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Mastercard

Mastercard is the world's second-largest card network (after Visa). Like Visa, they don't issue cards or process payments - they set rules and operate the infrastructure connecting banks. Mastercard's programs have higher thresholds than Visa but shorter response windows.

On this page

What Mastercard Actually Does​

Mastercard is NOT:

  • Your processor
  • Your acquirer
  • A card issuer

Mastercard IS:

  • The network infrastructure (Banknet)
  • The rule-maker for Mastercard-branded cards
  • The operator of MATCH (terminated merchant database)
  • The enforcer of network standards

Same as Visa: You communicate with Mastercard only through your processor, never directly.

Mastercard's Rules That Matter to Merchants​

1. Chargeback Monitoring Programs​

Mastercard's programs are more forgiving than Visa's:

ProgramThresholdConsequences
ECM (Excessive Chargeback Merchant)1.0% ratio + 100 disputes/monthFines ($5K-$25K/month)
HECM (High Excessive Chargeback Merchant)1.5% ratio + 300 disputes/monthHigher fines ($25K-$100K/month)
EFM (Excessive Fraud Merchant)Varies by regionFraud-specific monitoring

Timeframe: Prior month's transactions as denominator (different from Visa's rolling month)

Key difference from Visa:

  • Mastercard: 1.0% threshold (vs Visa's 0.9%)
  • Mastercard: Uses prior month (vs Visa's rolling month)
  • Mastercard: 45-day response window (vs Visa's 30 days)

Typically easier to avoid Mastercard programs than Visa's.

2. Reason Code System​

Mastercard uses a 4-digit reason code format:

Code RangeCategoryCommon Codes
4800sAuthorization4808 (Authorization required), 4834 (POI error)
4830s-4840sFraud4837 (Fraud - no cardholder auth)
4850sConsumer disputes4853 (Cardholder dispute), 4855 (Goods not provided)
4860s-4870sEMV/Chip4870 (Chip liability shift), 4871 (Chip/PIN)

Full breakdown: Mastercard Reason Codes

3. MATCH List (Terminated Merchant File)​

Mastercard operates the MATCH list (Member Alert to Control High-risk Merchants):

  • Database of terminated merchants
  • 5-year listing for most violations
  • All acquirers check before onboarding
  • 13 reason codes for listing

Visa calls it TMF (Terminated Merchant File). Same database.

See: MATCH/TMF List for full details.

4. Response Timeframes​

ActionTimeframe
Representment response45 days (vs Visa's 30)
Pre-arbitration response30 days
Arbitration filing10 days

Mastercard gives you more time to respond than Visa.

Mastercard Network Fees​

Mastercard charges assessment fees on every transaction:

Fee TypeRateWhen Charged
Assessment fee0.1375%All Mastercard transactions
Acquirer brand fee$0.0045Per transaction (US)
Network clearing fee$0.0075Per transaction
Cross-border fee1.0%International transactions

Total network fees: ~0.15-0.30% (similar to Visa)

When Mastercard Intervenes​

1. ECM/HECM Breach​

What happens:

  • Month 1 over threshold: Warning + $5K-$10K fine
  • Month 2 over threshold: $10K-$25K fine
  • Month 3 over threshold: $25K+ fine + mandatory remediation
  • Month 4+ over threshold: MATCH listing likely

Mastercard's enforcement:

  • Fines applied to your processor
  • Processor passes to you (or absorbs if they're nice)
  • Processor may terminate you to stop fines

2. QMAP (Questionable Merchant Audit Program)​

Mastercard's fraud audit program:

  • Triggered by fraud patterns or complaints
  • Requires forensic investigation
  • Can lead to MATCH listing (code 08)

Rare but serious when it happens.

3. Standards Violations​

Mastercard monitors compliance with:

  • PCI DSS requirements
  • Transaction integrity rules
  • Surcharging laws
  • Merchant category codes (MCCs)

Violations: Fines and potential MATCH listing.

