Mastercard Chargebacks

A chargeback is the reversal of a credit card transaction, returning to your account the money that you paid, due to a payment dispute raised with the bank that issued your card. Mastercard chargeback rules were established by credit card professionals for bank dispute departments. Cardholders, therefore, may find them rather confusing at first inspection. So let us try and explain them.

The right to a chargeback is based on laws passed in the United States in the 1970s offering cardholders certain consumer protections, but these laws were implemented very differently by the various card networks. So while they are all compliant with the relevant laws and regulations, the Mastercard chargeback guide is nevertheless totally different from that of Visa. If you ever need to chargeback Mastercard transactions, familiarizing yourself with the process will help improve your chances of success.

When America passed the Fair Credit Billing Act in 1974, it marked the beginning of consumer protections for credit card holders. Four years later, the Electronic Fund Transfer Act of 1978 gave similar protections to holders of debit cards. It was then left to the various companies to make the appropriate changes to reflect the legal landscape.

Debit cards and credit cards give consumers different protections, since as mentioned above they are based on different laws. However, for ease of use and a simpler and more streamlined process, the Mastercard chargeback guide implemented a unified set of policies for both debit and credit cards.

Since, like Visa, Mastercard is a multinational corporation with its headquarters in the U.S., it needs to make sure that its rules and policies are compliant with American laws and financial regulations. In addition, the Mastercard chargeback rules are adapted to comply with the local laws and regulations for many of the world’s countries and jurisdictions for the sake of cardholders, banks, and merchants there.

Mastercard traces its origins back to the late 1950s, and grew into its present structure between the 1960s and 1970s, the same time that its arch rival Visa was taking form. 

Mastercard Chargeback Guide

The first criterion to understand when dealing with a Mastercard payment dispute is the difference between two basic chargeback categories: fraud and cardholder disputes. Your bank even has separate departments to deal with them. Let’s dig a little deeper so that the distinction can be made as clear as possible.


According to Mastercard chargeback rules, “fraud” applies only to unauthorized transactions. Examples would include identity theft or a stolen credit card or card data.

This kind of use of language may seem upside down and backward to you, and that impression is totally understandable. After all, if you paid good money for goods or services that the merchant never intended to provide you, you would be entirely justified in saying that you were defrauded.

That’s why it’s so important to internalize the professional jargon as used by Mastercard. Logic will get you nowhere when people within an industry are accustomed to using words in a very particular way.

Therefore remember: Fraud in the world of Mastercard always refers to unauthorized transactions. 

Cardholder Dispute

If your chargeback is for a transaction you authorized, it will fall under the cardholder dispute category. The Mastercard chargeback guide recognizes no less than thirteen subcategories of cardholder disputes. The most common ones include:

  • Paying for goods or services that you never received
  • Paying for goods or services but receiving them damaged, of poor quality, or in any way different from how they were promised
  • Continuing to be charged for a membership or subscription after canceling it
  • Having the terms, conditions, or nature of the transaction misrepresented to you

Correctly categorizing your particular dispute is critical, but the rules are complex and the distinctions can be very fine.

Mastercard Chargeback Reason Codes

Regardless of whether your particular dispute is based on fraud or a consumer dispute, your claim with the bank will need to be categorized with the correct reason code. The various card networks follow completely different systems, and in the case of Mastercard, each reason code is a four-digit number, sometimes accompanied by an explanatory phrase.

It can hardly be overstated that you generally do not get a second chance to raise a chargeback, so getting it right the first time is critical. Getting professional help with complex disputes is a very good idea.

Mastercard Chargeback Time Limit

It probably goes without saying that a chargeback needs to be raised within a limited time frame. Somewhat more surprising is the extent to which the Mastercard chargeback time limits are highly complex and confusing. The Mastercard chargeback rules governing time frames are one aspect of payment disputes where even many industry professionals stumble over the finer details.

A good starting point is that the Mastercard chargeback time limit is no later than 120 days from the transaction date. Unfortunately, it is a commonly repeated fallacy that the 120 day rule applies across the board. The truth is that, upon a careful examination of the Mastercard chargeback guide one sees that in some cases, you may have even less time, while on the other hand there are cardholder dispute cases in which you may have as long as 540 days.

If you are involved in a complex Mastercard payment dispute, contact MyChargeBack today for a free no-commitment fund recovery consultation.