If you’re a merchant accepting card payments online, you’ve probably dealt with a chargeback or two. Maybe more. But what happens when you fight a chargeback, submit your evidence, and still get pushback from the cardholder’s bank? That’s where pre-arbitration comes into play.
This stage is often overlooked. It’s not as well-known as arbitration, but it can have just as much impact on your revenue and dispute ratios. If you understand how pre-arbitration works—and how to respond properly—you’ll avoid costly mistakes and strengthen your position in future disputes.
What Pre-Arbitration Actually Means
Pre-arbitration is part of the chargeback process. It happens after you’ve responded to a chargeback with evidence, known as representment, but before the case moves to arbitration. At this stage, the issuing bank (the cardholder’s bank) reopens the case.
This usually happens for one of three reasons:
- The cardholder provides new evidence.
- The issuer thinks your original response didn’t fully resolve the issue.
- There was a mistake in how the case was handled earlier.
It’s not always about fraud or bad intent. Sometimes, it’s just a messy process.
When a pre-arbitration is filed, the ball is in your court. You can accept it and take the loss, or escalate it to arbitration and ask the card network (like Visa or Mastercard) to make the final call.
How Pre-Arbitration Is Different from Arbitration
Understanding the difference between these two stages matters. They’re not the same, and they carry different risks.
If you move to arbitration and lose, you’re responsible for the fees. That’s why many merchants don’t escalate unless the transaction value makes it worth the risk.
Why You Might Get a Pre-Arbitration Case
Getting hit with a pre-arb doesn’t always mean you did something wrong, but there’s usually a reason behind it. Common triggers include:
- New documentation from the cardholder (like shipping claims or third-party screenshots)
- Poor or incomplete evidence in your original response
- Process problems, such as missing a deadline or submitting files in the wrong format
- Issuer disagreement, where they simply don’t agree with your explanation
Visa and Mastercard both use reason codes to describe why a dispute was filed. For example, Visa has codes like 10.4 (Other Fraud - Card Absent Environment) or 13.1 (Merchandise Not Received). Mastercard uses codes like 4837 or 4853, depending on the situation. These codes help you understand the exact reason behind the pre-arb and how to respond.
How to Respond to Pre-Arbitration
When you receive a pre-arbitration, you usually have a short window to respond. It could be 7 to 10 calendar days, depending on your acquirer and the card network involved.
You’ve got two options:
- Accept liability, which ends the case but means you lose the dispute and the money.
- Escalate to arbitration, which brings the card network into the decision.
Here’s how to approach the decision.
Step-by-Step:
- Check the reason code. Is it the same as the original chargeback, or has it changed?
- Compare the new evidence to what you’ve already submitted. Look for gaps or contradictions.
- Review the transaction amount. Arbitration fees can be high, so make sure it’s worth fighting.
- Talk to your acquirer or processor. They may offer advice or handle part of the process.
- Submit your decision on time. Missing the deadline often results in an automatic loss.
It’s also worth noting that your acquirer may reject the pre-arb on your behalf if the new evidence isn’t strong. But don’t rely on that—always double-check.
What Can Go Wrong If You Ignore It
Ignoring or mishandling pre-arbitration can lead to more than just a lost transaction. You might face:
- A higher chargeback ratio, which can put your merchant account at risk
- Enrollment in monitoring programs, like Visa’s Dispute Monitoring Program (VDMP) or Mastercard’s Excessive Chargeback Program (ECP)
- Strained relationships with your payment processor or acquirer
- Lost time and resources, especially if the same issue keeps coming up
Once you’re flagged for too many disputes, it becomes harder to negotiate processing terms. In some cases, you may even lose your ability to accept cards entirely.
Best Practices to Avoid Pre-Arbitration Problems
Pre-arbitration often reflects gaps in your dispute process. Here’s how to tighten things up:
- Organize your documentation. Keep order details, tracking info, customer service logs, and screenshots all in one place.
- Understand card network rules. Visa and Mastercard have different evidence standards. Learn what counts as compelling.
- Automate your responses. Use tools or platforms that can auto-respond to disputes and flag weak evidence.
- Train your team. Make sure everyone who touches disputes knows what each reason code means and how to respond properly.
- Respond quickly. Late submissions, even by a day, can lose the case.
Good habits here reduce both chargebacks and the chances of seeing pre-arbs in the first place.
Frequently Asked Questions
Can merchants win at pre-arbitration?
Yes, especially if the original evidence was strong and the cardholder’s new claims are weak or irrelevant.
Does pre-arbitration count as a chargeback?
Yes. It still impacts your chargeback ratio and is tracked by processors.
How long does it take to resolve?
Pre-arb cases usually wrap up in 10 to 15 business days. Arbitration can take much longer.
Should I escalate every case?
No. Only escalate if the transaction value is high and your evidence clearly disproves the new claims. Otherwise, the fees may outweigh the benefits.
Final Thoughts
Pre-arbitration is more than a formality. It’s a sign that something in the chargeback process didn’t land. Maybe your evidence wasn’t clear. Maybe the cardholder pushed back with something new. Whatever the reason, this stage gives you one last shot to resolve the issue before the card network steps in.
Instead of treating it as just another dispute, treat it like a feedback loop. Learn from it. Adjust your response strategy. And if you’re getting too many, take a step back and evaluate what’s happening in your transaction flow, policies, or fulfillment process.
The more prepared you are, the fewer disputes you’ll see and the better your chances when one does come your way.
If pre-arbitration is starting to feel like a rerun, it might be time to upgrade how your team handles disputes. Chargeblast gives you real-time alerts, smarter automation, and the insights to stop chargebacks before they hit pre-arb—or even before they happen at all. Whether you're drowning in representments or just want a cleaner way to stay compliant, we’ve got your back.
Want to see how Chargeblast fits into your dispute game plan? Book a demo now. You might be one alert away from saving that next sale.
