For companies in the payments sector, chargebacks have long posed a serious problem. They frequently result in reduced revenue, higher operating expenses, and damaged customer relations. The need for efficient dispute resolution has increased significantly as eCommerce grows. In response, Mastercard recently unveiled MasterCard Collaboration, an innovative programme that aims to accelerate the chargeback process by settling disputes earlier.
Mastercard Collaboration is a modern chargeback management strategy. It gives merchants the chance to resolve disputes before they become complete chargebacks. This programme seeks to reduce the time, effort, and expense related to conventional chargeback procedures by encouraging direct communication between issuers, acquirers, and merchants. It’s critical for companies to understand how Mastercard Collaboration functions and how it varies from competing solutions if they want to safeguard their profits and build consumer trust.
This article will explain how to incorporate Mastercard Collaboration into your current fraud protection approach, go over its main features, and contrast it with other chargeback prevention technologies like Verifi RDR and traditional chargeback alerts. This post will give you important insights into how Mastercard Collaboration may help you reduce chargebacks and preserve a great customer experience, regardless of your level of experience with payments.
What is Mastercard Collaboration?
With the help of Mastercard Collaboration, merchants can resolve disputes before they escalate into complete chargebacks. It serves as a form of early warning, alerting merchants when a cardholder disputes a transaction. With this notification, the merchant can evaluate the issue and take appropriate action to address it before it gets worse, usually by providing a refund.
The issuing bank uses the Mastercard Collaboration system to notify the merchant when a dispute is brought up. This alert can be sent via Ethoca Alerts or the merchant’s acquirer, depending on how it is configured. Following that, the merchant has 72 hours to reply in one of four ways:
- Authorize Mastercard to issue the refund on your behalf.
- Indicate that the transaction has already been refunded.
- Choose to handle the refund yourself within the next five days.
- Decide not to refund and let the case proceed to a chargeback.
Mastercard Collaboration aims to promptly and effectively settle disputes in order to prevent the expenses and problems associated with chargebacks. This solution helps merchants preserve their good relationships with customers while protecting their revenue by providing a proactive approach to dispute resolution.
Mastercard Collaboration vs. Verifi RDR
Verifi Rapid Dispute Resolution (RDR) and Mastercard Collaboration both provide strong chargeback prevention options. But the ways in which the two chargeback prevention solutions function are very different, therefore each has a particular set of merchant requirements that it’s more appropriate for a particular set of merchant requirements.
Automation vs Manual Processing
The way refunds are handled is one significant variation. Since Verifi RDR automates the refund procedure, disputes are settled quickly and without the need for human intervention. This can be a big benefit for companies that value promptness and effectiveness when resolving conflicts.
Mastercard Collaboration, on the other hand, needs manual processing. Merchants have 72 hours to consider the dispute to decide the best course of action. This may involve issuing a refund, asking Mastercard to process the refund, or deciding to raise the complaint. Giving merchants the option to review each issue separately gives them greater control over the dispute resolution procedure.
Resolution Time
Verifi RDR offers real-time dispute resolution, resolving issues immediately and avoiding the development of chargebacks. This quick response solution is perfect for companies who want to reduce the amount of time that issues get unanswered.
In contrast, Mastercard Collaboration gives you up to 72 hours to resolve disputes. This longer period of time allows merchants to analyse the dispute in detail and decide on the best course of action, which can be especially helpful in more complicated circumstances.
Pre-Set Rules
Pre-set rules, that can be set by merchants, control what is and isn’t refunded using Verifi RDR. While speed and consistency are guaranteed, some merchants may not get the level of customisation they need from this.
Since Mastercard Collaboration has no automated refunds system, there are no pre-set rules required for this program and merchants are free to establish their own standards for what can be refunded manually.
Chargeback Protection
Chargeback protection is provided by both systems, although under different circumstances. Verifi RDR offers a simple way to prevent chargebacks by guaranteeing that transactions are refunded through the system before they become fully fledged chargebacks.
Mastercard Collaboration offers partial chargeback protection. Chargebacks for refunded purchases are prevented if the correct response is given and the 72-hour response deadline is followed. This gives merchants a higher level of accountability while still giving them the freedom to make decisions based on a case by case basis.
In summary, merchants who value automation and speed should use Verifi RDR, whilst those who prefer a more hands-on approach with more flexibility and control may use Mastercard Collaboration. It is essential to understand these distinctions in order to choose the correct solution for your company’s chargeback prevention strategy.
