If you've reached the arbitration stage, it means the cardholder’s bank wasn't convinced by your initial evidence. This is the final, "supreme court" level of a chargeback dispute. It’s a high-stakes decision where a neutral panel at the card network (like Visa or Mastercard) makes a final, binding ruling.
This article will help you understand the risks, the costs, and whether it makes sense for your business to proceed.
What is arbitration?
Arbitration is the final stage of the chargeback lifecycle. It happens when neither the merchant nor the cardholder’s bank will accept the terms of the dispute.
At this point, the case is handed over to the card brand itself.
They review the history of the case and make a final decision (that can’t be appealed).
How much does it cost?
Arbitration is expensive. Unlike the initial chargeback process, which has a smaller administrative fee, arbitration involves significant costs:
Per-transaction fees: Fees are charged for every single transaction. If one customer disputes three separate orders, you could face three separate sets of fees.
High price tag: The average fee is $500, but in complex cases, it can exceed $1,000.
Liability-based charging: The good news is that you are only charged these fees if you are found liable (if you lose). If the card brand rules in your favor, you won't pay the arbitration fee.
When should I move forward?
Because the fees can far outweigh the value of the original sale, we generally do not recommend pursuing arbitration for disputes of $500 or less.
You should only consider arbitration if:
The transaction value is significantly higher than the potential $500 - $1,000 fee.
You are 100% confident that your evidence is bulletproof.
You are prepared for the possibility of losing both the transaction and the fee.
Key risks to consider
Before you sign the pre-arbitration documents, keep these three things in mind:
No new evidence: Usually, the card networks will not accept new documents at this stage. They only review what was already submitted.
Unpredictable outcomes: Even with great evidence, the final ruling is at the discretion of the card brand's panel.
Binding decisions: Once the ruling is made, it is final. There is no further path for appeal.
Next steps
If you’ve received a pre-arbitration notice and want to discuss your specific case, reach out to our Risk Team at chargebacks@helcim.com.
FAQs
What is the difference between pre-arbitration and arbitration?
Pre-arbitration is a "final warning" where the bank gives you one last chance to accept or fight. Arbitration is the actual trial where the card brand steps in to judge.
Can Helcim stop the arbitration once it starts?
No. Once the case is submitted to the card brand, the process must run its course until a final decision is reached.