Arbitration

Arbitration is the final and binding stage of the chargeback dispute process, where the card network acts as the judge to make a definitive ruling on the validity of the dispute after both the merchant and issuer have presented their cases. 

Arbitration occurs when a merchant contests a second chargeback (pre-arbitration) and escalates the dispute for network adjudication, or when an issuer refuses to accept the merchant's representment evidence. The arbitration process involves substantial fees typically ranging from $500 to $1,000 or more, with the losing party responsible for paying both the arbitration fee and the disputed transaction amount.

Card network arbitration decisions are final and cannot be appealed, making this a high-stakes option that merchants should only pursue when they have compelling evidence, the dispute amount justifies the financial risk, and the potential recovery outweighs the costs. Most disputes settle before reaching arbitration due to the significant fees and finality of the ruling.