The chargeback process is tough, and one key step is pre-arbitration.

So, what is pre-arbitration?

It's a second chance to resolve a dispute after the initial decision—whether you or the customer won. While it gives you an opportunity to submit new evidence, it also means the fight isn't over, as customers can dispute again.

Pre-arbitration is the last shot to settle before diving into expensive arbitration.

In this guide, we’ll break down pre-arbitration and show how Disputifier, the top chargeback solution, can simplify the process.

‍

What is Pre-Arbitration in the Chargeback Process?

Before diving into pre-arbitration, let’s quickly recap the main stages of the chargeback process:

• Initial dispute
• Representment
• Pre-arbitration
• Arbitration

‍

Overview of Chargebacks

Chargebacks are designed to protect consumers from fraudulent transactions, poor-quality products, or undelivered services. When a cardholder disputes a charge with their credit card issuer, it protects the consumer and ensures merchants are held accountable.

Originally developed to combat credit card fraud, chargebacks have since expanded to cover a wide range of consumer grievances, from dissatisfaction with the product or service to non-delivery.

There are many stages in the chargeback process, with pre-arbitration being a critical one for merchants. So, what exactly is pre-arbitration?

‍

Explaining the Pre-Arbitration Chargeback Meaning

Pre-arbitration, or pre-arb, is an important step that happens if a chargeback dispute isn’t resolved after the merchant’s initial evidence is presented (representment).

This phase gives both the merchant and the issuing bank another chance to resolve the dispute without moving to full arbitration, which can be more formal and costly.

At this stage, both parties review the evidence again. Merchants can submit additional documentation or information to strengthen their case.

Pre-arbitration can be triggered by the issuing bank if the cardholder disputes the transaction again after the initial chargeback was reversed. Alternatively, merchants can also initiate pre-arb if they don’t agree with the outcome.

This is the final opportunity to resolve the dispute before it moves to arbitration, where the card network (Visa, Mastercard, etc.) makes the final decision.

‍

What About Arbitration?

Arbitration is similar to a court trial, where the card network acts as the judge. All parties—merchant, cardholder, and issuing bank—submit their full set of evidence for an in-depth review.

Once the arbitration panel makes a decision, it’s final and binding. The losing party, whether the merchant or the cardholder, will also be responsible for paying arbitration fees, which can run into hundreds of dollars.

Because arbitration is costly and high-stakes, it’s wise to try and resolve the issue with the customer or provide a solid rebuttal during pre-arbitration. Most of the time, avoiding arbitration is the best course of action unless your chargeback ratio is dangerously high and you have no other option.

‍

The Challenges of Chargeback Pre-Arbitration for Merchants

As a merchant, the odds are often against you during a dispute. Financial institutions typically side with customers, so you need a strong case during pre-arbitration. By the time you reach this stage, you’ve likely already submitted most of your evidence, leaving little room for new information.

However, cardholders and banks only initiate pre-arbitration if they have new details to support their case. Unfortunately, the reality is that merchants rarely win the second dispute. Another challenge is that pre-arbitration counts as a second dispute, negatively impacting your chargeback ratio, even though it's part of the same case.

On top of that, there’s the time, stress, and cost involved. Pre-arbitration comes with strict deadlines, and assembling additional evidence quickly can take resources away from running your business.

Success in pre-arbitration relies on presenting well-organized evidence, such as transaction records, communication logs, and proof of delivery. Losing in this phase can lead to expensive arbitration, higher fees, and a worsened chargeback ratio.

That said, we’re here to guide you through this process and help you get prepared for whatever comes next.

‍

Tips to Set Yourself Up for Success in Pre-Arbitration

Though chargeback prevention is the ultimate goal, if you're dealing with pre-arbitration, here’s how to position yourself for a favorable outcome:

Look for New Evidence

Pre-arbitration is your last chance to submit new information you might not have included in the initial representment. This could be additional proof of delivery, customer communications, contracts, or other relevant documents.

Revisit the original chargeback reason code and see if there’s anything you missed the first time that could strengthen your case.

Prepare a Detailed Rebuttal

It’s time to refine your argument. Draft a concise and clear rebuttal addressing the chargeback reason, supported by your evidence. Structure your rebuttal logically, using headings and subheadings to make it easy to follow. Stay professional—no matter how frustrating the dispute may be, avoid accusatory language.

Submit Evidence Promptly

Timing is everything. Missing a pre-arbitration deadline almost always means losing the case. Work quickly to gather your evidence and submit it through the proper channels specified by your payment processor.

Follow Up with Your Acquirer

Stay proactive. Regularly check in with your acquiring bank or payment processor to track the status of your pre-arbitration case. If possible, ask for feedback on your submission to see if additional documentation is needed.

Be Prepared for Arbitration

If you lose in pre-arbitration, you have two options:

• Proceed to arbitration: Only move forward if you strongly believe in your case or have found new information. Be ready for the financial burden that comes with arbitration fees.
• Take the loss and move on: Sometimes, accepting defeat is the most cost-effective solution, especially if arbitration isn’t worth the financial risk. However, if your chargeback ratio is already high, it may be worth going to arbitration to protect your standing.

In any case, each experience with pre-arbitration is a learning opportunity. Whether you win or lose, analyze the outcome to refine your process for future disputes.

With the right tools and strategies, you can reduce the stress and financial burden that chargebacks place on your business. 

In fact, the best chargeback companies can take over this entire process, helping you prevent up to 95% of chargebacks while boosting your win rates by as much as 70%!

‍

Best Chargeback to for Pre-Arbitration

Disputifier eliminates chargeback headaches with AI-powered, fully automated dispute management. Say goodbye to costly insurance and lost disputes.

Using Verifi™ and Ethoca™ alerts, Disputifier blocks up to 95% of chargebacks before they hit your chargeback ratio. Automate refunds with fail-safes that protect your revenue, and stop 99% of fraudulent transactions with advanced AI fraud detection.

When a chargeback does occur, Disputifier manages the whole process, including evidence gathering and pre-arbitration. With experience handling thousands of disputes, we boost win rates by up to 70%.

Best part? You only pay if we win. Get a guaranteed 5x ROI—start your free trial today!

‍

Conclusion

Pre-arbitration is your final opportunity to resolve a chargeback before it escalates. You can submit new evidence and avoid costly arbitration.

To succeed, submit your rebuttal quickly and ensure it’s organized. Miss the deadline, and you’ll likely lose—and it’ll hit your chargeback ratio.

Disputifier handles this for you, from dispute prevention to fully managing chargeback responses and pre-arbitration. Let us deal with the hassle, so you can focus on growing your business!

‍