Dispute resolution (payments)

Dispute resolution in payments is the set of rules, deadlines and evidence requirements that decide what happens when a payer says a transaction was wrong or unauthorized, and who bears the loss.

Three layers. Most disputes move through up to three layers, and each has its own rules:

• Merchant and customer. The simplest resolution is a refund or correction agreed between the two.
• Payment network. For cards, the issuer can charge the transaction back under network rules. Mastercard’s cycle runs from first chargeback to the acquirer’s second presentment, then pre-arbitration and arbitration, where Mastercard determines financial responsibility. A compliance case can be filed when a rule was broken and no reason code fits.
• Law. Consumer protection rules set minimum rights that sit under the network process.

US statutory timelines. For credit cards, Regulation Z covers billing errors. The consumer’s written notice must reach the creditor within 60 days after the first statement showing the error. The creditor must acknowledge it within 30 days and resolve it within two complete billing cycles, and never later than 90 days. For debit and other electronic fund transfers, Regulation E applies. The institution generally has 10 business days to decide whether an error occurred and must report results within three business days after its investigation, with longer periods allowed if it provisionally credits the account. Other countries set their own rules.

Evidence when an agent paid. The core question in an agent purchase is whether the person authorized that agent to make that payment. AP2 says its Checkout and Payment Mandates, with their receipts, can be combined into a non-repudiable picture of the transaction, and it defines verification steps for dispute time. It leaves retention and retrieval out of scope, and suggests the Payment Mandate’s transaction_id as the key for any future retrieval method.

Recognizing a dispute. Automated channels have to notice that a customer is disputing something. The CFPB’s 2023 report on chatbots in consumer finance warned that when only specific words trigger dispute recognition, customers’ disputes can go unrecognized. The same concern applies when the customer’s side is an agent: a structured request type for disputes removes the guesswork.

Neighbouring terms. Non-repudiation is the property dispute evidence needs. A receipt is one signed record that can supply it.