In order to keep up with changes in the payment landscape—including fraud tactics payment technology, and customer behavior—all the major card networks occasionally update their rules, issuing new mandates for banks, merchants, and processors when appropriate.
In this article, we'll cover some of the major changes that Mastercard has made to chargebacks in recent years, starting with several changes that were made to specific chargeback reason codes in 2018.
The current versions of Mastercard's rules for merchants can be found here, but given that these documents contain hundreds of pages of information, we're going to break down the latest changes to chargebacks so merchants can be sure they're up to date.
In October of 2018, Mastercard made the following changes:
The following pre-compliance and compliance case filing reasons were removed:
In addition, pre-compliance is now required prior to escalating a compliance case for all applicable compliance filing reasons, cases, products, or transaction types (with the exception of fee collection disputes).
The pre-compliance and compliance case filing deadline was changed from 180 days to 120 days after the central site processing or violation date. For escalated compliance cases, the deadline is 45 days.
The following changes took effect on April 12, 2019:
The arbitration cycle was removed from most dual message processed chargebacks, reducing it from three cycles to two. Arbitration chargebacks are no longer allowed, and applicable documentation requirements were moved to the first chargeback cycle. This change excluded Fraud and Cardholder Dispute reason codes.
Pre-arbitration is required for the following chargeback types before they can be escalated to an arbitration case filing:
For reason code 4834 (Point of Interaction Errors), the first chargeback time limit was reduced from 120 days to 90 days. Point of Interaction Error chargebacks involving ATM transactions still use the 120-day time limit.
In July 2020, Mastercard overhauled their list of reason codes, consolidating most of them into several broad categories, with the text description providing information on the specifics rather than the code itself.
Here's a comparison of the old vs. new reason codes:
Old Reason Codes | Description | New Reason Codes | Description |
Fraud | Fraud | ||
4837 | No Cardholder Authorization | 4837 | No Cardholder Authorization |
4840 | Fraudulent Processing of Transaction | 4849 | Questionable Merchant Activity |
4849 | Questionable Merchant Activity | 4870 | EMV Chip Liability Shift |
4863 | Cardholder Does Not Recognize — Potential Fraud | 4871 | EMV Chip/PIN Liability Shift |
4870 | Chip Liability Shift | Authorization | |
4871 | Chip / PIN Liability Shift | 4808 | Warning Bulletin File |
Authorization | 4808 | Authorization-Related Chargeback | |
4807 | Warning Bulletin File | 4808 | Account Number Not on File |
4808 | Requested / Required Authorization Not Obtained | 4808 | Required Authorization Not Obtained |
4812 | Account Number Not on File | 4808 | Expired Chargeback Protection Period |
Point of Interaction Error | 4808 | Multiple Authorization Requests | |
4834 | Point-of-Interaction Error | 4808 | Cardholder-Activated Terminal (CAT) 3 Device |
4831 | Transaction Amount Differs | Point of Interaction Error | |
4842 | Late Presentment | 4834 | Point of Interaction Error |
4846 | Correct Transaction Currency Code Not Provided | 4834 | Transaction Amount Differs |
4850 | Credit Posted as Purchase | 4834 | Late Presentment |
4999 | Domestic Chargeback Dispute (Europe Region Only) | 4834 | Point-of-Interaction Currency Conversion |
Cardholder Disputes | 4834 | Duplication/Paid by Other Means | |
4853 | Cardholder Dispute – Defective / Not as Described | 4834 | ATM Disputes |
4841 | Cancelled Recurring Transaction | 4834 | Loss, Theft, or Damages |
4854 | Cardholder Dispute – Not Elsewhere Classified (U.S. Region Only) | Cardholder Disputes | |
4855 | Non-receipt of Merchandise | 4853 | Cardholder Dispute of a Recurring Transaction |
4859 | Cardholder Disputes | 4853 | Goods or Services Not Provided |
4860 | Credit Not Processed | 4853 | No-Show Hotel Charge |
4853 | Addendum Dispute | ||
4853 | Credit Not Processed | ||
4853 | Goods/Services not as Described or Defective | ||
4853 | Digital Goods $25 or less | ||
4853 | Counterfeit Goods | ||
4853 | Transaction Did Not Complete | ||
4853 | Credit Posted as a Purchase | ||
4854 | Cardholder Dispute Not Classified Elsewhere | ||
Other | |||
4850 | Installment Billing Dispute (Participating Countries Only) | ||
4999 | Domestic Chargeback Dispute (Europe Region Only) |
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