Pre-arbitration is the final opportunity to challenge a chargeback before it escalates to arbitration. By this stage, you’ve already disputed the chargeback through representment—and won—but the cardholder (or more often, their issuing bank) has submitted additional evidence or claims. If you want to hold onto the revenue, you’ll need to respond quickly and strategically. If you don’t, the chargeback stands, and arbitration might follow.
This guide covers how pre-arbitration works, what triggers it, what your response options are, and how to decide whether it’s worth fighting. It also explains the differences between Visa and Mastercard procedures and outlines how you can reduce your exposure to pre-arb cases in the first place.
What Triggers Pre-Arbitration?
Pre-arbitration happens when a chargeback you already reversed is challenged again, usually by the issuer. The most common trigger is new evidence submitted by the cardholder that wasn’t available during the first dispute cycle. This can include documentation like new screenshots, emails, police reports, or third-party verifications that contradict your original case.
Another common scenario is when the issuer determines that your representment wasn’t sufficient. They may argue that you used the wrong reason code, missed a required element of compelling evidence, or failed to refute the claim entirely. Sometimes pre-arbitration is initiated because of an internal review process or system error. For example, duplicate charges, failed reversals, or refunds that didn’t process correctly can all result in pre-arb filings.
Cardholder intent also plays a role. In cases of friendly fraud, some cardholders escalate a dispute simply because they don’t like the outcome of representment. Pre-arbitration allows issuers to reassert their position on behalf of the cardholder before committing to arbitration.
How the Pre-Arbitration Process Works
Once the issuer initiates pre-arbitration, your acquiring bank will notify you through your dispute management platform. The notice includes any new evidence or updated reason codes provided by the issuer.
From the moment you receive it, the timeline to respond is short. Visa and Mastercard each have strict deadlines for merchant action, ranging from 7 to 30 days depending on the dispute category and track. If you miss the deadline, the chargeback stands, and you forfeit the right to challenge it further.
At this stage, you have two choices:
- Accept liability and close the case.
- Contest the pre-arbitration by submitting a second round of compelling evidence.
If you accept liability, the funds are returned to the cardholder and the case ends. If you contest and the issuer still disagrees, they can escalate to arbitration. This brings in the card network (Visa or Mastercard) as the final authority — and comes with mandatory arbitration fees.
Pre-Arbitration in the Chargeback Lifecycle
To understand where pre-arbitration fits in, it helps to look at the full dispute process:
- Initial dispute (first chargeback) — The cardholder files a claim through their bank.
- Representment — You respond to the chargeback with your best evidence.
- Pre-arbitration — The issuer disagrees with your response and resubmits the case.
- Arbitration — If the two sides still can’t agree, the case is escalated to the card network for a final decision.
Pre-arbitration only occurs if your representment was initially successful (or partially successful) and is now being contested again. It’s important to note that it’s not a repeat of the chargeback. It’s a second-stage escalation that can quickly lead to binding arbitration and substantial fees if not resolved.
Pre-Arbitration with Visa vs. with Mastercard
Visa and Mastercard both allow pre-arbitration, but the way they structure the process (and the level of control you have as a merchant) varies.
Visa Pre-Arbitration
Visa divides disputes into two tracks: allocation and collaboration. The track determines how liability is assigned and how much input you get during the pre-arbitration phase.
In the allocation track, Visa handles fraud and authorization disputes automatically. Liability is assigned based on predefined rules, often without back-and-forth between parties. For merchants, this means limited visibility and almost no opportunity to influence the outcome once pre-arbitration begins. If you're involved in an allocation-track dispute, you’ll still receive a notification and can review the case, but your options to respond are narrow and time-limited. The process is designed to reduce handling time, but it also limits merchant control.
