Mastercard Disputes – What Are They and How to Deal with Them?

Successfully dealing with chargeback disputes is a complicated and draining process for merchants. It’s made worse by the fact that the chargeback process varies between card networks. Most merchants often deal with Visa and Mastercard chargebacks. Though their processes are similar, there are some minor differences in deadlines and rules merchants should adhere to. The differences in terminologies can be confusing as well. 

To manage disputes effectively, merchants should learn to play by the card network rules. Below is some information to get you on the right path of handling Mastercard chargebacks.  

What is a chargeback?

A chargeback is a disputed transaction that involves a transfer of funds from a merchant back to a consumer’s account after a purchase was made. These disputes are accompanied by chargeback reason codes which explain why the chargeback was  filed. Mastercard had a long list of reason codes in the past, but they’ve since simplified it. 

The four-digit Mastercard reason codes fall into four categories: 

  • Authorization
  • Fraud
  • Point-of-Interaction Errors
  • Cardholder Disputes

How to fight Mastercard chargebacks

The Mastercard chargeback process follows the below steps:

  • First presentment
  • Chargeback 
  • Second presentment
  • Pre-Arbitration
  • Pre-Arbitration Response 
  • Arbitration

In the second presentment, a merchant can fight the chargeback by submitting a rebuttal letter and compelling evidence to support their claims. The issuing bank reviews the documents and makes a decision. 

Unfortunately, though Mastercard dictates chargeback reversal rules, different issuers interpret the guidelines differently, leading to different outcomes. If you are constantly losing to a specific bank, test different templates, documents, and letters to determine which gets the highest win ratio. 

However, such experimentation takes time. If time isn’t a luxury you can afford, enlist the help of a chargeback mitigation solution to fight chargebacks and get you a higher win rate. 

How to avoid Mastercard chargebacks

The best way to deal with chargebacks is to prevent them from happening. Some tips you can use to do this include:

  • Insist on authorization – Mastercard authorization on purchases is crucial. As a merchant, if every card purchase is authorized, you can rest easy knowing the consumer’s bank knows about the transaction amount charged. If the bank declines the card for whatever reason, you should decline transactions from that specific card too.
  • Avoid double-charges – duplicate transactions often result in chargebacks. They happen when a consumer accidentally clicks the ‘buy’ button twice on an online store. Or when an in-store employee swipes a card twice to try and complete a transaction. MasterCard encourages businesses to monitor sales records to catch these errors and initiate refunds to avoid chargebacks.  
  • Ask for identification – a merchant can avoid in-store fraud by asking for consumer signatures or personal identification for large purchases. Creating an online identification verification system for the business is crucial too. The system can be as simple as verifying the cardholder’s address or requesting the CVV code. 
  • Institute clear and honest business policies – being transparent and upfront with consumers helps avoid chargebacks. Clearly state your refund and return policies, honor the policies fairly, ship products fast, and be proactive in keeping customers happy. 
  • Communicate with your bank – when dealing with Mastercard chargebacks, acting fast is in your best interest. Missing deadlines could lose you the chargeback, which translates to lost transaction amounts and incurring Mastercard fees.   

Though these measures can help reduce the number of chargebacks you receive, they don’t eliminate them 100 percent. Instead of busy merchants running A/B tests to determine the best template, it’s more efficient hiring a chargeback mitigation solution to increase your success rates.