How Chargebacks Work Issuing bank reviews the transaction and decides whether to initiate a chargeback. Network, such as Visa, screens the chargeback and, if appropriate, forwards it to the merchant’s bank, or aquirer. Acquirer decides whether to re-present the chargeback or forward it to the merchant. Merchant decides whether to accept the loss or re-present the chargeback. Acquirer decides whether to forward the re-presentment or advise against re-presenting the chargeback. Network screens the re-presentment. If appropriate, it forwards it to issuer. If not, it rejects it. If the issuing bank and merchant can’t agree on who is liable for a valid dispute, the network decides. Source: Fumiko Hayashi, Zach Markiewicz, and Richard J. Sullivan of the Federal Reserve Bank of Kansas City

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