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Mastercard chargebacks

Learn about the Mastercard chargeback process and the guidelines to dispute a chargeback.

From 17 July 2020, Mastercard changed the chargeback flow for new disputes, and introduced Pre-Arbitration.

In the Mastercard chargeback process, an issuer can escalate a dispute and file a Pre-Arbitration case. This applies to all Mastercard reason codes, except 4808, 4870, and 4871; these disputes will go to Arbitration directly if escalated.

Disputes that were initiated before 17 July 2020 will follow the old flow, without Pre-Arbitration.

Overview:


Mastercard Pre-Arbitration flow:

  1. Optional: Request for Information
  2. Information Supplied
  3. Notification of Chargeback
  4. 1st Chargeback
  5. Information Supplied
  6. Chargeback Reversed
  7. Pre-Arbitration
  8. 2nd Chargeback
  9. Arbitration

Deprecated Mastercard flow
(Chargebacks initiated before 17 July 2020):

  1. Optional: Request for Information
  2. Information Supplied
  3. Notification of Chargeback
  4. 1st Chargeback
  5. Information Supplied
  6. Chargeback Reversed
  7. 2nd Chargeback
  8. Arbitration

Mastercard Pre-Arbitration flow

Optional: Request for Information (RFI)

A Request For Information (RFI) is initiated when the cardholder does not recognize or does not agree to a charge, and requests more information from their bank. It can also be initiated in the context of a fraud investigation where the real cardholder does not acknowledge the transaction.
For an RFI, always upload information that can help the cardholder to recognize the charge or that can support your position that the transaction is valid.

At this point, funds are not yet deducted from your account.

Mastercard RFI reasons

A Mastercard RFI will have one of the following reason codes:

Code Message
6305 Cardholder does not agree with billed amount
6321 Cardholder does not recognize transaction
6323 Transaction Information Document (TID) needed for cardholder's personal records expense reporting
6341 Fraud investigation
6342 Potential chargeback or compliance documentation

For an RFI with reason code 6341, Fraud investigation, block the delivery of the goods (if still possible) and block the shopper from performing any future payments.

For RFIs with other reason codes, always upload information that can help the cardholder to recognize the charge, or that can support your position that the transaction is valid.

You can upload information within 18 days of the RFI date. We recommend supplying the following information:

For physical goods

  • Order confirmation/copy invoice.
  • Proof that goods are delivered (DHL/UPS signed proof of delivery).

For digital goods

  • Order confirmation/copy invoice.
  • Proof that services are downloaded or used (date and time of download, IP address, and email address that was used for the download).

Information Supplied

Adyen received your defense documents and forwarded them to the scheme. It is no longer possible to change these documents.

Notification of Chargeback

The issuer initiated a Notification of Chargeback (NoC). The NoC can follow from a Request for Information (RFI), or the RFI step is skipped and the NoC occurs immediately after the payment status is set to Settled or Refunded. The dispute process has started, and money will be withdrawn from your account.
The chargeback debit usually occurs a few days after you receive the NoC.

1st Chargeback

The issuing bank initiates the first chargeback on behalf of the cardholder by sending a chargeback notification to Adyen stating the dispute reason.
We will assign it to you for review in the Disputes tab of the Adyen Customer Area, or inform you via Adyen's notifications. At the same time, your account is debited for the chargeback amount, and the NotificationOfChargeback and Chargeback journals are booked.
After your review, you can decide to either:

Contact Adyen with the relevant defense documents within 40 days. There is no opportunity later in the process to provide information, unless this information was not available before.

Therefore, address the dispute reason code and upload information that can support your position. Only uploading an overview of the order details is not enough. Refer to the list of Mastercard dispute reason codes.

Submitting the defense documents is irreversible. The documents are automatically sent back to the issuing bank, through the credit card network. 

Information Supplied

Adyen received your defense documents and forwarded them to the scheme. It is no longer possible to change these documents.

Chargeback Reversed

The journal Chargeback reversed is booked and the disputed amount is transferred back into your account. The issuer is still reviewing the defense. If they accept, this is the final status.
If they don't accept, disputes with reason codes 4808, 4870, or 4871 go straight to Arbitration.

Pre-Arbitration

If the issuer finds the defense not compelling enough, they escalate the dispute by filing a Pre-Arbitration case within 45 days of the date that the defense was uploaded (the Information Supplied date). Pre-Arbitration applies to all reason codes, except 4808, 4870 and 4871; these disputes go to Arbitration directly if escalated by the issuer.

Adyen reviews the Pre-Arbitration case and either accepts or declines. If Adyen accepts, a Second Chargeback takes place, and the issuer no longer has the option to file an Arbitration case. If Adyen declines, the issuer has the option to file an Arbitration case.

2nd Chargeback

If Adyen accepted the issuer's Pre-Arbitration case, a second chargeback occurs. You can't upload defense documents. This is the final status.

Arbitration

If Adyen declined the Pre-Arbitration and the issuer accepts our response, the case is won. If the issuer doesn't agree with the response, they have the option to file an Arbitration case. This means the dispute is escalated to the card scheme.

Also, escalated disputes with reason codes 4808, 4870, or 4871 go straight to Arbitration.

Arbitration may lead to significant additional costs. The outcome of the Arbitration is decided by Mastercard.

Adyen is not responsible if the card scheme rules in favor of the cardholder.

Deprecated Mastercard flow

The first stages in this flow are the same as in the Pre-Arbitration flow:

  1. Optional: Request for Information
  2. Information Supplied
  3. Notification of Chargeback
  4. 1st Chargeback
  5. Information Supplied

The last stages, Chargeback Reversed, 2nd Chargeback and Arbitration, are different. They are described below.

Chargeback Reversed

The journal Chargeback reversed is booked and the disputed amount is transferred back into your account. The issuer is still reviewing the defense. If they accept, this is the final status.

2nd Chargeback

The issuing bank can initiate a second chargeback on behalf of the cardholder within 45-47 days from the date that the defense was uploaded (the Information Supplied date).

With the second chargeback, funds are withdrawn from your account.

Mastercard doesn't allow uploading documents to defend against a second chargeback. If you have enough information that the second chargeback shouldn't have taken place, contact the Adyen Disputes Team to challenge it.

Arbitration

After receiving the Second Chargeback you must decide whether to pursue the case. If you decide to pursue the case, you must contact the Adyen Disputes Team with supporting information within 40 days of receiving the Second Chargeback. You can provide supporting information at this stage only if this information was not available before. Mastercard allows only one possibility to provide supporting documents to defend against a chargeback: At the First Chargeback stage. Therefore, it is important that you procide the necessary documents at the First Chargeback stage and not later.

If your claim is valid, Adyen will file the case for Arbitration. However, doing so is potentially expensive. Mastercard charges an initial filing fee of EUR 150 and an additional administrative fee of EUR 250. The party that loses the Arbitration case is liable for both fees (on top of the chargeback amount). Mastercard can also charge a fee of EUR 100 for each technical error associated with the case. For example, it's a technical error if the issuing bank changes the reason code for the Second Chargeback, or processes a chargeback outside of the allowed time frame. Mastercard can charge technical error fees against either party, regardless of whether they win or lose the case.

Adyen is not responsible if the card scheme rules in favor of the cardholder.