The Mastercard chargeback process
Just as each card network has its own set of codes, it also has a specific process for disputing transactions. Either the cardholder or the issuer can initiate the process.
For Mastercard, the transaction process consists of the following steps:
- During the first presentment stage, the acquirer submits the transaction to the issuer for posting to the cardholder's account.
- The cardholder and issuer have the opportunity to dispute the first presentment. If either chooses to do so, they will contact the card issuer or merchant, respectively, with the claim.
- At this point, either the cardholder or issuer has the option of pursuing a retrieval request, in which the party requests a copy of the sales receipt and any other documentation to use in support of the claim. This step is generally optional, since most chargebacks do not require a retrieval request.
- If a retrieval request isn't requested or doesn't resolve the issue, the issuer then submits the chargeback using the appropriate reason code.
- The merchant may choose to either accept the chargeback or represent the charge. If a second presentment is submitted to the issuer, it should include information demonstrating that the chargeback doesn't fulfill the requirements of its reason code.
- If either the merchant or the acquirer doesn't accept the issuer's decision, they may file for arbitration, at which point Mastercard will step in, review the dispute, and make a final decision.
Common Mastercard chargeback reason codes
There are many chargeback codes that MasterCard uses in order to organize and streamline its chargeback process. Here are just a few of the most common Mastercard chargeback reason codes, as well as potential solutions for handling them.
4808: Authorization not obtained
Here, the charge did not go through because of authorization issues. This is common when authorization is invalid or incorrect (wrong account information, pin, etc.), the transaction was processed after authorization for the card was declined, the account number is incorrect, or the card has expired. The best solution is to avoid conducting transactions over the phone, since that’s the most likely scenario for human error. In addition, don’t override declined transactions and always be sure to double-check the account information details before processing the card.
4834: Point of interaction error
If the same transaction was billed more than once, the issuer will assign this reason code. To avoid this, only submit the transaction and a copy of the sales receipt once. Don’t submit the transaction to more than one acquirer, and void the transaction if the cardholder decides to use a different form of payment. This code also covers a charge that doesn't match the amount on the receipt.
4837: No cardholder authorization
The cardholder may claim that the transaction was processed without proper authorization. Avoid this by not accepting expired cards as payment, and not overriding declined or voided cards. You can also match the signature on the back of the card to the cardholder’s ID. In eCommerce, a combination of the various anti-fraud tools available will be your best defense against these chargebacks.
4853: Cardholder Disputes
This is the big one. It covers most non-fraud claims the cardholder might make. Some of the more common ones are "goods or services not provided," "goods/services not as described or defective," and "cardholder dispute of a recurring transaction."
Shipping all items with tracking and delivery confirmation and communicating clearly with customers about expected shipping times and any delays that occur will help prevent "not provided" chargebacks.
Cardholders will often claim that the goods or services were damaged, defective, or improperly marketed, which entitles them to a chargeback. Honest and transparent marketing will reduce this problem, as will proper packaging and shipping. It’s also wise to create a simplified return process for damaged goods in order to cut customer dissatisfaction and reduce the hassle of handling the chargeback.
The cardholder may claim that the merchant continued to bill the card after a recurring transaction was cancelled or without explicit notification to the cardholder. Constant communication with the customer can significantly reduce these chargebacks, as can a transparent, no-strings attached cancellation policy.
4870: EMV Liability Shift
This reason code covers chargebacks related to the EMV liability shift, which leaves merchants liable for fraudulent transactions in which the card had an EMV chip, but the merchant processed the transaction without using it. To avoid this, never use the magnetic stripe on a card with an EMV chip.
Know what's causing your chargebacks
Understanding and keeping track of your chargeback reason codes can help you figure out why chargebacks are happening, and take efforts to prevent them.
A high amount of chargebacks with a particular reason likely indicates a problem with some part of your business that you need to address. Monitoring your chargebacks for any changes can also help you identify any new problems that pop up quickly, so you can address them before they do too much damage.
FAQ
How many chargeback reason codes are there?
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