Different types of fees are associated when processing a payment that is made with a MasterCard. These fees have been implemented by the acquirers, card networks and issuers. The Dispute Administration Fee, which is also known as DAF holds a prominent place out of them.

MasterCard would charge the DAF for all the inter-European and intra-European transactions that you do. The DAF for every cycle would be assessed automatically during the dispute process. Then the administration fee would be charged from the receiver and paid to the sender.

What is behind Dispute Administration Fee?

It is important for all the people who use MasterCards for transactions to have a clear understanding about DAF. Their official announcement clearly mentioned the justification for this administration fee. DAF is in a position to keep MasterCard users away from the hassle associated with merchant chargebacks. When the transaction amount was lower than the processing cost of issuer’s chargeback, the issuers will be forfeiting their chargeback rights. This imbalance has the ability to increase the costs of the issuer substantially.

DAF can also work as the incentive suitable for merchants who need to deal with fraud detection. The merchants will have to go through some hassle in order to figure out fraudulent activity on a merchant account. Then they will have to take necessary measures to revert it in order to stay away from merchant business problems. The Dispute Administration Fee can come to their survival in that kind of a situation.

Chargeback prevention comes in

Before the introduction of Dispute Administration Fee, merchants had to go through a lot of issues. In fact, it was a financial burden for them as they didn’t have any convenient method for chargeback prevention. DAF came out in order to provide a convenient solution to the above mentioned merchant business problem. As a result, the merchants have got the opportunity to stay away from loss of revenue. In addition, they don’t need to bear any financial losses that are associated with these disputes.

As you can see, Dispute Administration Fee is in a position to incentivize the merchants who go through dispute chargebacks, which can create a negative impact on their profits. Unfortunately, they still don’t have a clear understanding about the entire process that needs to be followed in order to compile the compliant cases.

It is important to have a clear understanding of DAF

As per the regulations of the MasterCard, issuers are provided with the right to issue an arbitration chargeback at any time they want. Then the financial institution will dispute the validity of the original transaction. If the issuer change the chargeback reason code or obtain new information from the cardholder, this could happen. It can also take place when the documents submitted by the merchant are incomplete or the submitted evidences are compelling. Therefore, it is extremely important for the merchants to have a clear understanding about the Dispute Administration Fee. It will assist them to stay away from the hassle associated with chargeback problems.