Chargebacks are a common feature of the payment card industry, and Mastercard is no exception. A chargeback is a process by which ra cardholder disputes a transaction and requests a refund. In response, the merchant must provide evidence that the transaction was valid and authorized. In this article, we will provide a comprehensive overview of Mastercard chargebacks, including their types, reasons, and procedures.
Types of Mastercard Chargebacks
Mastercard chargebacks can be classified into four categories based on the reason for the dispute:
- Fraudulent Chargebacks: These occur when the cardholder denies having authorized the transaction. This may happen if the card has been stolen or if the cardholder’s account has been compromised.
- Authorization Chargebacks: These occur when the cardholder claims that they did not authorize the transaction, or that the merchant did not follow proper authorization procedures. This may happen if the merchant did not obtain the necessary authorization code or if the transaction amount exceeded the cardholder’s limit.
- Processing Chargebacks: These occur when the merchant makes an error during the processing of the transaction, such as charging the wrong amount, duplicating the transaction, or charging the wrong account.
- Technical Chargebacks: These occur when there is a technical issue with the payment processing system, such as a communication error or a malfunctioning device.
Reasons for Mastercard Chargebacks
The following are some of the most common reasons for Mastercard chargebacks:
- Fraudulent transactions: As mentioned earlier, fraudulent transactions occur when the cardholder denies having authorized the transaction.
- Late delivery: If the merchant fails to deliver the goods or services within the promised timeframe, the cardholder may initiate a chargeback.
- Defective merchandise: If the goods delivered are faulty or not as described, the cardholder may initiate a chargeback.
- Cancelled transactions: If the merchant cancels the transaction without the cardholder’s consent, the cardholder may initiate a chargeback.
Mastercard Chargeback Procedures
The chargeback process begins when the cardholder initiates a dispute with their bank. The bank then contacts the merchant’s bank, which in turn contacts the merchant. The merchant is required to provide evidence that the transaction was valid and authorized.
The evidence that merchants need to provide includes:
- Proof of delivery: If the transaction involved the delivery of goods, the merchant must provide proof of delivery, such as a signed delivery receipt.
- Proof of authorization: The merchant must provide evidence that the transaction was authorized by the cardholder, such as a signed receipt or an authorization code.
- Proof of refund: If the merchant has already issued a refund, they must provide evidence of the refund.
- Any other relevant documentation: The merchant may also provide any other relevant documentation, such as emails or invoices, to support their case.
Mastercard chargebacks can be a complex and time-consuming process for merchants. It is essential for merchants to understand the different types of chargebacks and the reasons for them, as well as to maintain accurate records and documentation to support their case. By taking proactive steps to prevent chargebacks, such as ensuring proper authorization procedures and prompt delivery of goods and services, merchants can reduce the risk of chargebacks and protect their businesses.