The collaboration track covers disputes related to customer dissatisfaction, processing errors, or product issues. These are more interactive. You have a chance to respond with additional evidence, engage with the issuer through your acquirer, and potentially resolve the dispute before arbitration. This track is closer to Mastercard’s model and allows for a more comprehensive review of the case. Visa typically gives merchants 30 days to respond to pre-arbitration,
Mastercard Pre-Arbitration
In contrast, Mastercard uses a single-track process for all dispute types. Both issuers and acquirers can initiate pre-arbitration, and there’s no automated liability assignment. Every case is reviewed manually, which creates more space for merchant response but also raises the bar for documentation quality.
Merchants dealing with Mastercard pre-arbitration should expect a few structural differences. First, there’s a $15 filing fee for the party initiating pre-arbitration. If the case escalates to arbitration and you lose, a $500 fee applies. These costs are fixed and don’t vary based on transaction size.
Second, Mastercard has a reputation for tighter documentation standards. Many merchants lose pre-arbitration disputes not because the evidence was wrong, but because it didn’t match the required reason code exactly. In some categories, Mastercard rejects over 60% of merchant responses for procedural mismatches or formatting errors. If you’re responding to a Mastercard case, it’s important to align your documents with their dispute resolution rules and submit within the correct timeframe, usually 15 days or less.
Responding to Pre-Arbitration: Fight or Flight?
Pre-arbitration puts the decision squarely on you: accept liability and close the case, or contest the new dispute and risk escalation to arbitration. There’s no one-size-fits-all answer, but there are clear trade-offs, and understanding them is critical.
Accepting liability means you absorb the loss. You agree to the chargeback and the funds are returned to the cardholder. That’s often the simplest path, especially when the transaction amount is low, your documentation doesn’t directly address the issuer’s new claims, or the customer met the terms of your refund policy. Accepting doesn’t necessarily mean admitting fault. It can be a strategic move to avoid arbitration fees, internal overhead, or reputational friction from dragging out a dispute.
Contesting pre-arbitration makes sense when the stakes are higher, either because the disputed amount is significant or the principle of the chargeback affects business policy. If you’re confident your evidence refutes the cardholder’s new claims and meets the card network’s documentation standards, pushing back can be worth it. But it’s not without risk.
If the issuer doesn’t accept your second response, the case may escalate to arbitration. At that point, the card network steps in to review the evidence and make a binding decision. Arbitration comes with fees—typically $500 to $1,000—and those costs are often non-refundable, even if you win. On top of that, you’ll spend additional internal time preparing the case, coordinating with your processor, and waiting weeks or months for a resolution.
The choice to fight or accept should be based on three core factors:
- Transaction value — If the amount at stake is small, the cost of arbitration may outweigh the benefit of continuing. Many merchants set internal thresholds (e.g., only fight cases over $1,000 or $2,000).
- Evidential strength — Review what new arguments or documents the issuer submitted. Can you directly and clearly disprove them? Does your documentation address the updated reason code requirements?
- Likelihood of success — Consider historical data. Have you won similar disputes in the past? Is this a chargeback reason you typically beat? If it’s a gray area or if cardholder evidence appears compelling, think twice.
In some cases, the decision is also strategic. If you’re seeing a pattern of similar claims, such as friendly fraud on digital goods, you may choose to challenge more of them to discourage abuse. If the chargeback relates to a known policy gap or unclear communication on your side, accepting and updating your process may save more in the long run.
The key is consistency. Set a clear dispute response policy that defines when to accept, when to escalate, and when to invest in arbitration preparation. Align that policy with your margins, chargeback ratios, and operational capacity, and review it regularly.
How to Build a Strong Pre-Arbitration Response
A successful pre-arbitration defense requires more than just resubmitting your original chargeback documents. In most cases, the issuer has presented new evidence or arguments, and your response needs to directly refute those, not just restate your original position.
The first step is to identify the updated reason code. This determines the type of evidence you’ll need and how the card network will evaluate your response. If the issuer has changed the reason code from the original chargeback, make sure your documentation addresses the new classification. Failing to match your evidence to the correct reason code is one of the most common (and avoidable) reasons for merchant losses in pre-arbitration.
