Mastercard Chargeback Process & Updates

Similarly to Visa’s VCR (Visa Claims Resolution) Mastercard has announced it is also updating and simplifying its dispute resolution process.

At first sight, the chargeback processes of the two card associations are very much alike, the only difference being the terminology they use. Here is what Mastercard’s chargeback process looks like:

  1. First Presentment – cardholder’s purchase, i.e. original transaction.
  2. First Chargeback – disputed transaction (by cardholder or issuer). The disputed funds are withdrawn from your merchant account and transferred back to the cardholder’s account.
  3. Second Presentment – merchant resubmits the transaction with evidence to counter the chargeback.
  4. Second (Arbitration) Chargeback – provided evidence does not resolve the cardholder – merchant dispute and the issuer charges the transaction back to the acquirer.


The parties involved could not reach an agreement; thus Mastercard will resolve the dispute in an arbitration process.

Recently, Mastercard has announced its plans to enhance the capability to prevent invalid disputes from entering the Mastercard Network, as well as expediting and simplifying the dispute resolution process.

This initiative has rolled out in three phases:

12 October 2018

Mastercard requires cardholder letter or email as supporting documentation in first chargebacks for chargeback reason code 4863 (Cardholder Does Not Recognize). Documentation must be a direct result of cardholder communication. Cardholder letter, email or a form will also be required for Disputes reason codes involving Digital Goods and Recurring Payment transactions.

12 April 2019

Mastercard reduces first chargeback timeframes from 120 days to 90 days for reason code 4834 Point of Interaction Error disputes. Fraud, Authorization-related, and Cardholder Disputes chargeback time frames remain unchanged.

Chargeback rights for these reason codes have been eliminated and invalid:

  • 4840 (Fraudulent Processing of Transactions)
  • 4863 (Cardholder Does Not Recognize)

Unjust enrichment associated with credits issued before or after a chargeback and/or after a second presentment will not be allowed via a pre- or compliance case and must be resolved via the chargeback management process.

17 April 2020

The arbitration chargeback cycle will be removed. As part of this change, some Fraud and Cardholder Dispute situations, such as requiring or involving progressive letters and expert opinion letters, will be required as part of the pre-arbitration process.

Notwithstanding these changes, the merchant chargeback response process is remaining the same, and we will continue to support you through it. Please, remember that a detailed chargeback rebuttal letter and compelling evidence need to be submitted to us within the given deadlines (typically 5 business days).

In case you have any questions regarding the Mastercard dispute resolution process, do not hesitate to contact your Account Manager.


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