Everything You Need to Know About the Mastercard Chargeback Fee Schedule
Chargebacks aren’t just a hassle for merchants. Banks also get hit with processing fees and other charges resulting from the dispute process. In many cases, they pass those fees on to you, the merchant.
Banks operating in the Mastercard ecosystem impose a chargeback fee for every chargeback filed. However, as a card network, Mastercard's fee scales operate a little differently from other financial institutions.
In this article, we’ll examine the Mastercard chargeback fee schedule. We’ll explain why Mastercard assesses these fees, and how you can protect yourself.
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What are Chargeback Fees?
Chargeback fees are penalties levied against merchants every time a chargeback is filed. Typically, the funds will be automatically removed from your account, along with an additional fee supplied by your acquiring bank. Chargeback fees typically vary anywhere between $5 and $100 per incident, depending on the circumstances.
As mentioned above, chargeback fees are intended to cover any administrative costs incurred due to the chargeback.
In most cases, these fees are non-refundable and must be paid, even if the merchant proves the dispute was invalid through representment. Mastercard chargeback fees are similar to Visa’s in composition and arrangement. However, there are key differences that you should be on the lookout for.
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What is a Mastercard Chargeback Fee?
As the world’s second-largest card network, Mastercard can pretty much make its own rules when it comes to disputes and chargebacks.
If you receive a chargeback from a Mastercard cardholder, the acquirer will pass those charges onto you. They will also tack on any applicable fees as dictated by Mastercard rules. The card network even qualifies specific chargeback reason codes for additional ‘progressive handling fees’ if the bank determines any are required.
Mastercard also imposes fees for the Mastercard Excessive Chargeback Merchant Program. This program exists for “high-risk” merchants who breach network chargeback thresholds. These are added assessments on top of other Mastercard chargeback fees; generally, when we discuss Mastercard chargeback fees, we are referring only to the fees assessed on a per-chargeback basis.
Why Does Mastercard Assess Chargeback Fees?
Frankly, Mastercard lets banks assess these fees to cover the cost of administering the chargeback.
Deleted: Although the terms might seem harsh, Mastercard chargeback fees are not intended to be punitive. The fees are meant to cover any costs that result from handling and processing all those incoming chargebacks.
Each chargeback means the bank has to handle documents, forward them to the merchant, and ensure all documents are routed to the correct party. They must also spend time and energy recovering funds lost to the dispute. All this work takes time and resources.
Remember: banks and card networks deal with thousands of chargebacks daily. Those fees can really add up, so they are passed on to the merchants with whom the liability legally rests. Mastercard’s chargeback fees are intended to cover the cost of doing this added work.
How Much Are Mastercard Chargeback Fees?
An assortment of fees could be attached to each case, depending on the circumstances and the merchant’s status. For instance
Mastercard chargeback fees can add up quickly as a result.
If a merchant chooses to fight back, they could face even more fees and penalties should things go poorly.