Once the reason code is confirmed, review any new claims submitted by the cardholder. These might be included in the pre-arbitration notification from your acquirer or available through your dispute management platform. Look for anything that wasn’t in the original chargeback: new screenshots, emails, tracking updates, device data, or service complaints. This is the core of what you’re being asked to rebut.
Your response should be structured and tightly focused. The evidence you submit needs to speak directly to the updated claim, and it needs to be clearly labeled and easy to follow. At this stage, volume doesn’t help; relevance does.
Effective documentation typically includes the following categories:
- Authorization records — AVS results, CVV match, 3D Secure authentication logs, and any other data that confirms the cardholder authorized the purchase.
- Delivery confirmation — Carrier tracking logs, delivery time stamps, GPS coordinates, and signed receipts. If you’re shipping physical goods, this data should connect the product to the buyer.
- Policy acceptance — Terms of sale, return policies, cancellation windows, or refund terms accepted by the customer at checkout. If possible, include a timestamp and screenshot of the checkout screen or the policy confirmation page.
- Customer communication — Email threads, live chat transcripts, or ticket history that show attempts to resolve the issue before the chargeback. Focus on what was said, when, and how it relates to the dispute.
- Service fulfillment — For digital products or subscriptions, include usage logs, login records, download history, or IP tracking to show the customer accessed the service.
If the dispute involves recurring billing, also include any opt-in confirmations, reminder emails, and cancellation workflows. For physical goods, supporting documentation like inventory logs or packaging records can also strengthen your case.
The way you organize the response matters. Present your materials in chronological order and create a clear narrative, from purchase to delivery or service use, to customer contact, to your response. Annotate each document with a short explanation, ideally in the filename or a cover sheet, so it’s immediately clear what it proves and why it’s included.
Both Visa and Mastercard publish specific documentation guidelines for pre-arbitration responses. Visa’s Compelling Evidence 3.0 framework, for example, includes 25 accepted evidence categories with formatting rules. Mastercard uses a reason-code-based system, and mismatches between evidence type and dispute reason often result in auto-rejection. If you’re using a chargeback management platform like Chargebackstop, make sure it aligns your uploads with network standards, or check manually if you’re handling responses directly.
Finally, keep a versioned internal record of each pre-arbitration response. This allows you to analyze performance, identify patterns (such as repeat claims from the same customer or errors in product descriptions), and refine your evidence templates over time. The strongest pre-arbitration programs are iterative, not reactive.
Avoiding Pre-Arbitration
Avoiding pre-arbitration altogether is the best outcome. That starts with strong practices upstream.
Use clear and recognizable billing descriptors. Make sure customers can identify your business name on their statement and include contact information where possible. Ambiguous descriptors remain one of the top reasons for avoidable disputes.
Ensure your refund and return policies are visible, clearly written, and confirmed at checkout. For subscriptions, send reminder emails before renewals and allow customers to cancel without friction.
Invest in fraud prevention tools. 3D Secure 2.0, AVS, CVV, and device fingerprinting help establish transaction legitimacy from the outset. For higher-risk industries, platforms like Verifi RDR or Ethoca Alerts can stop disputes before they become chargebacks.
Finally, build a fast, responsive support system. Many disputes start when customers feel ignored or don’t know how to get help. A live chat tool, a clear FAQ page, and follow-up messages after purchases can significantly reduce chargeback risk.
Need Help Managing Pre-Arbitration?
Pre-arbitration cases move quickly and carry financial risk. If you’re seeing more of them, or struggling to keep up with shifting rules and documentation standards, it may be time to bring in support.
ChargebackStop helps merchants respond to pre-arbitration with accurate, network-compliant evidence. Our dispute workflows are built to reduce handling time, improve win rates, and keep more revenue where it belongs — in your account.
We also help you reduce future pre-arb exposure by tightening up policies, updating internal processes, and using the right prevention tools for your business model.
Talk to one of our experts today. No sales pitch. Just a walkthrough of what you’re seeing, and where we can help.