Mastercard vs Visa: What's Different​

FactorMastercardVisa
Chargeback threshold1.0% + 1000.9% + 100
Response time45 days30 days
Calculation methodPrior month denominatorRolling month
Reason code format4-digit (4837)2-digit (10.4)
Terminated merchant listMATCHTMF (same database)
Market share25% US, 35% global50% US, 40% global
Assessment fees0.1375%0.14%

For most merchants: Mastercard's higher threshold (1.0% vs 0.9%) and longer response window (45 vs 30 days) make it slightly easier to work with.

Mastercard-Specific Gotchas​

1. Prior Month Denominator​

Mastercard calculates ratio differently:

Visa: Disputes this month / transactions this month (rolling) Mastercard: Disputes this month / transactions LAST month

Impact: Volume drops affect your ratio next month

  • $500K in sales (Month 1)
  • $200K in sales (Month 2)
  • 50 disputes in Month 2
  • Ratio: 50 / $500K (last month) = 0.01% ✅

But:

  • 50 disputes in Month 3
  • Ratio: 50 / $200K (Month 2 sales) = 0.025% ⚠️

Seasonal businesses can spike into ECM during slow months.

2. First Chargeback/Second Chargeback Split​

Mastercard separates:

  • First chargeback: Initial dispute
  • Second chargeback (pre-arb): Issuer challenges your representment

Both count toward ECM threshold. Losing a representment = two chargebacks on your record.

3. Collaboration Initiative​

Mastercard's pre-dispute alert system:

  • Similar to Visa RDR (Rapid Dispute Resolution)
  • Called "Ethoca alerts" (Mastercard owns Ethoca)
  • Deflect disputes before filing

See: Chargeback Alerts

4. Maestro (Global Debit)​

Mastercard owns Maestro (debit card scheme popular outside US):

  • Different rules than Mastercard credit
  • Common in EU
  • Less common in US

If you sell internationally, you'll see Maestro transactions.

Test to Run​

Mastercard monitoring check:

Week 1: Calculate your position

  1. Pull Mastercard disputes from last month
  2. Pull Mastercard transactions from month BEFORE that
  3. Calculate: disputes / prior month transactions
  4. Compare to 1.0% threshold

Week 2: Trend analysis 5. Compare last 3 months of Mastercard ratios 6. Improving or worsening? 7. Seasonal patterns?

Week 3: Response time audit 8. Check your average Mastercard response time 9. Are you using the full 45 days? 10. Faster responses often win more (even though you have 45 days)

Success criteria: Ratio under 0.75%, trending down or stable, average response time under 20 days.

Scale Callouts​

Under $100K/month:

  • Unlikely to hit 100 Mastercard disputes/month
  • Ratio is your risk (1.0% threshold)
  • Keep under 0.7% for safety margin

$100K-$1M/month:

  • Can hit both ratio and count
  • Monitor Mastercard separately from Visa
  • Some months you'll breach one but not the other

Over $1M/month:

  • HECM (1.5% excessive) becomes the threat
  • Mastercard fines are as painful as Visa's
  • Implement prevention tools

Over $10M/month:

  • Both networks monitoring you
  • Need dedicated compliance resources
  • Consider chargeback guarantees for high-risk segments

Where This Breaks​

  1. Prior month calculation hurts seasonal businesses: Holiday spike in December, slow January = high ratio in February when disputes from December hit.

  2. Mastercard gives more time but issuers use it: 45-day window means issuers sometimes take longer to file disputes. Older disputes are harder to defend.

  3. MATCH is permanent: Mastercard's MATCH list follows you for 5 years. Prevention is critical.

  4. International Mastercard is different: Mastercard has higher global market share than Visa outside US. If you're selling internationally, Mastercard volume may exceed Visa.

  5. Digital wallets may route through Mastercard: Apple Pay, Google Pay transactions can be Mastercard-branded. Check your mix.

Next Steps​

Monitoring Mastercard programs?

  1. Chargeback Monitoring Thresholds - ECM/HECM details
  2. Network Programs Reference - All programs
  3. MATCH/TMF List - Terminated merchant database

Understanding Mastercard disputes?

  1. Mastercard Reason Codes - All codes
  2. Compelling Evidence - Evidence requirements
  3. Representment - Response process

Comparing to other networks?

  1. Visa - Stricter thresholds, faster timelines
  2. American Express - Closed-loop differences
  3. Card Networks Overview - All four compared

See Also​