How to Respond to Mastercard Chargebacks

It’s tempting to just throw your hands up and accept an invalid chargeback. After all, you’re a busy merchant with a million other things to do.

But here’s the thing: every time you accept an invalid chargeback, you’re signaling to Mastercard and your acquirer that it’s your fault… even though it’s not.

Fighting back, in other words, is only partially about recovering the sale. On the macro level, it’s about demonstrating that you’re proactive and responsive; that you’re willing to combat chargebacks that aren’t your fault.

Can Merchants Fight Invalid Mastercard Chargebacks?

The short answer is “yes.” If you suspect that a chargeback was filed without a valid reason, you may respond through a process known as representment.

A quick disclaimer before we go any further, though.

You should absolutely not fight any chargebacks resulting from genuine criminal fraud or errors on your part. If a cardholder’s claim is legit, then you should simply accept the chargeback and strive to do better next time to prevent it from happening.

Invalid Mastercard chargebacks, however, should be challenged through representment whenever possible. You recover funds and protect your reputation, while the consumer learns that filing a bogus claim has consequences.

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Responding to a Mastercard Chargeback

So, how do you go about actually filing a response?

To fight a Mastercard chargeback, you’ll have to re-present it. This is a highly regulated process that allows you, the cardholder, and your financial institutions to resolve disputes in a streamlined and structured manner.

Here’s what you need to do:

Step #1 | Consult the Mastercard Chargeback Guide

To start, consult the most recent merchant edition of the Mastercard Chargeback Guide. This authoritative document will tell you everything you need to know about the chargeback reason code you received, and the evidence you’ll need to bring to the table to fight it successfully.

You can also consult our comprehensive reason code guide that will give you a simplified breakdown of that information in a more easy-to-understand format:

Learn more about Mastercard reason codes

Step #2 | Note the Response Time Window

Mastercard gives you just 45 days to represent a chargeback; far less than the 120 days cardholders get. Unfortunately, even that’s an upper limit. Depending on your acquirer, you may have even less time to respond.

Your acquirer needs some time to review and transmit documentation. As a result, you might have as little as five days to prepare your response in some cases.

Learn more about Mastercard time limits

Step #3 | Gather Evidence

Now, you’ll need to compile the actual representment package. At the heart of a successful package is compelling evidence, which should supply proof that the Mastercard chargeback is invalid because the transaction was legitimate.

Remember: what’s compelling and what’s not depends on the chargeback reason code. If the cardholder alleges that they didn’t receive their order, proof of delivery like a signed delivery receipt could be compelling. On the other hand, if the customer claims you double-billed them by accident, a log of your transaction records and transactions involving the cardholder could be most compelling instead.

Learn more about compelling evidence

Step #4 | Draft a Rebuttal Letter

You’ll want to make your representment package as strong as possible. To do that, you’ll want to draft a clear and concise rebuttal letter.

This document will get submitted alongside your evidence. The aim here is to summarize the disputed transaction, describe the counter-evidence supporting your side of the story, and ask for an outcome in your favor.

Learn more about rebuttal letters

Step #5 | Submit Your Representment Package and Wait for a Response

Now that you’ve compiled your evidence and rebuttal letter, you’ll need to submit it to your acquiring bank. Your acquirer will forward it to Mastercard, who will then forward it to the cardholder’s issuing bank.

The issuer will weigh your representment package against the cardholder’s claim and come to a decision, usually within several days or weeks. If you do not agree with the issuer’s decision, you can choose to escalate the dispute to arbitration, which we’ll discuss in the next chapter.

Learn more about representment

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In terms of evidence, you should keep it compelling and relevant. Examples of convincing evidence include proof of payment authentication like 3-D Secure for unauthorized chargeback claims, proof of shipping records for product not delivered claims, a copy of your refund and return policies, and communications with the customer.

As per Mastercard rules, evidence should be uploaded as JPEG or PDF files under 14.5 megabytes in size.

Mastercard Compliance: Resolving Disputes When Mastercard Chargeback Rules Don’t Apply

On occasion, one party may accidentally or deliberately breach the Mastercard Rules and Standards, causing the other party to experience a financial loss. When this happens, the affected party may file a compliance case for banks to reach a resolution. If unsuccessful, Mastercard can be asked to step in to help resolve.

Compliance cases can only be filed under limited circumstances. Mastercard prohibits the filing of compliance cases, for instance, when a chargeback and arbitration case process is ongoing, or when one party receives a double refund. In these instances, the parties should work through the established dispute process first.

A compliance case should not attempt to circumvent Mastercard’s Fraud Notification Service. Similarly, it should not be used to resolve claims that can be addressed through the Card Acceptor Business Code (MCC) Performance Program.

On the other hand, a compliance case may be filed if one party intentionally or unintentionally violates any of Mastercard’s Rules and Standards and causes financial loss to another party. Before a case is filed, the breaching party is given a chance to remedy the violation in what is known as a pre-compliance case. If the breaching party fails to fix the issue, the compliance case may proceed.