What triggers the arbitration process among card companies?

The arbitration process among card companies is primarily triggered by a dispute regarding chargebacks. Chargebacks occur when a cardholder questions a transaction and requests a refund from their card issuer. This can lead to disagreements between the card issuer and the merchant about the validity of the charge. When these disputes cannot be resolved through regular communication and negotiation, arbitration steps in as a formal process to resolve the contention.

Arbitration provides a structured environment where the involved parties can present their cases to a neutral third party. This is crucial in the payment industry because it helps maintain trust and integrity among merchants, consumers, and card companies by providing a fair means to address disputes. The resolution of chargebacks through arbitration helps ensure that transactions are handled equitably, which is vital for the stability of financial operations and customer relations.