Mastercard Collaboration vs. Chargeback Alerts
The goal of both Mastercard Collaboration and Chargeback Alerts (such as Verifi CDRN and Ethoca Alerts) is to keep disputes from turning into full-fledged chargebacks, although they operate differently and have different scopes.
Network Coverage
The network coverage is one of the biggest variations. Mastercard, Visa, American Express, Discover, and other card networks are among the many card networks that Chargeback Alert products, including Ethoca Alerts and Verifi CDRN Alerts, cover. This extensive coverage provides a comprehensive solution for organisations with a variety of transaction profiles by enabling merchants to handle disputes across a wide range of payment methods.
Mastercard Collaboration, on the other hand, is a more specialized solution created especially for disputes inside the Mastercard network. Although this restricts its use to Mastercard transactions, it permits more customized functionality and better integration inside the Mastercard ecosystem.
Service Providers
Third-party companies like Ethoca and Verifi enable standard Chargeback Alerts. Either directly with these providers or through a solution provider that interfaces with their services, these alerts are monitored. This configuration can help merchants who want a single platform to handle disputes and a unified solution across several card networks.
On the other hand, Mastercard manages Mastercard Collaboration directly with participating acquirers and processors. By taking a direct role in the process, Mastercard guarantees that it is closely integrated with their systems, which may make the Mastercard network dispute procedure more streamlined and effective.
Refund Process
The way refunds are handled is another important difference. Usually, the merchant or a solution provider handles the refund procedure when using Standard Chargeback Alerts. This allows merchants a degree of control over the timing and manner of refunds, but it also makes them actively participate in every dispute settlement. However, they do also have the option to let the dispute go forward, if they have the belief that the dispute can be overturned.
However, Mastercard Collaboration provides much more versatility. If merchants think the chargeback is unreasonable, they have three options: they can handle the refund themselves, ask Mastercard to handle it, or, in some situations, let the dispute go forward. This flexibility might be especially helpful for merchants who would rather customise their dispute resolution strategies for individual cases.
Fees
These products’ fee schedules vary as well. Chargeback Alerts from Ethoca and Verifi incur fees for each alert that is sent out, and these fees may build up based on how many disputes a merchant handles.
In contrast, Mastercard Collaboration charges a cost for each attempt to stop a chargeback and can charge additional fees for non-compliance if the process is not followed correctly. This may bring new issues to merchants’ attention, but it also emphasizes how crucial it is to exercise caution and react quickly while managing the chargeback within the Mastercard Collaboration framework.
While Mastercard Collaboration and Standard Chargeback Alerts share the goal of preventing chargebacks through early dispute resolution, their distinctions in cost structures, network coverage, management, and refund procedures allow them to serve distinct business requirements. While Standard Chargeback Alerts give broader coverage across several card networks through reputable third-party providers, Mastercard Collaboration offers a more specialized, customisable solution within the Mastercard network.
Key Benefits of Mastercard Collaboration for Merchants
Reduced Chargebacks
The power of Mastercard Collaboration to significantly lower the number of chargebacks is one of its most important benefits. Merchants are able to resolve customer issues prior to the start of a chargeback by being notified in advance of disputes. In addition to safeguarding the merchant’s chargeback ratio, this proactive strategy assists in preventing the high costs and lost income that come with chargebacks.
Streamlined Dispute Resolution
Merchants can detect and address problems more quickly thanks to Mastercard Collaboration, which gives them quicker access to comprehensive data regarding disputes. When merchants have access to detailed data up front, they may identify issues and take action more quickly, resolving disputes before they become chargebacks.
Cost Savings
The option to cancel some orders before fulfilment allows merchants to save money. Merchants can stop shipments, save money on delivery costs, and maintain inventory levels by settling disputes early. By doing this, unwanted operating expenses that would have been wasted on chargebacks are decreased.
Enhanced Customer Experience
The customer experience is immediately impacted by a faster, more effective dispute resolution procedure. By addressing customer concerns quickly and amicably through Mastercard Collaboration, merchants can reduce customer irritation and the possibility of negative reviews. This promotes long-term loyalty and helps create a more pleasing relationship with customers.
Conclusion
Mastercard Collaboration provides merchants with an effective tool to lower chargebacks and accelerate the dispute resolution process. By offering more control over dispute resolution and advanced notifications, it helps organisations save time and money by resolving problems before they get out of hand. This system’s adaptability and proactive attitude can greatly enhance a merchant’s chargeback mitigation strategy.
We at PayShield are aware of the difficulties in handling disputes and preventing chargebacks. Get in touch with us to find out how we can help you safeguard your earnings and improve the clientele you serve.
