Mastercard DAF: Dispute Administration FeeWhy it Exists & How Much You Can Expect to Pay

August 26, 2022 | 8 min read

Mastercard DAF Dispute Administration Fee

In a Nutshell

Merchants in the European Union know how problematic the chargeback process is and how costly it can be. In this article, we’ll mull over the Mastercard Dispute Administration Fee, from why it exists to how much it might cost you.

The Mastercard DAF: Why EU Merchants May Have to Pay an Added Fee for Disputes

Like any card association, Mastercard charges banks and merchants a fee each time a chargeback is processed through their network. These fees vary widely, with location being one of the key factors determining how much you pay.

If you’re a merchant operating in the European Union, you can expect to pay a Mastercard Dispute Administration Fee, or DAF, for every chargeback you receive. These fees are typically assessed to banks, who pass them along to the seller (possibly tacking on a few extra euros for good measure).

What is the Mastercard Dispute Administration Fee?

Dispute Administration Fee

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The Dispute Administration Fee, or DAF, is a fee assessed by Mastercard as part of the chargeback process in the EU. Mastercard generates a DAF for each chargeback, second presentment, and arbitration chargeback. The fee is then paid to the sender and charged to the receiver of the respective chargeback cycle.

While different entities might directly pay the funds for these services, the costs eventually trickle down to you. Banks, processors, and card networks cover fees upfront, then pass the charges along. Usually, there’s an added markup or administration fee, which is meant to cover the financial institution’s expenses resulting from the dispute.

As the last links in the process chain, merchants like you ultimately get stuck with the bill. If these fees aren’t understood and closely monitored, you may end up paying much more than they anticipated.

With the Dispute Administration Fee, you get hit with an additional charge for each stage in the dispute process. These fees increase as you move deeper into the chargeback process. The purpose of the DAF is to provide an incentive for merchant compliance within the Mastercard ecosystem (more on this below).

Mastercard Dispute Administration Fee Schedule

The network automatically generates a DAF for each chargeback, second presentment, and arbitration chargeback submitted against an applicable merchant. This is conducted through the Mastercard Consolidated Billing System.

The fee is paid to the sender and charged to the receiver of the respective chargeback cycle. These fees also increase as you progress further through the chargeback process. Here’s how it breaks down:

First Chargeback

In the first stage of this cycle, when a chargeback is filed, the issuer is paid €15 and the acquirer is charged €15.

Second Presentment

In the second stage of this cycle, the acquirer is paid €30 (€15 net) and the issuer is charged 30 EUR (15 EUR net).

Arbitration Chargeback

In the final stage, the issuer is paid €45 (€30 net) and the acquirer is charged €45 (€30 net).

Ultimately, you can expect to be charged anytime your acquirer needs reimbursement for DAF fees incurred due to a chargeback. Keep in mind that many banks will tailor those charges to suit themselves, taking their labor and overhead into consideration. This means you can expect to pay more per disputed transaction than the DAF that was actually levied by Mastercard.

Common Question What is a merchant category code?

A Merchant Category Code, or MCC, is a four-digit identifier that describes the type of goods or services provided by a business. The International Organization for Standardization (ISO) sets the MCC meanings and classifications, and card processors are responsible for assigning an MCC to a merchant at the start of their relationship.

Learn more about MCCs

Why Do Mastercard DAF Fees Exist?

It’s Mastercard’s prerogative to assess and levy fees for credit card disputes occurring on their network. The goal isn’t to hassle you; rather, Mastercard assesses these fees in the hopes that it will encourage all parties to take compliance as a serious matter.

According to Mastercard, the Dispute Administration Fee is meant to fairly compensate all parties that have a stake in the chargeback process. It also encourages banks and merchants to try to keep their chargeback ratios low.

What if prevention isn’t possible, though? If you feel that a chargeback was filed without a valid reason, Mastercard encourages you to fight back through the representment process.

Confused about chargeback fees? You’re not alone. The good news is that help is just a click away.


