Discover Card: 2019 Dispute & Chargeback Mandates

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Merchants who process credit card payments have another mandate to comply with this year. Following in the footsteps of Visa and Mastercard, Discover has issued a mandate of their own, which is changing the way cardholder disputes are handled. Parts of the mandate went into effect back in April, with even more rule changes set to take effect in October 2019.

If you don’t accept Discover Card payments, you can breathe a sigh of relief and go back to not worrying about this mandate, but merchants who to process Discover transactions must prepare once again to learn the rules and requirements of a new card network mandate and update their policies and procedures accordingly. Mandate compliance may be a headache, but in most cases it results in better, fairer handling of disputes.

Let’s take a look at what is changing under Discover Card’s new mandate, and what merchants must do to prepare for the next phase of the mandate set to drop in October.

Here is Discover's breakdown of the new 2019 Discover dispute & chargeback mandates...

Dispute Timeframes – 19.2 Release (October 2019)

Representment: The timeframe for Acquirers to initiate a Representment Request is reduced from 45 – 30 calendar days.

Dispute Arbitration: The timeframe for Issuers to initiate a Dispute Arbitration Request is reduced from 30 – 10 calendar days.

Dispute Impact
The reduction in dispute timeframes aligns with the industry and the Request/Response dispute stages are equalized between Issuers and Acquirers

ProtectBuy Fraud Liability Shift

19.1 Release (April 2019)
If an Acquirer/Merchants uses ProtectBuy version 1.0.2 to initiate a ProtectBuy Authentication Request for a Card Not Present Card Sale and the Issuer is certified to use ProtectBuy version 2.0, the ProtectBuy Authentication Request will be declined and the Card Not Present Card Sale may be subject to Dispute.

Dispute Impact
If the ProtectBuy Authentication Request is declined and the merchant still processes the transaction the Card Sale may be subject to Dispute.

19.2 Release
Card Not Present Card Sales by Acquirers or Merchants operating in the following three (3) additional MCCs that use Discover ProtectBuy and receive a ProtectBuy Authentication Response of “Authentication Successful” or “Authentication Attempted” may be subject to Dispute:

  • 6540 -Non-Financial Institutions
  • 7801 -Government Licensed On-Line Casinos
  • 7802 -Government Licensed Horse/Dog Racing

Dispute Impact
The MCCs may use Discover ProtectBuy for authentication responses may be subject to dispute.

Transit Transaction Aggregation

  • Enables contactless acceptance at transit agencies (specific MCCs) adopting use of contactless bank products to enter and provide payment information using contactless taps
  • A nominal amount authorization is used to aggregate multiple journey fares
  • Combines multiple taps / journeys from the same card / device into a single settlement transaction
  • Leverages Contactless Chip Payment Device

Dispute Impact
Issuer may initiate a dispute when the transaction amount exceeds $15 and the settlement is beyond 14 calendar days.


So what do the Discover dispute/chargeback mandates mean for merchants in 2019?

Disputes and Chargebacks

The most significant change to look out for in October is the change to dispute timeframes. Merchants who fight chargebacks should take particular note of this. When this part of the mandate goes into effect, the timeframe for acquiring banks to initiate a representment request in response to a chargeback will be reduce from 45 to 30 calendar days.

Beyond representment, the timeframe for dispute arbitration is shrinking as well.

Effective in October, issuing banks will have 10 days to initiate a dispute arbitration request, down from 30 days previously.

Discover’s reason for shortening these timeframes is to align with industry standards and equalize the request/response stages between issuing banks and acquiring banks.


ProtectBuy and Fraud Liability

ProtectBuy is Discover Card’s 3-D Secure 2.0 implementation. Like Verified by Visa and Mastercard SecureCode, ProtectBuy is a method of authenticating cardholder identity that serves to protect consumers from online fraud. One compelling reasons for merchants to adopt ProtectBuy and other 3-D Secure technology (aside from the fact that it protects their customers, of course) is merchants are not liable for chargebacks filed against 3-D Secure transactions for Fraud related chargebacks.

Part of this aspect of the mandate already took effect in April 2019.

Fight & Recover Chargebacks - Get The GuideIt stipulates that if acquirers or merchants use an earlier release of ProtectBuy (version 1.0.2) to initiate a ProtectBuy authentication request for a Card Not Present sale, and the issuing bank is certified to use ProtectBuy version 2.0, the authentication request will be declined.

The merchant may go on to process the transaction without ProtectBuy, but if the cardholder disputes the charge, the merchant will be liable.

When the next part of the mandate goes into effect in October 2019, several Merchant Category Codes will no longer be free from dispute and chargeback liability for their transactions carried out under ProtectBuy, even if they were processed with successful or attempted ProtectBuy authorization requests:

  • 6540—Non-Financial Institutions
  • 7801—Government Licensed Online Casinos
  • 7802—Government Licensed Horse/Dog Racing

While this may not represent a large segment of the ecommerce sector, merchants who fall under these MCCs will definitely want to make a note of this important change.

Transit Transaction Aggregation

With an eye to the future of transportation (and the ways in which harried commuters will want to pay for it), Discover is allowing some companies that serve as transit agencies (as identified by the transit-related MCCs they fall under) to process transactions in a streamlined manner.

Specifically, Discover is enabling contactless payment processing by allowing these companies to utilize bank products that store and provide payment information through the use of contactless taps.

Transit customers can use their payment cards, smartphones, or any device equipped with the required RFID technology to “tap” a point-of-sale terminal properly outfitted to receive and process the payment information transmitted by the device.

In other words, instead of requiring passengers to run their actual credit cards through a card reader to purchase tickets and fares, they can simply tap their payment device against the payment reader on their way to board the mass transit vehicle.

Because commuter trips will often involve more than one stop or transit vehicle, payment processing is greatly simplified when multiple fares can be aggregated into a single settlement transaction. To facilitate this, Discover will make a nominal amount authorization to aggregate multiple journey fares. Multiple taps on the same card or device will then be processed as one transaction.

This change leverages the advantages of contactless chip payment devices to cardholders’ advantage. Merchants in the transit sector must keep in mind that issuing banks will be permitted to initiate disputes for settlement transactions that exceed $15, once 14 calendar days have passed.


Most merchants will be pleased to see that Discover Card’s mandates are less far-reaching and impactful than the ones recently handed down by Visa and Mastercard. The most important part of the mandate for the average Discover-accepting merchant is change to dispute liability under ProtectBuy. If you accept Discover cards and use ProtectBuy, it is imperative that you upgrade to the latest version. And if you don’t use ProtectBuy, you should! 3-D Secure technology is a very important tool in the fight against chargebacks.

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