How Sanctions Affect Payment Disputes

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The response to Russia’s invasion of Ukraine has been characterized by a strong desire to help, and a similarly strong desire to not get into a shooting war with a major world power. The actions taken so far have thus mostly involved nonviolent economic sanctions.

To support Ukraine and avoid undermining these sanctions, private companies—including Visa and Mastercard—have suspended service in Russia. This is an unprecedented step for them to take, and there are hundreds of questions to ask about how it will play out, but the first thing we want to know is, how are credit card sanctions going to affect payment disputes and chargebacks?

New call-to-actionWhile Visa and Mastercard’s move to suspend service in Russia is rightly seen as a huge deal in terms of practically and symbolically cutting Russia off from the modern global economy, it’s fair to say that the power of credit cards to end armed conflict is limited at best. Cards will still work within Russia until they expire, and Russia has alternative card networks—their own Mir and China’s UnionPay—to fall back on.

While the conflict roils on, there are orders in shipment, transactions yet to be settled, and disputes in the making. The card networks can dramatically shut off the flow of credit at the tap, but there are still cardholders and merchants with valid questions about what’s going to happen to funds that get tied up in current or future disputes.

Visa and Mastercard have distributed guidelines for cardholders, merchants, and banks about how to handle various transaction processes, including disputes and chargebacks, with affected entities. Read on for a rundown of the key points that will be most important for merchants to know. 

What Are the Visa Guidelines?

New Disputes

Cardholders can still dispute transactions involving merchants whose Visa service has been suspended due to the sanctions. Issuers have been instructed to follow the usual process and submit claims to Visa Resolve Online (VROL). Visa will reimburse valid disputes.

The VROL Process

Disputes filed against suspended merchants will stay in “pending advice” status because the merchant is unable to receive notice of the dispute. When VROL processes the claim, it will automatically credit the disputed amount to the issuer and close the case.

Returned funds will carry a “Russia wind down dispute” text descriptor and no further action can be taken on these cases once they are closed in VROL.

Disputes in Progress

Visa halted all in-flight transactions with sanctioned entities on March 11, 2022, with in-flight dispute and pre-arbitration activity resolved by Visa disbursing the disputed funds to the party currently liable for the transaction based on its case status in VROL. Visa projected that it would be finished processing these disputes by April 8, 2022.

Russian Issuing Banks

Customers of Russian issuing banks are no longer able to file any disputes against Visa transactions, as their banks are no longer able to receive the required financial messages.

Credit Processing

With the suspension of services in effect, Russian merchants can no longer refund their customers by issuing credit transactions over the Visa network. However, cardholders can still file legitimate “credit not processed” disputes.

Dispute Monitoring

To prevent fraudsters from taking advantage of their stated intentions to allow disputes and return funds related to the suspension of service, Visa is implementing a Russian Transaction Dispute Monitoring Program that will keep tabs on daily dispute volume, flag suspicious interactions, and protect the system from abuse.

Time Limits

Visa has not announced any extensions or changes to the dispute time limits laid out in their rules.

Reason code 13.1—Merchandise/Services Not Received

Visa has indicated that this is not a valid reason for a chargeback if the merchant was unable to provide goods or services due to foreign sanctions or government prohibition, provided the merchant can show evidence of the sanctions or prohibition and that they offered a reasonable alternative or credit in accordance with their terms and conditions.

What Are the Mastercard Guidelines?

New Disputes

Russian banks have lost their access to Mastercom, which means they can’t initiate disputes, respond to chargebacks, or engage in any other activity related to a dispute case. New refund, chargeback, or case filing activity with a sanctioned entity is prohibited.

Specifically, this means that non-sanctioned issuers cannot file chargebacks or arbitration requests against sanctioned Russian acquirers. Unless the sanctions are lifted before the chargeback filing window expires, the acquirer keeps the disputed funds.

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Non-sanctioned acquirers cannot submit second presentments to sanctioned acquirers.

Compliance Cases

Non-sanctioned banks cannot file compliance cases against sanctioned customers.

Pre-arbitration and Pre-compliance Cases in Progress

Cases in progress at the time service was suspended will be closed with a final “Filed in Error” status.

Arbitration and Compliance Cases Awaiting Ruling

Mastercard says they will not rule on cases involving sanctioned entities, so these cases will remain on hold indefinitely.

Services Canceled Due to Sanctions

Mastercard cardholders do have chargeback rights when merchants cancel due to sanctions or government prohibitions unless the terms and conditions give the merchant the right to offer reasonable alternatives under the law.

Time Limits

Mastercard has stated that they will not be adjusting their timelines or offering hardship extensions.


Future historians will get the final word on whether cutting Russia off from the global credit card payments system made a positive difference or not.

In the meantime, it’s up to the merchants, banks, and service providers who depend on the system every day to adapt to these changes—and the inevitable adjustments and reversals that will eventually follow—with care and professionalism.

It’s important not just to maintain a positive and hassle-free experience for ordinary e-commerce customers, but to remember that innocent consumers of all persuasions may experience hardship due to these sanctions. In times of war and peace alike, it’s always worth taking the time to communicate directly with your customers about their issues, listen to the problems they’re having, and come up with solutions that make them happy.

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