Chargeback lifecycle
Maya Chen disputes the EUR 42.50 charge from Demo Coffee Ltd. Bank Alfa raises a chargeback, Demo Coffee answers with evidence, and the case decides who bears the loss — through Cardnet, a fictional card network standing in for Visa/Mastercard-style networks. (SYNTHETIC / TRAINING ONLY)
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Maya disputes the charge
Maya Chen (cardholder) → Bank Alfa (issuer)
Maya tells Bank Alfa she does not recognise the EUR 42.50 booking on her statement. The issuer records the claim and, for many claim types, first asks whether she has tried to resolve it with the merchant directly.
Step 1 of 11: Maya disputes the charge
- 04SettlementThe disputed amount settles back through the network cycleMeridian Bank (acquirer) → Bank Alfa (issuer)
- 05PostingMeridian Bank debits Demo Coffee and asks for evidenceMeridian Bank (acquirer)
- 09ProcessingBank Alfa reviews the representmentBank Alfa (issuer)
- 10SettlementThe interbank chargeback settlement unwinds in the acquirer's favourBank Alfa (issuer) → Meridian Bank (acquirer)
- 11PostingThe case closes — liability lands with the evidenceMeridian Bank (acquirer)
Full step-by-step text (works without JavaScript)
- 04SettlementThe disputed amount settles back through the network cycleMeridian Bank (acquirer) → Bank Alfa (issuer)
A chargeback is not only a case file — it is a money movement. In the next network settlement cycle the disputed amount is charged to the acquirer's net position and credited to the issuer's, reversing the direction the original sale settled in.
The interbank leg reverses first; whether the merchant or the issuer finally bears the loss is decided later by the case.
- 05PostingMeridian Bank debits Demo Coffee and asks for evidenceMeridian Bank (acquirer)
The disputed amount is pulled from the merchant's account while the case runs — in a chargeback, the money moves first and the argument follows. The acquirer passes the case to Demo Coffee with the reason code and a deadline to respond.
- DR Demo Coffee Ltd settlement account at Meridian Bank — EUR 42.50
- 09ProcessingBank Alfa reviews the representmentBank Alfa (issuer)
The issuer weighs the evidence against Maya's claim and the reason code's requirements. This review decides the case for most disputes — escalation beyond it is the exception, not the rule.
- 10SettlementThe interbank chargeback settlement unwinds in the acquirer's favourBank Alfa (issuer) → Meridian Bank (acquirer)
Because the representment succeeds, the earlier acquirer-to-issuer movement reverses: in the next settlement cycle the disputed amount is charged back to Bank Alfa's net position and credited to Meridian Bank's, undoing the chargeback's original settlement. The acquirer is made whole between the banks before it re-credits the merchant.
The money returns to the acquirer's side first; only then does Demo Coffee get its debit reversed.
- 11PostingThe case closes — liability lands with the evidenceMeridian Bank (acquirer)
Bank Alfa accepts the representment: the chip data shows Maya's card was present, so the charge stands. With the interbank leg reversed, Meridian Bank re-credits Demo Coffee, and Bank Alfa reverses Maya's provisional credit and explains the outcome to her. Liability followed the evidence.
- CR Demo Coffee Ltd settlement account at Meridian Bank — EUR 42.50
What this simplifies: One dispute, one reason code, one round. Real chargeback flows vary by network and reason code — time limits, required evidence, fees and even the number of cycles differ, and network rules generally govern each stage. The provisional-credit and fee movements between the banks are described in prose rather than drawn as lanes.
Sources for this flow2
- Market practiceMarch 2003 edition
A glossary of terms used in payments and settlement systems ↗ — CPSS (now CPMI), Bank for International Settlements
Terminology has evolved since this edition; newer CPMI publications refine some definitions.
- Simplified educational illustration
Payments Signal editorial teaching models — Payments Signal
What this simplifies: One reason code and one cycle shown; exact time limits, fee amounts and evidence requirements vary by network and by reason code, so they are phrased generally. All parties and amounts are fictional.
Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.