1. Mastercom® Dispute Resolution
Expedite resolution, reduce chargebacks and enhance the customer experience
September 4, 2019
Colin McGrath
Cyber & Intelligence Solutions – North America

2. Mastercom dispute resolution
$12B in losses for US issuers due to chargebacks1
Over 76% of US consumers contact their bank instead of the merchant for a refund1
US issuer aggregate cost due to dispute-related customer service calls is $2B per year3
Chargebacks are a significant and growing problem for financial institutions and merchants
Financial Institutions
$19B in US eCommerce losses and costs due to chargebacks1
US merchants see friendly fraud is 34% more prevalent in digital vs. POS channel1
Chargebacks on avg. cost US merchants $2.48 to $2.82 –which is about 2X more than the transaction1
75% of merchant fraud is a result of friendly fraud2
Investigating and resolving a single dispute or chargeback can cost $20-$254
©2019 Mastercard. Proprietary and Confidential
Merchants
1. JAVELIN. THE CHARGEBACK TRIANGLE Aite. Global chargeback landscape rapidly evolving Julie conroy, aite. Tackling retail fraud with technology.techtrends.com Mercator advisory group. Credit card dispute management: transactions in the billions bring expectations in the missions

3. Mastercom dispute resolution
More digital transactions leads to more false declines, friendly fraud and chargebacks
Consumer “Friendly” Fraud
False Declines
Chargebacks
63% of US cardholders decreased patronage with retailer after experiencing at least one decline because of suspected fraud1
Merchants lose out on $118 billion in sales due to false declines each year3
US Friendly fraud rose 41% in the last two years4
Nearly 50% of US chargebacks experienced by digital merchants are thought be a result of friendly fraud1
US friendly fraud victims doubled in 2018 – equaling 15% of all fraud victims4
For every $1 disputed, US merchants and issuers incur $1.50 more in chargeback costs1
Operating costs from chargebacks impact profits up to 20%2
$2.4 billion in combined operational costs of chargebacks – equaling 20% of US issuer losses1
©2019 Mastercard. Proprietary and Confidential
1. JAVELIN. THE CHARGEBACK TRIANGLE AITE. THE GLOBAL CHARGEBACK LANDSCAPE: RAPIDLY EVOLVING chargebacks911. chargeback stats for American banker. Friendly fraud is on the rise

4. Mastercom dispute resolution
Warranting continued investment and innovation in chargeback management
$20-$25 of an issuer’s budget goes to the investigation and resolution of a single dispute2
Issuer and merchant costs to manage disputes continue to rise
Acquirers and processors are charging merchants to service chargebacks
$31 Billion
75% of total fraud losses are from chargebacks and friendly fraud3
High customer frustration with dispute experience and false declines
Explosive growth in associated friendly fraud costs
in total US financial institution and merchant losses due to chargebacks1
Rapid payment innovation and new market entrants focused on consumer experience
Digital giants driving industry change for brand-agnostic solution
76% of US cardholders contact their bank instead of the merchant for a refund1
1 JAVELIN. THE CHARGEBACK TRIANGLE Mercator advisory group. Credit card dispute management: transactions in the billions bring expectations in the missions Aite. Global chargeback landscape rapidly evolving

5. Mastercom dispute resolution
Mastercom’s three-step strategy to reduce chargebacks in the payments ecosystem 1 2 3
Check
for invalid chargebacks
Consolidate
disputes
Collaborate
with merchants
©2019 Mastercard. Proprietary and Confidential
Mastercom rules engine helps to remove friction caused by invalid chargebacks
Mastercom Claims Manager merges dispute processes into one platform
Mastercom Collaboration bridges the gap between merchants and issuers

6. Mastercom dispute resolution
Manage disputes from end-to-end throughout the lifecycle
MASTERCOM
CLAIMS MANAGER
Creates and tracks disputes from end-to-end throughout the entire lifecycle 1 2
Enables dispute initiation of chargebacks, re-presentments and retrieval requests in place of customer-supported back-office systems
USER INTERFACE
API INTEGRATION
TRANSACTION RESEARCH
DISPUTE INITIATION
DOC & NON-DOC DISPUTES
CLEARING INTEGRATION
ISSUER
ACQUIRER
Manages all dispute cycles within single “claim” until closure
RULES ENFORCEMENT
F&LD INTEGRATION
REVERSAL/FEE COLLECTIONS
FORMS AUTOMATION
DASHBOARD & REPORTING
Integrates with customer platforms to provide multiple access options via user interface or Mastercard API 4 3

7. Mastercom dispute resolution
Streamline disputes from initiation to close
Mastercom Claims Manager:
Manages all dispute types regardless of documentation support requirements
Auto-populates and selects Expedited Billing Dispute Form
Reports fraud accounts to Fraud & Loss Database
Enables users to supply support documentation at time of dispute initiation
Locates and auto-populates details into chargeback record creation via transaction research tool
Supports reversal and fee collection record submissions
Provides helpful validation/reminder prompts and auto-managed deadline controls throughout the dispute process
Applies appropriate reason codes to prevent invalid chargeback initiation
Provides comprehensive dashboard reporting including summaries, trend analysis and case history

8. Mastercom dispute resolution
Rules-based chargeback decisioning reduces dispute complexity and processing time
Reduces complexity within dispute channel and shortens processing time frames +
Blocks invalid chargebacks from the network +
©2019 Mastercard. Proprietary and Confidential
Leverages authentication data to drive dispute decisioning*
*Future capability 8

