An arbitration chargeback is the final stage in the chargeback process and it happens when your ‘decline’ response at the pre-arbitration stage has been rejected by the customer and their bank. At this stage, all the parties involved—the cardholder, the bank, and the merchant—are unable to resolve the dispute on their own, so a representative of the card scheme intervenes and makes a judgment. No new evidence is provided at this stage; the representative of the card scheme reviews the receipts that you provided in the previous chargeback stages.
How Paystack notifies you about arbitration chargebacks
When your business receives an arbitration chargeback, we'll notify you about it via email. In this email, we'll provide information about why the customer took the chargeback to arbitration.
To ensure that you don’t miss notifications about arbitration chargebacks, it’s important that all the email addresses you set as your chargeback emails on your Paystack account are those that do not get too many inbounds. You can review the email address set as your Chargeback (Disputes) Email on your dashboard.
The chargeback journey always ends at arbitration. The card scheme will either rule in your favour or in favour of the customer. If they rule in your favour, no debit will be passed to your account. However, if they rule in favour of the customer, you will be debited for the arbitration fee and the full transaction amount. Mastercard charges up to $640 for each arbitration chargeback while VISA charges up to $750.
Most merchants choose not to go into arbitration because of the fees, time, and potential penalties if you lose your arbitration case. Arbitration chargebacks mostly favour the customer so it is not advisable to let chargebacks get to this stage.