Chargeback Prevention

2023 Visa Chargebacks Guide

Visa Chargebacks

Table of Contents

  1. What Are Visa Chargebacks?
  2. Why Does Visa Accept Chargebacks?
  3. What Are Visa's Dispute Categories?
  4. How Can Merchants Prevent Visa Disputes?
  5. What Are the Most Common Card-Not-Present Visa Dispute Reason Codes?
  6. What Is the Compelling Evidence Requirement for Visa Disputes?
  7. What Merchants Should Know About Visa Disputes
  8. How Do Visa Chargebacks Work?
  9. How Do I Win a Visa Chargeback?
  10. Does Visa Treat Chargebacks the Same as Refunds?

Every card network sets its own rules and creates its own process for handling chargebacks. In order to handle chargebacks effectively, merchants need to understand the rules for any network whose cards they accept. Of course, there's one credit card brand that almost every merchant accepts: Visa.

With over $1 trillion in total annual purchase volume, Visa is the world's largest credit card network. In all likelihood, most of the chargebacks a merchant receives will be Visa chargebacks. That makes having a good grasp of the Visa dispute guidelines one of the most important parts of a chargeback management strategy. By understanding these rules, merchants can prevent more chargebacks and win more disputes. Let's go over some of the basics of Visa chargebacks and what merchants need to know to maximize their chances of success.

What Are Visa Chargebacks?

When a cardholder files a dispute with the issuing bank that provides their Visa-branded credit card, the transaction becomes a Visa chargeback, also known as a Visa dispute. The bank debits the transaction amount from the merchant and gives the cardholder a temporary credit.

Manage Chargeback In-House Or OutshoreThe merchant will also be assessed a chargeback fee. The amount of the fee is set by the merchant's agreement with their processor. Merchants in high-risk industries often pay higher chargeback fees, although fees also vary significantly from one processor to another.

Each chargeback is assigned a reason code that explains the justification for the chargeback. Visa groups its various reason codes into several broad dispute categories.

Visa’s rules allow merchants to fight chargebacks by presenting the charge a second time along with evidence supporting its legitimacy. This process is called representment. If the issuer accepts the merchant’s evidence, they will reverse the chargeback. If one or more parties involved in the chargeback do not accept the outcome at this point, they may file for arbitration, at which point Visa will decide the matter.

Why Does Visa Accept Chargebacks?

All US credit cards are required by the Fair Credit Billing Act to provide a process for cardholders to dispute fraudulent or incorrect charges. The process must fulfill certain legal requirements, but most of the details are left up to the card network.

The Fair Credit Billing Act, which became federal law in the United States in 1974, was created to address consumer concerns about a new financial product: The credit card.

The purpose of the FCBA was to protect cardholders from fraud and unfair billing practices. Among other reforms, the legislation granted cardholders the right to dispute fraudulent or incorrect transactions.

There are some specifics in the FCBA—for example, it establishes 60 days as the minimum window during which cardholders must be allowed to dispute a charge—but for the most part, it allows card networks and issuing banks to create their own procedures for handling chargebacks.

The existence of chargebacks allows cardholders to feel more confident about making purchases with their credit cards, knowing that they won’t be held responsible for the actions of identity thieves, deceptive merchants, and other fraudsters. However, the chargeback process also has loopholes that can be exploited, allowing cardholders to commit so-called “friendly fraud,” when they obtain a chargeback by making false claims, sometimes unknowingly, but often intentionally.

Note that debit card chargebacks are governed by a different piece of legislation: The Electronic Fund Transfer Act of 1978. Debit chargebacks may have different deadlines, liabilities, and rules.

What Are Visa's Dispute Categories?

Visa specifies four dispute categories that encompass its various chargeback reason codes: Fraud, Authorization, Processing Errors, and Consumer Disputes.

Category 10: Fraud

This includes transactions where an available EMV chip was not used for authorization, where stolen payment card credentials were used in a card-present or card-not-present environment, and transactions flagged by the Visa Fraud Monitoring Program.

Category 11: Authorization

Disputes in this category include transactions processed without authorization, with a declined authorization, or where a Card Recovery Bulletin was ignored.

Category 12: Processing Errors

Processing error disputes can include late presentments; incorrect transaction codes, currencies, account numbers, or accounts; duplicate processing, duplicate payments involving payment by other means; and transactions containing invalid data.