You have a right—and a responsibility—to fight back in an effort to reduce overall global chargeback volume. However, the sad truth is many merchants don’t fight back at all. They assume that chargebacks are just “a cost of doing business.”

This inaction can lead to an endless feedback loop of higher fees, more time-consuming disputes, and greater revenue loss. It’s bad news for everyone, including the consumers who abuse chargebacks.

The Realities of Mastercard Dispute Administration Fees

Chargebacks were a major financial burden, long before Mastercard mandated the Dispute Administration Fee. The situation’s only gotten worse over the years; in 2023 alone, merchants stand to lose $117 billion due to chargeback costs.

Each chargeback means lost sales revenue and added fees. You also have to contend with merchandise costs, overhead costs like shipping and interchange, and long-term threats like an elevated chargeback rate. All things considered, it’s no surprise that the average merchant ultimately loses $3.75 for every $1 of sales subjected to chargebacks.

For retailers in Europe, the Mastercard DAF is just one more cost added into the mix. You’re essentially backed into a corner, forced to dispute every possible chargeback just to survive. Even if you manage to recover the DAF cost, the €15 won’t offset the resources lost in creating and submitting your representment case.

This also assumes you’re fortunate enough to win the representment and avoid an arbitration chargeback (also referred to as a second chargeback). Unfortunately, that’s a long shot at best.

The average merchant has a chargeback win rate of 32%, and merchants ultimately only recover revenue from about one in eight disputes. The rules and procedures for chargeback disputes are complex and change frequently. You have an incentive to try representment, but most merchants lack the experience and expertise to assemble complaint cases. There’s also the threat posed by chargeback arbitration.

As we stated earlier, most merchants don’t understand the ins and outs of filing a compelling representment case that also adheres to complex industry regulations. Issuers know this and know to look for the things merchants are most likely to miss. One seemingly-minor error might lead to a second chargeback. This can double your expenses and losses if the Mastercard DAF is a factor.

Living With The Mastercard DAF

Remember, the Dispute Administration Fee isn’t about helping you prevent chargebacks. It exists to cover network and bank costs for conducting chargeback operations on your behalf.

The financial risks associated with the Mastercard Dispute Administration Fee are real. All merchants need a proactive chargeback management plan in place, but the DAF makes this crucial step even more important for European retailers. An effective chargeback management strategy involves two equally important components:

Preventing transaction disputes

You need to use complementary tools as part of a multilayer fraud detection strategy to mitigate risk and minimize liability.

Fight invalid claims

Fight invalid claims: Not only do first-party fraud chargebacks need to be disputed, but they also need compliant and compelling cases that ensure success.

Creating and implementing a successful plan may seem overwhelming, but Chargebacks911 can help. As leaders in the global payments industry, our chargeback experts can answer any of your DAF-related questions, or even create a customized mitigation strategy. Contact us today to learn more.


What is a Mastercard DAF fee?

The Dispute Administration Fee, or DAF, is a fee assessed by Mastercard as part of the chargeback process in the EU. Mastercard generates a DAF for each chargeback, second presentment, and arbitration chargeback. The fee is then paid to the sender and charged to the receiver of the respective chargeback cycle.

How much does the Mastercard DAF cost?

Unless an exemption exists, the Dispute Administration Fee costs €15 for a first chargeback. This increases to €30 for a second presentment, and €45 for an arbitration chargeback.

Does the DAF help prevent chargebacks?

Not really. The DAF is intended to recoup losses incurred by the network through the acquiring banks involved, who will always pass those costs down to their merchants.  The DAF is touted as a means to encourage merchants to ‘fight back’ against illegitimate chargebacks. At its core, though, it’s just a fee for which merchants will ultimately be responsible.

How much does it cost to fight a Mastercard chargeback?

There is no consistent answer, as chargeback responses and costs vary according to the situation. However, given that the average merchant lost $3.75 in revenue for every $1 in chargeback liabilities last year, we can conclude that the cost is high.

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