Visa Chargeback Reason Codes: A Merchant’s Guide
The Visa Chargeback Process
The Visa chargeback life cycle process may seem confusing at first glance, but it actually follows a very careful and calculated method. 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 nine steps involved in a standard chargeback:
- The cardholder disputes the transaction and immediately contacts the card issuer with the disputed information.
- The card issuer reviews the information and checks the transaction to see if it’s eligible for a chargeback. If applicable, the issuer electronically returns the transaction to the merchant’s acquiring bank.
- Visa screens the chargeback for technical compliance. If necessary, Visa electronically forwards the chargeback to the merchant’s acquiring bank.
- The acquiring bank receives the chargeback and resolves the issues or forwards to the merchant.
- The merchant receives the chargeback and must meet the conditions presented by the acquiring bank. Otherwise the merchant may be forced to accept all charges.
- The acquiring bank re-forwards all new information to Visa.
- Visa screens the information for technical compliance and forwards it to the card issuer if necessary.
- The card issuer receives the item and refunds the cardholder’s account. If the chargeback issue is still contested, the card issuer may dispute with Visa.
- The cardholder receives information regarding the dispute and may receive a new bill or credit.
As you can see, and likely know from personal experience, this is a long, confusing, time-intensive process that unfortunately is all too common.
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.
Common Visa Chargeback Codes
In order to reinforce your understanding of these situations, let’s review some of the most common chargeback reason codes, what they mean, what causes them, and what specific actions you can take to prevent future recurrence and customer dissatisfaction.
- Reason Code 30: Services not provided or merchandise not received. The cardholder files a claim that merchandise or services were not received. Common causes include the merchant not providing the service or sending the merchandise, billing for the transaction before it shipped, and not sending the merchandise by the expected delivery date. Record keeping and dates are big when it comes to reason code 30. You’ll be asked to provide evidence of service rendered and/or delivery specifications.
- Reason Code 41: 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 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 53: 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 62: Counterfeit transaction. The cardholder files a claim with the card issuer that he or she had no knowledge of, or involvement in the disputed transaction.
The most common cause is a failure to verify the card at the point of sale. Preventing a counterfeit transaction requires stricter card verification and security processes.
- Reason Code 73: Expired card. Again, a fairly self-explanatory claim. In this instance, the card issuer receives a transaction that was completed after the card expired – and therefore isn’t authorized. This typically results from a lack of awareness on the merchant’s part. Establishing a more thorough process that encourages point of sale employees to always obtain authorization approval if a card has expired will eliminate most of these chargeback claims.
- Reason Code 75: Transaction not recognized. The cardholder claims they don’t recognize a transaction that appears on their billing statement. This typically results from an inaccurate or confusing store name or location on the cardholder’s billing statement. The easiest solution to this common problem is to ensure your merchant name is clearly identifiable on billing statements.
- Reason Code 82: Duplicate Processing. 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.
While these are the seven most common reason codes, there are a handful of others. As a merchant, it’s important to understand Visa chargeback codes and how to best prevent them.
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