Category 13: Consumer Disputes

This category tends to deal with issues that can crop up between the customer and the merchant, such as merchandise or services not received, recurring transactions that the cardholder attempted to cancel, merchandise that is counterfeit or defective, merchandise that does not match the product description, failure to process a refund credit, and other merchant misrepresentations.

How Can Merchants Prevent Visa Disputes?

Merchants can prevent Visa disputes by using a clear and recognizable billing descriptor, offering helpful and available customer service, and using effective fraud prevention tools.

When it comes to figuring out the reasons you're receiving chargebacks, Visa or otherwise, the best place to start is by looking up the reason codes on those chargebacks, which can be done using our handy lookup tool.

By looking up the reason code assigned to each chargeback, merchants can understand the general outline of the cardholder’s claim. This will help you determine the validity of the chargeback and how to fight it if it's invalid. If you have compelling evidence to disprove the customer's claim as outlined by the reason code, you can often win the dispute and recover your revenue.

Whether the customer's claim is true or false, however, it's still important to try to understand the reasons behind each individual dispute.

For true claims, the reason code can provide some general information, but you'll still want to dive into the specifics to know exactly why the chargeback happened.

For false claims, of course, the reason code isn't telling you the real reason the customer disputed the charge. To understand the specific causes behind each chargeback, you must carefully examine the transaction details, any interactions with the customer, and any business practices that could be a contributing factor.

For example, misleading marketing is a frequent cause of chargebacks. Some merchants make big claims and promises in their sales and marketing materials that their products can’t really live up to.

While being dissatisfied with a product isn't a legitimate reason for filing a chargeback, many customers will do so regardless, and since the line between simple dissatisfaction and "item not as described" is a fuzzy one, banks will often err on the side of the customer and allow the chargeback to go through. Of course, if the item is actually not as described in your marketing material, the customer has a legitimate reason to file a chargeback, and that's a dispute you're unlikely to win.

Some cardholders will file a chargebackLearn How To Fight Them The Smart Way when they see a transaction they don’t recognize on their account statement. This is often the case when merchants use descriptors that do not match their branding or business name.

To make sure you're not receiving chargebacks for this reason, search online for your merchant descriptor and make sure your business is the first result. A good merchant descriptor should also include a customer service phone number the customer can call if they're confused about the transaction.

Chargebacks also frequently occur when cardholders feel that they have tried to resolve an issue with the merchant, but the merchant is stonewalling them. While the merchant may feel that they have a justifiable reason for a slow or unsatisfactory response, attentive customer service and a generous refund policy can go a long way toward preventing these chargebacks.

True fraud chargebacks occur when a fraudster obtains credit card payment credentials, either by stealing them directly or by acquiring numbers harvested from data breaches on the black market, and uses them to make purchases. True fraud chargebacks cannot be fought and are difficult to prevent, but anti-fraud tools and rigorous security protocols can work to reduce them.

Authorization and processing chargebacks are often caused by merchants following outdated or incorrect procedures. Reviewing and updating these processes should eliminate these chargebacks, provided you can identify the specific errors causing them.

What Are the Most Common Card-Not-Present Visa Dispute Reason Codes?

The most common Visa Reason codes include 10.4, 13.1, 13.2, and 13.3. The first is a catch-all for claims of fraud, while the others typically involve customer disputes over undelivered items, canceled subscriptions, and defective merchandise, respectively.

10.4 Other Fraud—Card Absent Environment

This indicates that the cardholder has claimed that they did not authorize or participate in a card-not-present transaction processed by the merchant. This is the classic case of true fraud in e-commerce, where a fraudster uses a stolen card to purchase something for their own benefit.

This is also a common friendly fraud reason code, especially when the cardholder doesn’t recognize the transaction on their statement.

12.5 Incorrect Amount

If the cardholder believes that the amount they were charged was not what they agreed to pay, their dispute will be filed under this reason code. This can occur due to number transposition or other data errors when the transaction is entered for processing, or it may result from a misunderstanding about fees or taxes included in the final price.

12.6.1 Duplicate Processing

Here, the cardholder is claiming that a single transaction was processed twice, resulting in a double charge to their account.

