Visa Chargeback Reason Codes: A Merchant’s Guide

Table of Contents

1. What is the Visa chargeback process?
2. What are chargeback reason codes?
3. What are the most common Visa chargeback reason codes?
4. How to prevent Visa chargebacks
5. What is Visa reason code 75?
6. How long does a Visa chargeback take?
7. Do Visa chargebacks hurt merchants?

In order to effectively prevent and fight chargebacks, it's important for merchants to know the chargeback process inside and out, including the ways it may vary from one card network to the next. While the process itself is broadly similar across all the major networks, there are some areas in which it varies. One of those areas is reason codes.

Every card network has reason codes for chargebacks. These codes ensure all parties are clear on the reason for the chargeback. They also help merchants determine whether they should fight a given chargeback and, if so, what evidence they will need to fight it with.

Unfortunately, every card network has their own unique set of reason codes, along with their own definitions for what falls under each one.

As the world's largest card network, Visa sets the global standard for what the chargeback process should look like. Nearly every merchant who accepts credit card payments at all accepts Visa cards, and if you accept Visa cards, you should be intimately familiar with all aspects of the Visa dispute process, including Visa's reason codes.

Visa organizes chargeback reasons into six basic categories — non-receipt of information, fraud, authorization error, processing error, canceled or returned merchandise, and non-receipt of goods or services — and clearly outlines the protocol for each situation.

Here are the steps involved in a standard Visa dispute:

1. The cardholder contacts their issuing bank to dispute the transaction.
2. The issuing bank reviews the information and checks the transaction to see if it’s eligible for a chargeback. If so, the bank credits the cardholder and sends a chargeback notification to the merchant.
3. The merchant chooses to either accept the chargeback, ending the process, or fight it through representment.
4. If the merchant takes the case to representment, they submit a rebuttal letter along with supporting evidence proving the chargeback is illegitimate.
5. The issuing bank examines the evidence and decides to either uphold or reverse the chargeback. If the chargeback is reversed, the funds are returned to the merchant.
6. If the chargeback is upheld, the merchant can choose to take the case to arbitration. (See step 9.)
7. If the chargeback is reversed but the cardholder presents new evidence supporting their claim, the bank may take the case to pre-arbitration.
8. The merchant can either accept the chargeback in pre-arbitration to take the case to arbitration.
9. In arbitration, Visa will review the evidence and make a final decision on the case, charging hundreds of dollars in fees to the losing party.

Note that the process described above is Visa's collaboration workflow. Some chargebacks instead follow the allocation workflow, which begins with an automated decision from Visa on the validity of the chargeback, then goes straight to step 8: pre-arbitration.

As you can see, and likely know from personal experience, this can be a long, confusing, time-intensive process that unfortunately is all too common for merchants, especially those in eCommerce.

As a merchant, your goal should be to understand what you can do to prevent chargebacks. However, it’s not always in your control. If you can’t prevent them, then you need to understand how to streamline the process and avoid being the party that takes the financial hit.

More importantly, the chargeback reason code determines how the merchant can fight that chargeback. Let's say that a customer goes to their bank and disputes a charge by saying that they didn't receive merchandise ordered from an online store. This could be the result of theft, a problem in shipping, or an error in processing orders. It could also be a case of chargeback fraud, meaning the customer did in fact receive their package. 

If you want to fight the chargeback, you must address the reason code. In this case, your dispute package would include evidence proving the merchandise was delivered, whether that be a delivery receipt or some other form of proof.

Reason codes are typically alphanumeric and organized into categories. These codes are determined by the card network and differ from one network to another. (Note that sometimes the card network and issuing bank are the same, as is usually the case with Discover and American Express)

What are the most common Visa chargeback reason codes?

In order to reinforce your understanding of these situations, let’s review some of the most common Visa reason codes, what they mean, and what specific actions you can take to prevent future recurrence and customer dissatisfaction.

• Reason code 13.1: Merchandise/services not received. The cardholder files a claim that the merchandise or services they purchased were not received. Common causes include the merchant not providing the service or sending the merchandise, billing for the transaction before it shipped, or not sending the merchandise by the expected delivery date. Record keeping and dates are important when it comes to reason code 13.1. You’ll be asked to provide evidence of service rendered and/or delivery details.
• Reason Code 13.2: Cancelled recurring transaction. The cardholder claims that the merchant was notified of their desire to cancel a recurring transaction, but has since been billed. Another common cardholder claim is that the amount charged exceeds the pre-authorized monthly amount. In most cases, this is either an oversight on the merchant’s part or a cardholder’s misunderstanding. The best prevention is to ensure the proper systems are in place and that employees understand cancellation procedures.
• Reason Code 13.3: Not as described or defective. This one is pretty self-explanatory, but typically results from the cardholder stating the goods or services didn’t live up to the merchant’s descriptions or claims regarding condition and/or functionality. Common causes include the merchant sending the wrong merchandise or merchandise being damaged during the shipping process. In most cases, this merchandise will be returned. Properly handling the return and reimbursement process will prevent most of these chargebacks, and keeping accurate paperwork is key. 
• Reason Code 10.4: Other fraud — Card-absent environment. The cardholder files a claim with the card issuer that he or she had no knowledge of or involvement in the disputed transaction. Code 10.4 applies to eCommerce, whereas code 10.3 is the less common version for card-present transactions. This is commonly caused by either true fraud or friendly fraud.
• Reason Code 12.6: Duplicate processing/Paid by other means. The cardholder claims they were charged multiple times for a single transaction. This is typically a simple error on the fault of the merchant and results from entering the wrong information into the point of sale terminal or depositing transaction receipts for a single transaction with multiple acquirers.

For a complete list of all Visa reason codes, as well as the reason codes for other card networks, check out our complete chargeback reason code guide. For more detailed information on a specific reason code, you can enter it into our reason code lookup tool.

How to prevent Visa chargebacks

As a merchant, it’s important to not only understand Visa chargebacks, but also how to best prevent them. Visa offers some basic guidelines to merchants for preventing and responding to disputes, and we have a wealth of articles available that may help, including our guide for preventing eCommerce chargebacks.

If you want to really tackle your chargeback problem, especially if your chargeback ratio is above 0.5%, you may want to look into professional chargeback management services.

A chargeback management company like Chargeback Gurus can fight chargebacks on your behalf, provide personalized advice and tools for preventing them, and give you an excellent return on investment.

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