What is Pre-Arbitration?

A pre-arbitration is a second chargeback filed by the cardholder of the first chargeback after a chargeback has been reversed. Pre-arbitration gives the acquirer and issuer another chance to resolve the customer dispute.

How does Pre-Arbitration Works?

Before any chargeback enter pre-arbitration chargeback, the cardholder and the merchant will go through the following phases:

1. The cardholder made a transaction.

2. The cardholder file a chargeback request. (Chargeback)
   
3. Merchant submit documentation to the issuer to challenge the chargeback.

4. If the chargeback result is in merchant's favorite, the cardholder is allowed to provide new evidences to the bank and file a chargeback for the second time.

5. Merchant received incoming Pre-Arbitration letter.

Why is Pre-Arbitration Happening?

The cardholder has the right to dispute the transaction for the second time, the merchant reversed chargeback doesn't mean the chargeback is over. In almost all the situation, a reversed chargeback can turn into a pre-arbitration.

Cost of a Pre-Arbitration

Challenge a pre-arbitration review requires additional fees, vary by card brand, costs is range between $450 - 700. We highly recommend the merchant reach out to the cardholder and seeking for conciliation without moving into an arbitration.

Chances of Winning an Arbitration

In reality, it's fairly difficult for a merchant to win a case in arbitration. The cardholder have to submit new evidences to file pre-arbitration, and the merchant often has little to no additional evidence to present in arbitration.

Updated on: 11/08/2023