days to pursue arbitration after the pre-arbitration chargeback occurs.


Additionally, each time a chargeback moves to a new stage of the process, the bank that submitted the chargeback has five days to provide documentation to both the merchant and the cardholder explaining the reasons behind their decision.

MASTERCARD

Time Limits for Cardholders

Mastercard has established time limits for cardholders to file chargebacks for certain issues. In most cases, the time limit is 120 days from the date of the transaction. However, certain chargebacks are subject to a shorter deadline of 45 days.

Cardholders have 120 days to file a chargeback for issues such as a discrepancy in the transaction amount, lack of cardholder authorization, fraudulent transaction processing, a canceled recurring transaction, late presentment, an incorrect currency code, questionable client activity, credit posted as a purchase, a product that is not as described, goods or services not provided, an ATM dispute, credit not processed, chip or PIN liability shift, or any other unclassified cardholder dispute.

The time limit for Mastercard chargebacks is reduced to 45 days for a warning bulletin file or an account number not on file. For chargebacks related to the "Credit Not Processed" reason code, banks must wait 15 days after the date on the credit document, the date merchandise was returned, or the date services were terminated before processing chargebacks.


Time Limits for Merchants to Respond

Mastercard gives merchants 45 days to respond at each stage in the chargeback process. The time limit for responding starts on the day the process moves to the next step.

The merchant has 45 days to contest a chargeback by submitting representment. The issuer has 45 days to initiate an arbitration chargeback after receiving representment. Either party has 45 days to pursue arbitration after an arbitration chargeback

American Express

Time Limits for Cardholders

For most issues, American Express allows cardholders 120 days from the date of the transaction to file a chargeback. However, for chargebacks related to damaged or defective items, the deadline is 120 days from the date the item was received.


For products or services that were not received at all, cardholders have 120 days from the date they expected to receive the product or service, or from the date they became aware that they would not receive it, whichever came first.


Time Limits for Merchants to Respond

American Express allows merchants 20 days to respond at each stage of the chargeback process. In cases where a cardholder dispute begins with an inquiry to the merchant, the merchant has 20 days to respond. If the response does not resolve the issue, or if American Express decides to skip the inquiry altogether, a chargeback will be filed. Merchants also have 20 days to respond to a chargeback. There is no arbitration process for American Express chargebacks.

Discover

Time Limits for Cardholders

Discover does not have a strict time limit on cardholders' ability to dispute a transaction. While they recommend customers file disputes within 120 days, they evaluate each case individually when deciding whether to approve a dispute.

Time Limits for Merchants to Respond

Discover allows merchants 20 days to respond to an inquiry, 30 days to respond to a chargeback, and 10 days to file for arbitration. In cases where an inquiry is sent before a chargeback is filed, merchants have 20 days to respond. When a chargeback occurs, merchants have 30 days to initiate a representment request. Once a chargeback has been decided, any party who wishes to take the case to arbitration has 10 days to do so.

How to Use Time to Your Advantage in Chargeback Disputes

When a customer initiates a chargeback request, the merchant has a limited amount of time to gather and present evidence to refute the chargeback and recover the lost revenue. To successfully reverse a chargeback, the merchant must create a representment package that includes convincing evidence proving that the chargeback is invalid and a rebuttal letter summarizing the merchant's case and the supporting evidence. This can be a challenging task for small merchants to fit in with their regular business operations. It is important for merchants to be aware of the time limits for responding to chargebacks in order to have enough time to put together a strong case. Smoothen can assist your business in automating the chargeback process and creating a strategy to effectively resolve chargebacks based on the specific reason codes relevant to your industry and products. Our team is dedicated to helping you streamline the chargeback process and minimize any potential losses.

Comments


bottom of page