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In the United Kingdom and European Union, the revised Payment Services Directive (PSD2) establishes the regulatory framework governing the rights and obligations of Payment Service Providers (PSPs) and cardholders when submitting, managing, and processing cardholder disputes. This guide explains how PSD2 applies to disputes on your UK and EU programs and what credit and notification requirements you need to account for. To support UK and EU programs under PSD2, Marqeta has partnered with Transact Payments Limited (TPL), an Electronic Money Institutions (EMIs) licensed by the Gibraltar Financial Services Commission. At the end of this guide, you will understand:
  • When PSD2 applies to a dispute, based on program type and dispute category
  • The notification and credit requirements for each PSD2 dispute category
  • The key milestones in a PSD2 dispute, including provisional credit, permanent credit, and provisional credit reversal
  • How the corporate opt-out and investigation requirements affect commercial programs

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When PSD2 applies

Whether PSD2 applies to a dispute depends on the program type and the category of the cardholder’s claim. For commercial programs, PSD2 applies when a cardholder submits a claim for an unauthorized transaction. If a cardholder submits a claim for any other reason, PSD2 does not apply. For consumer programs, PSD2 applies when a cardholder submits a claim in any of the following dispute categories:
  • Unauthorized transactions
  • Incorrectly executed transactions
  • Refunds for payee-initiated transactions

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PSD2 dispute categories

PSD2 defines distinct requirements for each dispute category. The notification window and credit obligations differ by category and, in some cases, by program type.

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Unauthorized transactions

An unauthorized transaction is a transaction made without cardholder’s authorization through fraud. This category applies to both consumer and commercial programs. The notification timeframe depends on the program type. For consumer programs, the cardholder has 13 months from the debit date to notify you. For commercial programs, card network timeframes apply, and you can exercise the corporate opt-out where eligible. For both consumer and commercial programs, you must issue provisional credit by the end of one business day after the cardholder notifies you. Permanent credit applies after your investigation confirms that the transaction was unauthorized.

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Incorrectly executed transactions

This category applies to consumer programs only. An incorrectly executed transaction is one that was not carried out, or was carried out incorrectly. The cardholder has 13 months from the transaction date to notify you. Provisional credit is not required initially. The outcome is determined after you complete your investigation.

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Refunds for payee-initiated transactions

This category applies to consumer programs only. A payee-initiated transaction is one in which the merchant (typically a hotel or car rental company) charged an incorrect amount. The cardholder must report the dispute within card network timeframes. Credit eligibility depends on timing. Provisional credit is required only if the cardholder contacts you within eight weeks of the settlement date. If the cardholder makes contact after eight weeks, no provisional credit is provided. When the refund conditions are met, you must issue provisional credit within 10 business days.

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Key milestones and timelines

A PSD2 dispute moves through several milestones. The requirements at each milestone depend on the dispute category and program type.

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Provisional credit grant

For unauthorized transactions, you must issue provisional credit by the end of the next business day following the dispute notification, for both consumer and commercial programs. For payee-initiated transactions on consumer programs, you must only grant provisional credit when the dispute falls within eight weeks of the settlement date. In that case, you must grant provisional credit within 10 business days.

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Permanent credit

For unauthorized transactions, you apply permanent credit after your investigation confirms that the transaction was unauthorized.

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Provisional credit reversal

You can reverse provisional credit only if your investigation proves that the cardholder authorized the transaction or is otherwise liable. Before reversing provisional credit, you must give 14 business days of advance notice, for both consumer and commercial programs.

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Corporate opt-out

For commercial programs whose cardholders are not consumers or microenterprises, certain PSD2 protections can be waived by agreement in the cardholder terms and conditions. A microenterprise is a company with fewer than 10 employees and an annual turnover or balance sheet total that does not exceed EUR 2 million.

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Investigation requirements

As the PSP, you must investigate unauthorized transactions promptly while balancing fast refunds against fraud prevention. The burden of proof lies with you to demonstrate that a transaction was properly authenticated and recorded. You must report suspicious activity to the relevant authorities while still processing legitimate refunds on time.

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Milestones summary

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Webhooks

For information on webhooks related to PSD2 and other regulatory dispute transition events, see Dispute Webhook Events.