New Challenges with Chargebacks and Arbitration

Note: We are not attorneys or accountants. The following information is purely meant to be informative, subject to change, and we invite you to contact us with any questions. Thank you.



Chargebacks are a dispute between a cardholder and your company for services rendered or sold. Oftentimes, chargeback defense starts with whether the card was present or keyed in.

If keyed in, it is imperative that the AVS and CVV2 values match (YY or YYY). If they do not match, the chargeback has traditionally been nearly impossible to defend due to the liability shift that was instituted in 2017 and went into full effect in 2019.



In April of 2022, card brands (Visa, Mastercard, Discover, American Express) increased their fees associated with challenging a cardholder dispute in the event you lose the first chargeback. If you decide to challenge a chargeback dispute through the arbitration process, there will be charges assessed to have the case heard before the arbitration board.

Here are some scenarios that result in a merchant paying fees:

  • If a merchant decides to challenge a lost chargeback and request arbitration, the merchant will end up paying $320.00 for Mastercard or $420 for Visa, Discover, or American Express for withdrawing the request after initiating the process.
  • If a merchant loses the arbitration case, the merchant will end up paying $420.00 to Mastercard, $475 to Discover, or $500 to Visa or American Express.
  • In the event a merchant wins, no fees will be charged outside of document submission fees.


Our Advice On Chargebacks

If a transaction charged back is greater than $420 for Mastercard, $475 for Discover, or $500 for Visa or American Express, then the merchant may want to proceed with the arbitration.

We are not certain, for example, a $150.00 transaction is worth your time, energy, and effort, unless you have clearly captured a signed invoice, and if hand-keyed, the merchant has AVS and CVV2 values with a Y indicator on the receipt. If it is an N, based on what we are seeing, the case will result in a loss.

Ultimately, if the transaction is less than the amounts at risk with card brands, it may be best to move on, as the expense may not be worth it.


Gain The Advantage

We know keeping up with the ever-changing nuances of payments can be a lot to keep up with.  This is why FPN developed The Advantage Program, a trio of solutions designed to help protect your business against chargebacks and data breaches.** Options may include:

  • Get reimbursed for chargebacks up to $1,000**
  • Should you suffer a data breach, you’ll be insured for up to $100,000**

Stop wasting time chasing down funds so you can focus on new customers. Contact FPN today to learn how The Advantage Program can give you peace of mind and protect your business.


* Fees subject to change. We understand card brand fees are complex and vary on a case-by-case basis. Please contact us should you have any questions.

** The FPN Advantage program is primarily for what card brands consider ‘card present’ transactions. Protection terms subject to change. Please contact us should you have any questions.