Mastercard chargebacks severely dent your business. They can siphon away your hard-earned revenue, rob you of your valuable inventory, and put your relationship with your acquirer on shaky footing.
If you’re dealing with a chronic influx of Mastercard chargebacks, you might be tempted to see it as a package deal. After all, the privilege of being part of the second-largest card network comes with its costs.
Well… kind of. While merchant costs like are inevitable, chargebacks fees aren’t. In fact, Mastercard has developed a robust lineup of assets including Consumer Clarity, Mastercom, and the First-Party Trust Program to help merchants like you stop disputes before they happen.
All of these tools and programs might sound confusing, so don’t worry if you’re a little lost. In this guide, we’ll break down the most important dispute prevention tools in the Mastercard ecosystem. We’ll cover what they do, how they work, and how you can use them to keep your business — and your revenue — safe from chargeback fraudsters.
Consumer Clarity is a dispute prevention product created by Ethoca, a Mastercard subsidiary. The product lets merchants provide cardholders with rich information about their purchase, such as order details, receipts, and even the purchase’s carbon footprint.
By providing these details to cardholders, Consumer Clarity can potentially prevent chargebacks that stem from forgetfulness or unintentional first-party misuse. Merchants who take advantage of the product may also benefit from higher customer satisfaction and lower long-term operating costs.
Read MoreThe Mastercard First-Party Trust program gives merchants the opportunity to reduce friendly fraud chargebacks by providing real-time evidence that a given transaction under dispute is legitimate.
Specifically, merchants can use the program to share transaction details, like device information, order details, and shipping information with issuers either during or after the transaction. As part of this program, Mastercard has developed new rules for evidence that protect merchants from invalid disputes; essentially, merchants who share details that meet certain evidence criteria can potentially avoid liability for friendly fraud disputes.
Read MoreMastercom Collaboration is an end-to-end dispute management platform. It allows merchants to work with acquirers, issuers, and cardholders to prevent complaints before they escalate into full-fledged chargebacks.
Specifically, Mastercom Collaboration works as an early warning system, which merchants can access via API connections provided by their payment processor or acquirer. Before a cardholder files a formal dispute, merchants get the opportunity to proactively and pre-emptively refund the buyer through the platform (i.e. the collaboration process), thus preventing a chargeback from being filed.
Read MoreBeyond specialized tools for chargeback prevention and management, Mastercard has many other dispute management guidelines outlined in the Mastercard Chargeback Guide to help sellers prevent and avoid disputes. The information provided there can help merchants minimize chargebacks, preserve revenue, and prevent them going forward.
That said, parsing hundreds of pages of dry industry rules and guidelines can be daunting. The good news is that we’ve done the work for you. From avoiding confusion by using clear billing descriptors and communicating clearly throughout the transaction process here are some of the most important practices you can adopt to prevent Mastercard chargebacks.
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Chargeback rules for Mastercard state that cardholders have up to 120 days from the date of the original transaction to file a dispute with their issuing bank.
Merchants, on the other hand, are granted 45 days to respond to a dispute. In practical terms, though, merchants usually have far less time than this, as the merchant’s bank needs time to collate, review, and transmit documentation.
Mastercard’s threshold for excessive chargebacks is set at 100 or more chargebacks per month, plus a chargeback-to-transaction ratio of 1.5% or more.
Mastercard’s chargeback rate threshold is 1.5%. This means that a merchant will be enrolled in Mastercard’s Excessive Chargeback Merchant program if their chargeback-to-transaction ratio exceeds 1.5%, and they receive 100 or more chargebacks per month.
Both Visa and Mastercard have robust and well-defined chargeback processes that are designed to operate according to the specifics of the brand in question. Neither card networks’ dispute policies or rules can be considered better than the other.
As a merchant, you can avoid credit card chargebacks by minimizing billing errors, clarifying your billing descriptor, focusing on prompt and helpful customer service, and practicing proactive communication. You should also deploy security measures at sign-up, login, and checkout, like device fingerprinting and multi-factor authentication.
