program: Chargeback Handling
- authority: Mastercard SPME §10.1, §10.3, §10.4, and §11.5
+ authority: Mastercard SPME §8.4.3, §10.1, §10.3, §10.4, 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
 
- # Added explicit reference to ongoing customer submission responsibilities during investigations and appeals
- # per Mastercard SPME §10.7 update, incorporating continuing obligations under sections 10.3 and 10.4.
+ # Incorporated Mastercard SPME §8.4.3 guidance on issuer fraud recovery, clarifying threshold criteria for fraudulent transactions,
+ # outlining the process for recovery payments from Acquirer to Issuer accounts, and reinforcing compliance with Mastercard settlement procedures.
+ # This update ensures the chargeback handling program aligns with the updated Mastercard fraud recovery processes.

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.

6. Continuously provide required documentation and information to Mastercard throughout any investigation or appeal process as mandated by sections 10.3 and 10.4 of the Mastercard SPME.

7. Be aware that Mastercard's fraud recovery process includes thresholds for issuer fraudulent transaction volumes under which issuer recoveries are limited (e.g., less than USD 2,000), and that claims approvals require verification of exceeded thresholds and may involve debiting Halyard Pay's acquirer account and crediting issuer accounts as per Mastercard SPME §8.4.3.

## 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, §§8.4.3, 10.1, 10.3, 10.4, 10.7, 11.5.