program: Chargeback Handling
- authority: Mastercard SPME §10.1 and §11.5
+ authority: Mastercard SPME §10.1, §10.3.1, and §11.5
acknowledgement_business_days: 1
lifecycle_states:
  - first_presentment
  - chargeback
  - second_presentment
  - pre_arbitration
  - arbitration
evidence_requirements:
  first_presentment:
    - transaction_receipt
    - authorization_record
  chargeback:
    - merchant_rebuttal_letter
    - delivery_confirmation
    - customer_communication
  second_presentment:
    - compelling_evidence
    - signed_cardholder_agreement
  pre_arbitration:
    - full_dispute_record
    - prior_correspondence
  arbitration:
    - full_dispute_record
    - arbitration_filing
agent_owner: chargeback_agent
 
# Updated to reflect refined definitions and thresholds relating to laundering, excessive chargebacks, fraudulent transactions, and bankruptcy as defined in Mastercard SPME §11.5 (2023 edition).
- # These criteria impact evaluation triggers and risk assessment during chargeback handling.
+ # Also incorporates new forensic investigation reporting timeframes and independence requirements mandated by Mastercard SPME §10.3.1 (2023 edition).
+ # These affect chargeback investigations and obligations related to Account Data Compromise Events.
+ 
+ # Regarding Account Data Compromise (ADC) Event investigations under Mastercard SPME §10.3.1:
+ # - Payment Forensic Investigators (PFIs) engaged must submit a preliminary forensic report within 5 business days from investigation commencement.
+ # - A final forensic report is required within 10 business days following the conclusion of the PFI's investigation, including findings, conclusions, and recommendations.
+ # - Merchants and Customers must not interfere with the independence or completeness of the forensic investigation or reports, including prohibitions on editing reports, restricting PFI communication with Mastercard, or influencing investigation outcomes.
+ # - Mastercard retains the right to engage PFIs directly and the relevant Customer remains financially responsible.
+ 
+ # These requirements supplement existing obligations related to investigation and documentation retention in chargeback handling workflows.

Chargeback Handling

Chargebacks are cardholder-initiated disputes against a transaction. Halyard Pay, as the acquirer, manages the entire dispute lifecycle for its merchants, from initial first presentment through arbitration, in compliance with Mastercard's requirements.

Lifecycle overview

Disputes move through defined stages: first presentment, chargeback, second presentment (re-presentment), pre-arbitration, and arbitration. Adherence to strict evidence requirements and deadlines at each stage is critical to avoid automatic rulings against the acquirer.

Required actions

1. Acknowledge each incoming chargeback within one business day.

2. Collect the necessary evidence based on the current lifecycle stage.

3. Submit second presentments when merchant liability is disputable, providing strong supporting evidence.

4. Only escalate to pre-arbitration and arbitration after issuer rejection of the second presentment.

5. Maintain full case documentation for audits and reporting.

Monitoring and Risk Factors

Halyard Pay monitors merchant risk factors including chargeback ratios, fraud rates, and financial stability. Updated Mastercard MATCH Listing Reason Codes define specific grounds for elevated scrutiny or match listing, including but not limited to laundering (presentation of invalid transaction records), excessive chargebacks (over 1% chargeback-to-sales ratio with minimum USD 5,000 monthly), excessive fraud (fraud-to-sales ratio of 8% or more including at least 10 fraudulent transactions totaling USD 5,000 or more), questionable merchant classification, and bankruptcy.

In addition, for any Account Data Compromise (ADC) event, Halyard Pay follows Mastercard's enhanced requirements from SPME §10.3.1: a Payment Forensic Investigator (PFI) must submit a preliminary forensic report within 5 business days of investigation start and a final report within 10 business days after investigation completion, detailing findings and recommendations. Halyard Pay ensures no party impairs the objectivity or independence of the forensic investigation or report, including prohibiting actions that influence or restrict the PFI's communication with Mastercard or the integrity of the reports. Halyard Pay also assumes responsibility for timely investigations to fully contain ADC events and implements required remediation measures.

These refined definitions and procedural enhancements inform Halyard Pay's chargeback and risk management policies to ensure compliance and mitigate risk exposure.

Source authority: Mastercard SPME §§10.1, 10.3.1, 11.5.