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Mastercom Collaboration

Mastercom Collaboration

Mastercom Collaboration is Coming. Here’s What That Means for Merchants & Banks.

Let’s say that you’re a merchant. You want to do right by your customers and provide them with the best service possible. Yet, even though you try your best, you still get hit with chargebacks.

Mistakes happen, and occasional problems will arise. If only your customers would contact you before calling the bank, you’d be happy to resolve any problems for them, right?

Well, we have good news for Mastercom users. Things are about to change for the better, with the rollout of the new Mastercom Collaboration tool.

Why is a New Chargeback Process Necessary?

Before diving in, let’s take a quick look at the present lay of the landscape regarding Mastercard chargebacks.

Chargebacks are a serious pain point. The operational costs associated with a single chargeback can be significantly higher than the dollar value of the original transaction. In fact, for every dollar lost to chargebacks in 2019, the average merchant lost an additional $2.60 due to merchandise, fees, overhead, and other sources of loss.

As a merchant, you face the brunt of chargeback losses. However, you’re not alone; they create headaches for a lot of players within the Mastercard ecosystem.

Learn more about Mastercard chargebacks

Banks and other parties all face billions in losses each year tied to chargebacks. Issuers face processing costs, liability losses, and write-offs, while acquirers get hit with processing costs and card network fees. So, there are many parties at play that could benefit from a more streamlined, efficient, faster process for resolving transaction disputes.

Into this environment, enter: Mastercom Collaboration.

Mastercom Collaboration

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Mastercom Collaboration is Coming

Mastercom is Mastercard’s end-to-end dispute resolution platform. Mastercom has been in place for years. However, a new workflow being offered through the platform aims to offer merchants the opportunity to rectify a dispute before it becomes a formal chargeback.

In July 2022, Mastercard will be rolling out the enhanced version of its existing Collaboration tool for all the players within the payment journey. This has already been available to issuers and merchants. But, as of July, acquirers will be able to join the party.

By looping acquirers into the Mastercard Mastercom Collaboration ecosystem, the card network hopes to provide even better functionality and information sharing capability.

How Mastercard Collaboration Worked Previously

Prior to this upcoming enhancement, the solution already played a part in helping reduce chargebacks. It worked in a more limited capacity, though.

Previously, there had been no acquirer participation. Merchants were able to participate in Collaboration through the Ethoca Merchant Network and Ethoca Alerts. Participating issuers were then able to alert merchants of an impending cardholder dispute in real time.

If the dispute in question was fraud related, the merchant could decide to prevent the inevitable chargeback by refunding the cardholder. This notification also allowed the merchant to stop the fulfilment of any merchandise or service not already provided.

Typically, though, the merchant would have learnt of a dispute several days—even weeks—after the related transaction. If that happened, the merchant would have lost sales revenue, as well as any products or services that had already been provided to the buyer.

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Transaction and purchase information could also be shared between the merchant and issuer under the legacy arrangement.

Mastercard’s Consumer Clarity powered by Ethoca provided on-demand, enhanced data to issuing banks and their cardholders, directly from the merchant. This assisted in recognising disputed transactions and subsequently preventing chargebacks.

Using the pre-existing system, rich data could be delivered via the issuer’s mobile app by the cardholder tapping on the transaction. It could also be accessed directly via the issuer’s call center following a cardholder notification of the disputed transaction.

How Will Mastercom Collaboration Work?

When an issuing bank decides to dispute a cardholder’s transaction, their course of action will depend on whether they have a direct relationship with Ethoca or not. If they have, then they’ll initiate the collaboration request directly through Ethoca. The request will then pass to them along those rails.

If the issuer is not part of the Ethoca network, then the request will pass directly to the acquirer instead. The acquirer then views the case from the relevant queue in Mastercom. After reviewing the claim, they either contact the merchant directly for instructions on how to respond, or they respond on their merchant’s behalf based on a predetermined agreement.

If the issuer has no direct relationship with Ethoca, then the collaboration request is initiated directly through Mastercom. At this point, the request is sent to the merchant via Ethoca if a relationship between the two exists. Otherwise, it will be sent to the acquirer, who will respond on the merchant’s behalf through Mastercom.

If the request goes to the merchant, they will have 72 hours to respond. Otherwise, the paused dispute will be automatically rejected. This will likely result in a chargeback.

What Response Options Do Acquirers & Merchants Have?

The acquirer will have four response options when acting on a merchant’s behalf:

#1 | Accept the dispute and contact Mastercard

Acknowledge that the request is valid, or otherwise not worth progressing. Mastercard will refund the issuer directly on the acquirer’s behalf.

#2 | Acknowledge

Acknowledge that the request is valid, or otherwise not worth progressing, and provide notice that a refund to the cardholder will be processed directly by the merchant.

#3 | Disregard

After the issuer has removed the funds from the acquirer, the acquirer will deduct funds from the merchant’s account to cover the chargeback amount.

#4 | Reject the dispute

If the acquirer/merchant believe the inquiry is invalid, they may reject the claim. The issuer can then respond with a chargeback, but the merchant can re-present the transaction if needed.

The 72-hour grace period could allow merchants time to consider whether they have the necessary compelling evidence to choose option four and challenge the dispute.

Mandatory Participation is Good News for Merchants

Mastercard always intended for the roll out of Collaboration to be a phased process. While there’s certainly been some success in reducing chargebacks and the associated costs up to now, the real game changer will come in July.

The success of Collaboration previously relied on issuers taking part. However, not all did. Beginning in July, it will be mandated for all issuers to participate either through Ethoca or Mastercom directly.

This will have a profound effect on the dispute landscape. If merchants/acquirers are connected to Collaboration, they will have the option to decide on how they want to respond to the dispute before it becomes a chargeback. Equally the issuer, because Collaboration is mandatory, will not be able to process a chargeback directly through Mastercom without giving the merchant the opportunity to resolve it beforehand.

There will no longer be that surprise or bewilderment for merchants when a chargeback hits. While chargebacks are never pleasant, at least they won’t catch you off guard.

Mastercom Collaboration

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The Way Forward: A Fundamental Change

With this change to Mastercom Collaboration, merchants can now choose whether to resolve disputes prior to a chargeback being raised. This ties in neatly with the requirement of some dispute types for the cardholder to attempt to resolve the dispute with the merchant prior to raising it with their issuing bank.

This seems perfectly fair and reasonable. While cardholders are expected to contact merchants before disputing charges, they rarely do so. It’s been observed that up to 73% of consumers contact their bank first to query a transaction, thus depriving the merchant of the opportunity to resolve the issue.

Consumers have no idea of the possible implications a chargeback may have on a merchant. Come July, however, merchants will at least have the opportunity to put the dispute to bed before it goes through the lengthy, drawn-out chargeback process.

Whatever route the collaboration request takes to reach the merchant, the fundamental sea change is that the merchant will now have the benefit of making an informed decision on a dispute before it becomes a chargeback. In doing so, they can save themselves the cost and the hassle of the dispute resolution process. Cardholders ultimately benefit from this, as disputes get resolved faster, and lower costs for merchants can translate to lower prices for consumers.

Help is Available

Mastercard Collaboration will be a step in the right direction. It balances out the process and gives merchants the much-needed opportunity to influence the progression of a dispute before it becomes a fully-fledged chargeback.

Of course, some of these inquiries will still inevitably progress to the chargeback phase. Need additional help with assessing available evidence and building strong cases? No problem—Chargebacks911® is on hand.

The team of industry experts at Chargebacks911 offer unparalleled knowledge, experience, and expertise in the field. We can provide everything necessary to provide the best possible chance of a successful outcome.


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