We are diving headfirst into the intriguing realm of chargeback reason codes, deciphering the enigmatic messages behind those cryptic codes that relate to any chargebacks being raised.
Quick recap: What are Chargebacks and how do they work?
Chargebacks are a protection mechanism that allow credit card holders to dispute unauthorised or fraudulent transactions, billing errors, or unsatisfactory purchases. They are designed to give peace of mind and protection when using a credit card. When a cardholder identifies a transaction they believe is inaccurate or unauthorised, they can contact their issuing bank or credit card company and initiate a chargeback. The issuing bank then investigates the claim to verify its validity.
Common Reasons for Chargebacks:
- Unauthorised Transactions: If a cardholder spots a charge on their credit card that they did not authorise or participate in, they can dispute the transaction
- Fraudulent Activity: If the cardholder suspects that their card was used fraudulently, they can initiate a chargeback to reverse the unauthorised transaction
- Non-Received Goods or Services: If a customer pays for goods or services but doesn't receive them as promised, they can dispute the charge
- Defective or Not-as-Described Products: Customers can request a chargeback if the received product is significantly different from what was advertised or if it is defective
- Duplicate Charges: If a customer is billed multiple times for the same transaction, they can initiate a chargeback to resolve the issue
Every chargeback raised is done so with a reason code assigned to indicate why it was raised in the first place, these differ between networks, below we will dive into the most common codes across Visa and Mastercard.
Reason codes
Fraud/No Authorisation:
- VISA Code 10:4: Fraudulent Transaction:
This the most common code, used when a user suspects they are a victim of credit card fraud. In a card-absent environment (online/phone/direct mail sales, etc.), the cardholder or issuer is claiming that either an unauthorised (fraudulent) transaction was processed using an invalid or stolen account or card number; or the cardholder believes the transaction to be fraudulent due to an unclear or confusing merchant descriptor - Timeframe Issuer: 120 Days to raise Chargeback from transaction date
- Timeframe Merchant: 20 days to challenge (Represent)
- VISA Code 11.2: Declined Authorisation:
The authorisation for the transaction declined, but the transaction was processed anyway - Timeframe Issuer: 75 Days to raise Chargeback from transaction date
- Timeframe Merchant: 20 days to challenge (Represent)
- Mastercard Code(s) 4837/4863: No Cardholder Authorisation:
Did someone make a purchase on your card without your consent? Code 4837 steps onto the scene to rectify the situation by disputing unauthorised transactions - Timeframe Issuer: 120 Days to raise Chargeback from transaction date
- Timeframe Merchant: 45 days to challenge (Represent)
- Mastercard Code 4808: Authorisation-Related Chargeback:
The merchant didn’t obtain authorisation or got it too late / or the authorisation for the transaction declined, but the transaction was processed anyway - Timeframe Issuer: 90 Days to raise Chargeback from transaction date
- Timeframe Merchant: 45 days to challenge (Represent)
Goods or Services Not Provided:
- VISA Code 13:1: Services Not Provided or Merchandise Not Received:
Picture this: you ordered that gadget online, but it never arrived, what do you do? This code is used when the cardholder has paid for a service or product, but they have never received the goods or service (access) - Timeframe Issuer: 120 Days to raise Chargeback from transaction date / Date goods were due to be delivered
- Timeframe Merchant: 20 days to challenge (Represent)
- Mastercard Code 4853: Goods or Services Not Provided:
Cardholder claims goods or services were not received or not received by the agreed upon date - Timeframe Issuer: 120 Days to raise Chargeback from transaction date / Date goods were due to be delivered
- Timeframe Merchant: 45 days to challenge (Represent)
Goods/Service not as expected:
- VISA Code 13:3: Not as Described or Defective Merchandise:
Ever ordered something that looked nothing like its online photo? This code is used when the product received is a far cry from what was advertised - Timeframe Issuer: 120 Days to raise Chargeback from transaction date / Date goods were returned or attempted to be returned
- Timeframe Merchant: 20 days to challenge (Represent)
- Mastercard Code 4853: Goods/Services not as Described or Defective:
The cardholder claims that the goods or services were defective or not as described. - Timeframe Issuer: 120 Days to raise Chargeback from transaction date / Date goods were returned or attempted to be returned
- Timeframe Merchant: 45 days to challenge (Represent)
Cancelled but still charged:
- VISA Code 13.2: Cancelled Recurring Transaction:
The cardholder claims to have been charged for a cancelled recurring transaction - Timeframe Issuer: 120 Days to raise Chargeback from transaction date
- Timeframe Merchant: 20 days to challenge (Represent)
How They Work
In a nutshell, chargeback reason codes act as a common language between merchants, credit card companies, and consumers. When a cardholder notices an unauthorised or questionable transaction, they can contact your credit card issuer and reference the appropriate reason code. They'll then launch an investigation to determine the legitimacy of your claim.
Chargeback reason codes play a pivotal role in maintaining a balanced playing field for everyone involved. They ensure that consumers aren't left high and dry when their hard-earned money goes awry and give merchants the chance to rectify any honest errors. Each reason code determines the evidence required by the merchant to challenge the chargeback.
So there you have it, the world of chargeback reason codes demystified, at least to some extent. There are many more, lesser used, codes across the networks but for now we have covered the most popular.