Your Pocket Guide to 40 Payment, Dispute, and Chargeback Puzzle Pieces — Part 1

Backspace Tech
4 min readDec 22, 2023

Feeling frazzled by the jargon jungle of payment, dispute, and chargebacks? Terms like “representment” and “friendly fraud” leave you feeling like a lost panda in a payment processing maze?

Worry not, Chaos Conquered!

This blog is your sherpa, ready to guide you through the intricate landscape of 40 essential payment, dispute, and chargeback terms.

We have dissected the jargon and simplified it to make the journey a downright delightful romp.

So, strap on your virtual pith helmet, grab your metaphorical magnifying glass, and prepare to delve into the fascinating world of payments, disputes, and chargebacks.

Ready to conquer the conundrum? Let’s begin!


A cardholder is an individual who owns and uses a payment card (credit or debit) for making transactions.


Merchant refers to a business/individual that sells goods or services and accepts payments from customers.

Issuer (Issuing Bank) — Cardholder’s Banker

Issuer is a bank/financial institution, that issues a payment card (credit, debit, prepaid, or any card you can use to make a payment with) to a cardholder.

Acquirer (Acquiring Bank)- Merchant’s Banker

An acquirer is a financial institution that lets merchants accept payments that arise from card transactions, be it online or offline mode.

Card Network

Card Network is a financial organization that acts as the middleman between issuing and acquiring banks. These networks enable cardholders to make purchases at various merchants, with the transactions being processed and authorized through the network, ensuring a smooth flow of funds between the issuer and the acquirer.

Eg: Visa, Mastercard, RuPay, etc


A dispute occurs when a cardholder objects to a transaction on their card statement. It is the primary stage of the chargeback process.


Chargeback is a process where a cardholder disputes a transaction with their bank or card issuer. It is essentially a way for customers to get their money back when they believe they were unfairly charged for a product or service.

Payment Fraud / Criminal Fraud

Payments fraud means using a customer’s card credentials illegally to make high-ticket purchases or steal funds from the customer’s account.

Friendly fraud

Friendly fraud occurs when a cardholder makes an online purchase using their card and later disputes the charge, often claiming they didn’t receive the product or service or don’t recall making the transaction.


Pre-arbitration refers to a stage in the dispute resolution process where a cardholder disputes a transaction, and the merchant has the opportunity to respond before the issue progresses to formal arbitration.


Arbitration happens when the cardholder/ merchant disputes the chargeback decision made by the card network as they are not satisfied with the pre-arbitration decision. It resembles a court trial in many ways, where the card network serves as the judge and will examine all the evidence.


A refund happens when the merchant returns the purchase amount to the cardholder.

Double Refund

A double refund occurs when a cardholder initiates a chargeback with their bank and a refund request with the merchant.

Provisional Credit

A provisional credit is a temporary credit given to a cardholder by their issuing bank during the chargeback process.

Reason Codes

Reason codes are alphanumeric codes used by issuers to indicate the reason for a chargeback.

Eg: Visa’s reason code 11.3 denotes the “No Authorization” chargeback category.

Chargeback Fee

A chargeback fee is levied by the acquirer and paid by the merchant when a cardholder disputes a transaction, leading to a chargeback. This fee is charged to cover the administrative costs associated with handling the dispute and investigating the validity of the chargeback.

Partial Chargeback

Partial Chargeback is disputing a single charge in a transaction cluster.

Consumer Dispute

A consumer dispute is a disagreement between a cardholder and a merchant about goods/services. Consumer disputes usually arise due to misinformation, non-receipt of goods, defective goods and so on.


Representment is the process of presenting compelling evidence by a merchant against a chargeback claim.

Merchant Category Code (MCC)

Merchant Category Code (MCC) denotes the nature of the merchant’s business.

Eg: MCC 5812 denotes Eating places and restaurants


Whoa there!

We’ve only wrangled 20 of those pesky terms, leaving 20 more chomping at the bit in Part 2.

But fear not, fellow payment pioneers! Your trusty guide will return soon, saddlebags brimming with more jargon-busting insights.

So, until we meet again, happy reading!

To know more about the payment ecosystem, chargeback, and dispute nuances through delightful bytes of information, follow us on LinkedIn, Twitter, Facebook, and Threads.



Backspace Tech

Backspace Tech offers Fintech-as-a-Service to automate,simplify, and disrupt the payment industry by handling chargeback requests through a plug-and-play model.