9. Mastercom dispute resolution
Avoid chargebacks by sharing dispute insights prior to formal chargebacks for quicker resolution
Mastercom Collaboration: 1
Bridges dispute communication between consumers, issuers, acquirers, and merchants 2
Integrates with issuer dispute websites to provide collaboration between issuers and merchants 3
Alerts merchants of disputes prior to formal chargeback cycles so they can quickly respond and resolve consumer inquiries 4
Provides near real-time dispute data visibility to support merchants’ just-in- time shipping decisions 5
Informs merchants with account data insights based on active fraud chargeback activity 6
Improves the consumer experience with fast, final, once-and-done dispute resolution

10. Mastercom dispute resolution
Collaborate to reduce operational costs and improve the consumer experience by avoiding lengthy chargeback cycles
MASTERCOM
COLLABORATION
Assigns claim number to all disputes to facilitate transaction lifecycle transparency
Acts as source of record for all claims/disputes
Enforces data-driven rules leveraging authorization and clearing records
Blocks invalid chargebacks
Enables transaction lifecycle transparency for merchant-refunded disputes to block potential trailing chargeback initiation
Facilitates credits between parties including merchant issuance of consumer credits
Updates F&LD
Does not move funds
CONSUMER
ISSUER
ACQUIRER*
MERCHANT
RESOLUTION YES/NO
*ACQUIRERS INTEGRATED INTO COLLABORATION IN 2020

11. Mastercom dispute resolution
Collaboration enables dispute insights for quick resolution
COLLABORATION
(via Mastercom or direct-to-Ethoca)
CONSUMER
ISSUER
MERCHANT
Initiates first chargeback in Mastercom Claims Manager
Mastercom places first chargeback in “pending” status and sends to the Ethoca merchant network
Receives first chargeback notification
Initiates dispute
Sends confirmed fraud notification direct to Ethoca merchant network
Ethoca sends alert to merchant network
Receives Ethoca alert
RESOLUTION – MERCHANT REFUND
Mastercom changes chargeback status from “pending” to “rejected”
Receives refund from merchant
Views merchant refund details in Mastercom TQR4 report, UI, or API
Processes refund directly to consumer
Ethoca sends alert refund status to issuer
Receives dispute status updates from issuer
Processes chargeback in Mastercom Claims Manager
NO RESOLUTION
Does not refund consumer
Mastercom immediately changes chargeback status from “pending” to “processed”, funds move in Clearing

12. Mastercom dispute resolution
Reduce chargebacks and improve the customer experience with prompt, efficient dispute resolution
Save an average of 20% in chargeback processing costs, increasing automation and productivity with consolidated dispute processing that significantly shortens resolution and cycle processing timeframes
Reduce chargeback volumes an average of 20%, collaborating to resolve disputes outside of chargeback cycles
Resolve friendly fraud disputes within hours to a few days,
pre-empting disputes from advancing to chargebacks and saving weeks, or even months, of dispute mitigation
©2019 Mastercard. Proprietary and Confidential
Avoid losses with real-time account data insights, supporting just-in-time merchant shipping decisions
Mastercom Dispute Resolution can help issuers, acquirers and merchants with their bottom line
Bottom line = Mastercom

13. Mastercom dispute resolution
Flexible implementation meets customer needs
Participation
Implementation
Mastercom dispute processing (including Claims Manager and Collaboration) is mandatory for all Mastercard issuers, processors and acquirers for all chargeback-related transactions (acquirers integrated into Collaboration in 2020)
Issuers and acquirers must be migrated to Mastercom Claims Manager to participate in Collaboration
Direct-to-Ethoca issuing customers are required to contact Ethoca to participate in Mastercom Collaboration
No customer enrollment forms required
Mastercom Hosted or Pro implementation configurations available based on issuer/acquirer needs
Claims Manager available with both Mastercom Hosted and Pro implementation configurations
Issuers/acquirers can access Claims Manager via API or User Interface
Issuers/acquirers must setup an implementation project with CIS for Claims Manager migrations
Mastercom Collaboration connects issuer disputes directly to merchants with no technical changes required to migrate to Mastercom Claims Manager
Merchants may optionally choose to participate in Collaboration directly through Ethoca; they may participate through their acquirers in 2020
Merchants must contact Ethoca to request access to Mastercom Collaboration
All merchants must be onboarded with Ethoca to participate in Collaboration; new merchants are onboarded regularly
Issuers/
Acquirers
Merchants

14. > A roadmap for innovation 2018 2019 2020 Beyond Collaboration
Mastercom dispute resolution
A roadmap for innovation
>
2018
2019
2020
Beyond
Claims Manager
Claims Manager functionality in Mastercom
Fraud & Loss Database (confirmed Fraud) integration with Claims Manager
Rules-based decisioning
Customer migrations to new Claims Manager platform complete (Claims fee required)
Installment chargeback processing (21 mos) (LAC - select markets)
Enhanced reporting with additional data elements (including error description)
Single message dispute integration with Mastercom
Batch processing retired
On-soil processing support
Open banking support
Masterpass QR and push payment chargeback automation
Optional payment types (i.e. ACH)
Collaboration
Ethoca acquisition
Collaboration Phase 1 - issuer and merchant participation (first chargeback sent to Ethoca’s merchant network)
Merchant onboarding in Ethoca ONLY
Collaboration Phase 2 – acquirer participation (near-real-time communication between issuer/acquirer or merchants)
Digital receipt support