What are Chargeback Time Limits?
Chargeback time limits refer to the deadlines that merchants, banks, and cardholders are permitted when filing different phases of the chargeback process. Also called credit card dispute time limits, they vary from one card brand to another, but are often set at 120 days following a purchase.
Of these, there are two different types. First, the chargeback time limit which dictates how long cardholders have to file disputes. Second, are the limits imposed on banks and merchants that determine how long they have to respond to a cardholder’s claim at each stage of the process.
Why Impose a Time Limit on Chargebacks?
The chargeback process was designed as a safety net to protect consumers from fraud and nefarious merchants. The Fair Credit Billing Act of 1974 mandates that all cardholders have a minimum of 60 days to dispute illegitimate charges.
Banks, processors, and card networks can set their own deadlines, provided they meet the minimum requirements under the law. Card issuers, for example, usually give cardholders 120 days to dispute a charge (double what the law requires).
Who Decides Chargeback Time Limits?
It’s not just the card networks that can control the time frames for chargebacks. Acquirers must also meet the deadlines, thus may move up the merchant’s deadline to barter for time.
For example, a Chase Bank cardholder will only have 60 days to dispute a transaction, despite the network’s limit being 120 days. The networks say merchants have a 45-day response window, but the Chase credit card chargeback time limit for merchants is 39 days.
On the other hand, PayPal — which can serve as a credit card processor for merchants — allows buyers up to 180 days to file a claim. That’s 50% more time than what the major card networks allow. The merchant, however, must respond within seven days.
Other Factors
Reason Codes
Every chargeback is filed with a reason code that identifies the given reason for the dispute. These may impact the dispute time limits.
Some reason codes offer cardholders over twelve months to file. Others require banks to wait for a certain period before they can issue a chargeback. For defective or “Not as Described” reason codes, the 120-day window may still apply, but “Day One” will vary depending on the circumstances.
Recurring Payments
In these situations, the merchant supplies goods or services on an ongoing basis, but the customer’s card may only be charged once a year. Not only can cardholders file a chargeback months beyond the actual transaction date, they may also be allowed to dispute back payments for several months (or years) of the term of the subscription.
Chargeback Time Limits By Network: Mastercard
Issuer/Cardholder: Mastercard users have 120 calendar days from the Central Site Business Date (CSBD)— the day the original transaction was processed, or the date the order was delivered, to file a chargeback in most situations.
Acquirers/Merchants: Merchants and acquirers generally have 45 days to respond to each phase of a Mastercard chargeback. An important exception is a request for information concerning a dispute. Merchants only have 18 days to respond to this.
Chargeback Time Limits By Network: Visa
Issuer/Cardholder: Visa cardholders can only file a chargeback within 120 days of the original transaction or delivery date, in most cases. Like Mastercard, Visa mandates shorter timeframes for certain disputes. In some cases, for instance, claims must be filed within 75 days of the transaction.
Acquirers/Merchants: For their part, acquirers and merchants must respond within 30 days of Day One for each phase. The one exception is the timeframe for arbitration, which has the tightest deadline of all. If a party wants to escalate a dispute to arbitration, they must do so within 10 days.
Chargeback Time Limits By Network: Amex
Issuer/Cardholder: The company imposes a 120-day limit for filing almost all chargebacks. Cardmembers are limited to two disputes per transaction, however.
Acquirers/Merchants: When a card member contacts American Express about a dispute, they will either file the chargeback or send the merchant an inquiry. The merchant then has 20 days to respond to the inquiry, either accepting the dispute or offering evidence that the chargeback is invalid.
In most instances, Amex will simply escalate the case straight to a chargeback, as they are both the issuing/acquiring bank for this card.
Chargeback Time Limits By Network: Discover
Issuer/Cardholder: Discover typically allows cardholders to file a dispute up to 120 days after the transaction.
Acquirers/Merchants: The merchant has 20 days for initial Discover responses. However, individual banks and processors may be more strict with timelines. Appealing the representment decision must be done within 30 calendar days.
If there is a second chargeback, the merchant has 30 days to submit additional documents. Merchants have 15 calendar days to request that the case progress to Discover arbitration.
Last Update: December 6, 2021
Tell us how can we improve this post?
Are you interested in a topic we haven’t covered yet? Use our Submit a Question feature to request additional information from our contributing experts.