13.1 Merchandise/Service Not Received

Many situations can result in this frequently-encountered chargeback. They can occur when the merchant or carrier really does fail to deliver the product to the cardholder, but also when goods are not shipped by the delivery date given, or when the merchant bills the cardholder before shipping the merchandise.

Poor communication between the merchant and cardholder about shipping and delivery times, including any delays, often leads to this kind of chargeback.

13.2 Canceled Recurring Transaction

If a merchant processes a recurring billing transaction after the cardholder’s subscription has been canceled, the cardholder can dispute the transaction under this reason code. Merchants must always be careful to cease billing immediately when a customer terminates a subscription.

13.3 Not as Described or Defective Merchandise/Services

To meet the criteria for this reason code, the cardholder will have to state that the merchandise or services they received did not match the description provided by the merchant, or that merchandise was damaged or defective upon arrival.

These disputes can get into highly subjective territory when cardholders cite the quality of the merchandise as the justification for the chargeback.

Unfortunately, some merchants set themselves up for these chargebacks by making grandiose claims about their products that they’re not actually able to fulfill.

13.6 Credit Not Processed

Cardholders file these chargebacks when a refund credit or voided transaction receipt has not been processed by the merchant. These chargebacks can easily be avoided by processing credits promptly, as soon as possible after the cardholder has been notified that a refund will be given.

13.7 Canceled Merchandise/Services

Similar to the previous reason code, this occurs when a cardholder cancels services or returns a product and does not receive a refund that they understand to be due. Once again, this is easily avoided by quickly issuing refunds, but it can also happen when a merchant has not adequately communicated their refund policy to the cardholder.

What Is the Compelling Evidence Requirement for Visa Disputes?

Generally speaking, compelling evidence in chargeback representment will consist of proof that the cardholder knowingly participated in the transaction and received the intended benefit thereof.

Here are some examples of evidence a merchant may want to submit, depending on the reason code for the chargeback:

  • Photographs, emails, or other evidence that the cardholder has received or is using the goods or services they purchased.

  • In situations where purchased goods were to be picked up from the merchant’s location: A signature, copy of identification, or other identifying information provided by the cardholder at the time of pickup.

  • If the purchased goods were shipped to the cardholder: Documentation from the carrier confirming that the merchandise was delivered to the cardholder at an address that matches the billing address on the card.

  • For digital goods: Network or server data that proves the cardholder downloaded the product or logged in to use it. This can include the cardholder’s IP address and location data, information about the device used, confirmation that the cardholder has a verified customer profile on the merchant’s site, proof that the cardholder accessed digital goods or services through that profile after the transaction date, and transaction data showing that the cardholder has made previous, undisputed transactions with the merchant.

  • When purchased goods are shipped to a business address: Proof that the cardholder was employed at that address at the time of delivery.

  • For transportation-related transactions, including Travel & Expense: Proof that the ticket was received at the cardholder’s billing address, proof that the ticket or boarding passed was scanned, evidence that the cardholder earned or redeemed frequent flier miles related to the transaction, or evidence of subsequent related transactions such as seat upgrades or onboard meals.

  • For airline transactions: Documentation of the cardholder’s name on both the purchased itinerary and the departed flight manifest.

What Merchants Should Know About Visa Disputes

While the various card networks have similar chargeback processes, they differ enough in the details that merchants must have means of confidently navigating the many reason codes, evidence requirements, deadlines, and other variables that will impact their ability to fight chargebacks.

While guides like this can serve as a helpful reference for merchants, large or intractable chargeback problems may require more focus and specialized attention than smaller merchants can readily provide on their own. This is where chargeback management firms can provide valuable assistance, helping merchants navigate complicated card network rules to develop a chargeback defense strategy that can protect them from preventable chargebacks, no matter the source.


How Do Visa Chargebacks Work?

Much like other chargebacks, Visa chargebacks start with a cardholder disputing a charge with their issuing bank. If the bank approves a chargeback, the merchant can either accept the chargeback or fight it through representment.

How Do I Win a Visa Chargeback?

Merchants can win Visa disputes by keeping thorough documentation of each order and using those records as compelling evidence to reverse illegitimate chargebacks.

Does Visa Treat Chargebacks the Same as Refunds?

Visa treats chargebacks differently than refunds, primarily by tracking a merchant's chargeback ratio and imposing consequences if it exceeds 0.9%. Refunds don't affect the chargeback ratio.

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