What is a dispute?
A dispute is the process that begins when a shopper contacts their bank to formally question or complain about a transaction.
You should think of a dispute as an inquiry or a formal complaint regarding a payment. While it is often used as a synonym for "chargeback," the term dispute generally covers the entire lifecycle of the claim—from the moment the customer raises the issue with their bank until a final decision is made by the card network.
Why disputes occur?
While every case is unique, disputes generally happen for several reasons ranging from simple administrative errors to more complex security concerns. Understanding these root causes can help you improve your business processes and reduce the likelihood of future claims.
The most frequent reasons for disputes include:
Unrecognized charges: The cardholder looks at their bank statement and does not recognize the name of your business. For example, this might happen if your "billing descriptor" (the name shown on the statement) differs from your store's brand name.
Product(s) or service(s) not received: The customer claims they never received the items they paid for. This could be due to a package being lost in transit, stolen after delivery, or a delay in shipping that was not communicated.
Product(s) not as described or defective: The shopper received the order, but it was damaged during shipping, was the wrong size/color, or the quality did not match the description on your website.
Unauthorized or fraudulent transactions: The cardholder claims they did not make or authorize the purchase. This could be "true fraud" (a stolen card) or "friendly fraud" (the customer made the purchase but is trying to get their money back dishonestly).
Unprocessed refunds: The merchant agreed to issue a refund, but the customer became impatient or the refund failed to appear on their statement within the expected timeframe, leading them to ask their bank to step in.
Cancelled subscriptions: For recurring payments, a customer may claim they cancelled their subscription before the last charge was made, or they simply forgot they had an active subscription.
The parties involved and their tasks
Party | Role/Task |
Cardholder | Initiates the claim via their issuing bank. Must provide a reason and evidence to their bank. |
Issuing bank | The customer's bank. Reviews the claim and immediately debits the funds from the merchant. |
Merchant (You) | Must review the claim, gather compelling evidence, and submit a response to Montonio. |
Processor of card payments | The technical link between the merchant and the card networks. They receive dispute data from the banks and facilitate the movement of evidence and funds. |
Card network | (Visa/Mastercard, etc) The rule-setter. They provide the framework for disputes. |
Montonio | A technical intermediary. We ensure your defence is delivered correctly to the system. |
Card payment disputes vs chargebacks
It is helpful to understand the difference between a dispute and a chargeback.
Stage 1: The dispute: This is the "inquiry" stage. The moment a customer raises a concern with their bank, a dispute is officially opened. Two things happen immediately:
The 20€ dispute fee is applied to cover the administrative work required to start the investigation across the banking networks.
The disputed funds are held. The bank pulls the transaction amount from your balance and holds it in reserve while the case is being reviewed.
Stage 2: The chargeback: This is the formal continuation of the process. If the merchant does not contest the claim or if the bank decides in favour of the customer, the "held" funds are officially returned to the cardholder.
A note on the dispute fee: We know that fees are never ideal. This fee is an administrative charge from the card payment processor that is applied the moment a dispute is opened. It covers the costs of managing the formal communication between the banks involved. Because this work begins as soon as the customer contacts their bank, the fee is non-refundable, regardless of whether the case is eventually won, lost, or even if it is closed early.
Dispute reasons and required documentation
How Disputes are categorized
All card payment disputes are classified using standardized Reason Codes set by the card networks (e.g., Visa or Mastercard). These codes are included in the chargeback notification you receive from Montonio and indicate the exact nature of the cardholder’s claim.
Your defence document package, called the representation, must specifically address the claim made under that code.
Common dispute categories and evidence
Dispute reason | Required merchant documentation |
Product not received | Tracking number and shipping confirmation. Please note: Without a signed proof of delivery (POD), merchants are at a higher risk of losing these cases. |
Product unacceptable | Screenshots of the product page, photos of the item, and your return policy. |
Credit not processed | Proof of a refund already issued, including the Acquirer Reference Number (ARN). |
Duplicate charges | Proof that each charge was for a separate, distinct order, or proof that any duplicate error was already corrected/refunded. |
Fraudulent | 3D Secure authentication logs, IP addresses, and customer communication. |
If you have received a dispute notification and want to contest it, you need to act quickly. The banking networks follow strict deadlines, and providing the right documentation is the only way to recover your funds and resolve the case.
Read our Practical Guide: How to handle a card payment dispute to learn how to prepare a professional evidence package and submit your response.
If you have additional questions and need our help, feel free to contact our support team via the chat in the bottom right corner.