A customer may open an informal inquiry about a transaction by contacting their credit card issuer. The credit card issuer sends a request to the merchant, seeking transaction details and supporting documentation related to the dispute. This is also known as a retrieval request.
If an inquiry has been opened, the payment provider will respond on behalf of the merchant and the dispute status will be updated to “Inquiry under review”. If the inquiry is not escalated into a formal dispute within 120 days, the dispute status will be updated to “Inquiry closed”.
Dispute (also known as a chargeback)
If the credit card issuer deems the customer’s inquiry valid based on the investigation, the merchant is notified of a formal dispute. The disputed amount is deducted from the merchant's account balance, along with any associated fees. Once the dispute has been posted to the merchant’s account, the dispute status will update to “4 days to respond”.
The merchant has 4 business days to respond with compelling evidence that supports their case. This evidence could include proof of delivery, customer communication, or any other relevant documentation proving the transaction's legitimacy. Once evidence has been submitted, the dispute status will update to “Under review”.
The credit card issuer evaluates the merchant's response and supporting evidence before making a final decision. If the chargeback is ruled in favor of the merchant, the funds are reversed, and the merchant's account balance is restored. However, if the chargeback is upheld, the funds remain debited from the account balance.