MasterCard Chargeback Stages
Visa and MasterCard process chargebacks in a similar way, with the biggest difference being the codes used by the two payment networks. This article will review the stages in MasterCard’s chargeback cycle.
The chargeback cycle begins with the presentment for clearing and settlement of a transaction from the processing bank to the issuer. If, for a specific reason, the issuer determines that the transaction may be invalid, the issuer may return it to the processor as a chargeback. When an issuer has billed a transaction to its cardholder’s account for payment and then initiates a chargeback, the issuer credits the cardholder’s account for the amount of the chargeback, so that, if the chargebacks is accepted by the processor, the issuer does not get reimbursed twice for the same transaction.
Each individual charged-back transaction is processed in the following fashion:
- First Presentment / 1240.
- First Chargeback / 1442.
- Second Presentment / 1240.
- Arbitration Chargeback / 1442.
- Arbitration Case Filing.
Additionally, if an issuer needs a copy of the sales receipt, the retrieval process has two steps – Retrieval Request and Retrieval Fulfillment. The retrieval process also may include Image Review.
The following table lists the stages of a transaction when the issuer initiates a chargeback.
| Stage | Description | MTI-Function Code(s) |
| First Presentment | The processor submits the transaction to the issuer. | 1240-200 |
| Cardholder or issuer disputes the first presentment. | ||
| Retrieval Request | The issuer may request a copy of the sales ticket to support or identify a potential chargeback.
|
1644-603 |
| First Presentment | The processor submits the transaction to the issuer. | 1240-200 |
| Chargeback | Issuer initiates a chargeback within the time frame applicable to the specific message reason.
|
1442-450 (full amount)
|
| Second Presentment | When applicable, the processor may process a second presentment within 45 calendar days of the business date of the chargeback. | 1240-205 (full amount)
|
| Arbitration Chargeback | When applicable, the issuer may initiate an arbitration chargeback within 45 calendar days of the business date of the second presentment. | 1442-451 (full amount)
|
| Arbitration Case Filing | The processor may file an arbitration case to MasterCard, for a decision on the dispute, within 45 calendar days of the business date of the arbitration chargeback. | n / a |
Image credit: Diariomarca.com.mx.
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