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What is the 540 Days Chargeback Rule?

When it comes to Visa chargebacks, most cardholders and merchants are used to hearing about the 120-day dispute limit. However, there’s a special rule that can extend the time window to 540 days in very specific circumstances. This can be a game-changer if you’re a merchant dealing with delayed delivery issues or a cardholder waiting on goods or services that arrive well after the transaction date.

In this post, we’ll explore the 540 Days Chargeback Rule: what it is, why it exists, and how it affects both merchants and consumers.

Why Visa Implements Different Time Limits

Visa’s dispute process aims to balance the rights and responsibilities of both cardholders and merchants. While the 120-day limit applies to most disputes, not all purchases are straightforward. Some items—like concert tickets, travel bookings, or custom products—may be purchased months ahead of their delivery date.

To address these scenarios, Visa created exceptions allowing cardholders more time to file a dispute if:

  • The goods or services are expected to arrive much later than the transaction date.
  • The product is never delivered, or the service never rendered.
  • The cardholder finds out well after the fact that something has gone wrong.

How the 540 Days Chargeback Rule Works

Visa references the 540 days extension primarily under Reason Code 13.1 (Services Not Provided or Goods Not Received) when:

  1. Delivery Date is Extended
    The goods or services won’t be received until long after the initial purchase date—think of tickets purchased months in advance.
  2. Goods/Services Not Provided
    If the merchant fails to deliver the product or service within the agreed timeframe, the 540-day rule can be triggered.

Key Points to Remember

  • The standard 120-day clock doesn’t start on the transaction date if the cardholder reasonably expects to receive the goods later.
  • Visa can extend this timeline up to 540 days from the transaction date, which is the absolute cap for filing a dispute.
  • Issuers (the cardholder’s bank) will typically wait 15 calendar days after the expected delivery date before initiating a chargeback.

In short, if you sell products or services that take a long time to fulfill—or if you’re a customer who paid well in advance for something that never arrived—this is where the 540-day rule comes into play.

Merchant & Cardholder Perspectives

For Merchants

  1. Delivery Deadlines Matter
    If you promise a specific delivery date, make sure you meet it—or at least keep the buyer in the loop. Failing to do so can lead to disputes filed many months after the transaction.
  2. Documentation is Critical
    Keep clear records of shipping updates, customer communication, and any changes in delivery dates.
  3. Potential for Long-Standing Liabilities
    A transaction you thought was safe after a few months might still be disputed if the customer never received the product.

For Cardholders

  1. Extra Buffer for Late Deliveries
    You have more time to dispute if you don’t receive goods or services by the expected date.
  2. Proactive Communication
    Contact the merchant first. If they’re unresponsive or unable to resolve the issue, know that the 540-day limit might apply.
  3. Documentation Helps
    Save emails, order confirmations, and any proof that your items weren’t delivered as promised. This will strengthen your case if you file a dispute.

Common Scenarios for the 540 Days Rule

  • Travel & Tickets: Tickets purchased for an event several months away. If the event is canceled, or the tickets never arrive, you could file a chargeback even if the 120-day window has passed.
  • Custom or Pre-Order Items: Products that take a long time to manufacture, or pre-order items with uncertain release dates.
  • Services with Future Dates: Educational courses, subscriptions, or maintenance services scheduled far in advance.

Important Visa Reason Code Tie-Ins

While Reason Code 13.1 (Merchandise/Services Not Received) is the most common basis for the 540-day rule, other codes can indirectly extend timelines depending on the nature of the transaction. Always double-check your Visa Dispute Management Guidelines or consult with a chargeback professional if you’re unsure.

How to Manage 540-Day Disputes

For Merchants

  1. Track Extended Transactions
    Implement an internal system to flag orders with long lead times. This helps you keep track of potential dispute risks.
  2. Communicate Proactively
    If you run into production or shipping delays, let your customers know as soon as possible. Provide evidence of shipping or partial deliveries to show good faith.
  3. Maintain Strong Evidence
    Save all receipts, shipping proofs, delivery confirmations, and communication logs. If a dispute arises, you’ll need comprehensive records to defend yourself.

For Cardholders

  1. Confirm Delivery Dates
    Be clear on the expected delivery or service date. Mark it on your calendar, and follow up with the merchant if you sense delays.
  2. Act Within Reasonable Time
    Although the rule allows up to 540 days, it’s best to file as soon as you realize there’s a problem. Waiting longer can complicate evidence collection.
  3. Keep All Correspondence
    If you do file a dispute, you’ll need to show that you attempted resolution with the merchant first.

How Disputifier Helps Handle & Mitigate Chargebacks

Disputifier streamlines the entire chargeback management process for you. Our automated, data-driven approach uses AI-powered fraud detection, Verifi/Ethoca alerts, and proven representment tactics to boost your win rate up to 70%. 

By analyzing hundreds of data points for each transaction, we craft compelling, tailored rebuttals—so you don’t have to lift a finger. And because you only pay when you win, there’s no risk in letting us handle your chargebacks while you stay focused on running (and growing) your business.

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