program: Chargeback Handling
- authority: Mastercard SPME §10.1 and §11.5
+ authority: Mastercard SPME §10.1 and §11.5 and §8.4.7
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.
+ # Added handling for chargeback reason code 4849 concerning Questionable Merchants.
+ # Acquirers must accept chargebacks for at least one year following Mastercard's
+ # public identification of a Questionable Merchant, per Mastercard SPME §8.4.7 updates.
+ # Issuers have 120 days from announcement to initiate these chargebacks.
+ # This new requirement extends the timeline and scope of chargeback processing responsibilities.

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.

Additionally, when Mastercard publicly identifies a merchant as a Questionable Merchant, Halyard Pay recognizes that the acquirer assumes responsibility for all valid chargebacks related to this merchant under reason code 4849—Questionable Merchant Activity—for a minimum period of one year from the announcement date. Mastercard may extend this chargeback liability period. Issuers have up to 120 days after the announcement to file chargebacks for fraudulent transactions occurring within the specified period. Halyard Pay will incorporate this extended chargeback timeline into its monitoring and response procedures for Questionable Merchants.

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.

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

Source authority: Mastercard SPME §§10.1, §§8.4.7, 10.1, 11.5.