Mastercard generally don’t get involved in chargebacks (other than transporting messages between the bank and the merchant).
When we raise a chargeback, we send a message via Mastercard to the merchant, this immediately moves the disputed amount straight to Monzo (plus a chargeback fee). In the message we explain why we’re raising the chargeback, and exactly which Mastercard rule we think the merchant broke.
At this point the merchant can dispute the chargeback by sending us another message, which also immediately moves the money back to the merchant (plus a fee). In this message the merchant will say why they don’t think they broke the Mastercard rule (and perhaps send evidence), or say that Monzo broke a Mastercard rule.
At this point Monzo can send another message where we ask to take the chargeback to arbitration. This also moves the money (plus a fee). At this point the merchant can send one more message effectively agreeing to arbitration, and this is when Mastercard steps in. The arbitration process can take months to complete.
At each step the fees each party (Monzo and the merchant) get increasingly larger, to discourage people from just messing around.
A chargeback is won when one party gives up and stops sending messages and escalating the chargeback.
It important to remember that Mastercard rules are not the same as the law. Which can make certain things a little tricky. Additionally the Payment Services Regulation 2017 (PSR) requires a bank to basically take a customers word, if they say a charge is fraudulent, and provide a refund by the end of the next working day. To avoid a refund we need to find evidence that a customer is behaving fraudulently (and it can’t just be “this person looks a tad dodgy”).
This means that banks are highly incentivised to raise chargebacks, because they’ve probably already refunded the customer. Chargebacks are also a good way to get evidence from a merchant, which can then inform future refund decisions, or even account closures if a pattern of deceitfulness appears.