Business owners accepting debit or credit cards understand that chargebacks are a common phenomenon in their businesses. When faced with a chargeback, you are provided with an alphanumeric text used to determine the cause of the chargeback.
Fighting and preventing chargebacks require merchants to understand the root cause of the chargeback. If a merchant does not know what caused a chargeback, then chances are that it will be difficult to find out the next step to take.
Fortunately, chargeback reason codes make it easy for merchants to understand the cause of chargebacks. Even though these codes are not detailed enough, they are crucial when it comes to successfully preventing and fighting chargebacks.
What are Reason Codes?
Reasons codes are composed of alphanumeric text attached by a bank when there is a chargeback to explain the reason for the chargeback. The most popular card networks such as American Express, Discover, MasterCard, and Visa use these codes, albeit differently.
Knowing these codes is vital for merchants to understand the reason for chargebacks and how to manage them. Banks, however, categorize chargebacks or disputes depending on the card used when a chargeback occurs.
Categories For Reason Codes
Categories for reason codes have changed over the years, especially because of the increasing number of disputes.
The most popular card networks use the following categories;
- Processing Errors
- Fraud
- Consumer Disputes
- Authorization
- Service Dispute and Miscellaneous/Inquiry (Only used by Discover and American Express)
Understanding these categories is important when it comes to knowing chargeback reason codes and how to manage them.
Processing Errors
Processing error reason codes are also referred to as Point-of-Interaction errors. These reason codes are issued when there are disputes with things like processing credit as a charge, charging incorrect amounts, using invalid card numbers, late presentment, and duplicate processing.
Here are the processing error codes by card;
MasterCard
- 4842 – Late Presentment
- 4831 – Different Transaction Amount
- 4834 – Point-of-Interaction Error
Visa
- 12.3 – Incorrect Currency
- 12.2 – Incorrect Transaction Code
- 12.1 – Late Presentment
American Express
- P03 – Credit Processed as Charge
- P01 – Unassigned Card Number
- P04 – Charge Processed as Credit
Discover
- LP – Late Presentation
- IN – Invalid Card Number
Fraud
Disputes that go into the fraud category are mostly fraudulent transactions. For instance, someone might lose their credit or debit card. They later find out that that card has been used for transactions in your business. A chargeback resulting from such a transaction would throw a reason code under the fraud category.
Here are the fraud error codes by card;
MasterCard
- 4863 – Cardholder Does Not Recognize
- 4840 – Fraudulent Processing of Transactions
- 4837 – No Cardholder Authorization
Visa
- 10.2 – EMV Liability Shift Non-Counterfeit Fraud
- 10.1 – EMV Liability Shift Counterfeit Fraud
- 10.4 Fraud – Card-Absent Environment
American Express
- F29 – Card Not Present
- F14 – Missing Signature
- F10 – Missing Imprint
Discover
- UA06 Fraud – Chip and PIN Transaction
- UA02 Fraud – Card Not Present Transaction
- UA01 Fraud – Card Present Transaction
Consumer Disputes
If the owner of a card initiates a chargeback due to things like product issues, the merchant, or even a service, it is classified as a consumer dispute. These disputes are also referred to as Cardholder Disputes, Service Chargebacks, or Disputes from Card Member.
Even though there are different reasons for cardholder disputes, a majority of them come from items paid and not being received or recurring payments still going through even after cancellation.
Here are the fraud error codes by card;
MasterCard
- 4855 – Goods/Services Not Provided
- 4854 – Cardholder Dispute for the US
- 4853 – Cardholder Dispute
Visa
- 13.4 – Counterfeit Merchandise
- 13.3 – Defective Merchandise/Services
- 13.1 – Services/Merchandise Not Received
American Express
- C05 – Goods/Services Canceled
- C02 – Credit Not Processed
- C08 – Goods/Services Not/Partially Received
Discover
- AP – Recurring Payments
- 05 – Good Faith Investigation
- AW – Altered Amount
Authorization
Just like the name suggests, authorization disputes are caused by unauthorized use of credit or debit cards. For example, a bank might request authorization when a card is being used but fails to get it even though the transaction goes through.
It also occurs when there is a declined response after an authorization request. In both instances, the transaction goes through.
Here are the fraud error codes by card;
MasterCard
- 4812 – Account Number Not On File
- 4808 – Authorization-Related Chargeback
- 4807 – Warning Bulletin
Visa
- 11.2 – Declined Authorization
- 11.1 – Card Recovery Bulletin
- 11.3 – No Authorization
American Express
- A02 – No Valid Authorization
- A01 – Charge Amount More Than Authorization Amount
- A08 – Authorization Approval Expired
Discover
- AT – Authorization Noncompliance
Electronic payments can benefit a business in many ways. However, business owners need to understand these codes for them to manage chargebacks and fight or prevent fraud.