Arbitration is the final stage of the dispute lifecycle, in which the card network itself rules on a chargeback that the merchant and issuer could not resolve through representment and the pre arbitration exchange that follows it. The losing side pays the network’s case fees, which regularly exceed the disputed amount.
Why it matters
Arbitration exists, but for most merchants it is a door best left closed: the fees are punitive, timelines run to months and networks decide on the documented record, not on sympathy. Its real value is upstream. Knowing a case could survive arbitration is the standard that keeps your representment evidence honest, and knowing most cases could not is the discipline that stops good money chasing bad disputes. High risk merchants should reserve it for large tickets with airtight evidence or for the rare dispute that sets a precedent with a serial abuser.