program: Chargeback Handling
- authority: Mastercard SPME §10.1, §10.3, §10.4, and §11.5
+ authority: Mastercard SPME §8.4.7, §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
    - fraud_and_chargeback_data_analysis
  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 evidence requirement for fraud and chargeback data analysis to address new MATCH reason codes
- # related to excessive chargebacks and fraud ratios as introduced in Mastercard SPME §11.5 update,
- # supporting compliance with chargeback management standards per Mastercard SPME §10.1 and §10.3.
+ # Updated authority to include Mastercard SPME §8.4.7 reflecting the removal of issuer's 120-day
+ # chargeback period and Mastercard's ability to extend acquirer's chargeback responsibility
+ # for questionable merchants, necessitating review of chargeback handling for reason code
+ # 4849—Questionable Merchant Activity to ensure acquirer assumes full responsibility per latest standards.

Chargeback Handling

Chargebacks are cardholder-initiated disputes against a transaction. Halyard Pay, acting as the acquirer, manages disputes from initial presentment through potential arbitration, adhering to arbitration in compliance with Mastercard's requirements to protect requirements, ensuring protection for all parties involved.

Lifecycle overview

Disputes progress through defined phases: first presentment, chargeback, second presentment (re-presentment), pre-arbitration, and arbitration. Compliance with evidence standards and timelines at each step is essential to prevent adverse rulings.

Required actions

1. Acknowledge incoming chargebacks within one business day.

2. Gather necessary evidence relevant to the dispute stage.

3. Submit second presentments when liability is disputable, supported by strong documentation.

4. Escalate to pre-arbitration and arbitration only after issuer rejection of second presentment.

5. Retain comprehensive case documentation for auditing and reporting purposes.

6. Provide all requested documentation promptly to Mastercard during investigations or appeals as governed by sections 10.3 and 10.4 of the Mastercard SPME.

Monitoring and Risk Factors

Halyard Pay evaluates merchant risk using updated Mastercard MATCH Listing Reason Codes, including new, specific definitions for elevated chargeback and fraud concerns:

• Laundering: Merchant presenting invalid transaction records rather than bona fide sales.

• Excessive Chargebacks: Monthly Mastercard chargebacks exceed 1% of sales transactions with total chargebacks ≥ USD 5,000.

• Excessive Fraud: Fraud-to-sales ratio of 8% or more, with at least 10 fraudulent transactions totaling USD 5,000+ in a calendar month.

Additionally, when Mastercard identifies a merchant as "Questionable Merchant" in a Mastercard Announcement, it specifies a chargeback period of at least one year. If Halyard Pay continues to acquire from the identified merchant beyond this announcement, Halyard Pay assumes full responsibility for all valid chargebacks under reason code 4849—Questionable Merchant Activity—during this chargeback period. Unlike previous procedures, issuers no longer have a 120-day limitation to lodge such chargebacks, and Mastercard may extend this chargeback responsibility period. This revision requires Halyard Pay to adjust its chargeback management procedures accordingly to ensure ongoing compliance.

These clarified definitions, part of Mastercard's definitions and updated responsibilities, outlined across Mastercard SPME MATCH Listing Reason Codes (see section sections 8.4.7 and 11.5), among others, guide Halyard Pay’s risk assessments and chargeback management handling protocols to align in alignment with Mastercard’s evolving standards.

Source authority: Mastercard SPME §§10.1, §§8.4.7, 10.1, 10.3, 10.4, 11.5.