American Express Chargeback Reason Code P01: Processing Errors

chargeback reason code p01Merchants who receive a chargeback for a transaction placed with an American Express card may encounter reason code P01, which indicates a transaction that was not processed correctly by the merchant. The actual underlying cause of this chargeback is usually merchant error. Merchants who believe they have received an invalid chargeback under reason code P01 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.

What is American Express Chargeback Reason Code P01?

American Express chargeback reason code P01 falls under the “Processing Errors” category. The shorthand description is “Unassigned Card Number.”

This reason code is used for the unusual circumstance of processing a transaction using an invalid or otherwise incorrect card number.

If the transaction manages to go through, it will be charged back under this reason code when American Express discovers the error.

What Scenarios Might Lead to This Chargeback?

Most payment processing terminals and software are set up to prevent errors like this, but it can happen under extraordinary conditions. If a merchant manually enters an incorrect or invalid American Express card number and forces the transaction through by bypassing the authorization request step, a back end system might erroneously process the transaction, necessitating a chargeback once the error is caught.

It is theoretically possible for software glitches to cause a transaction to be submitted with an erroneous account number, and sometimes fraudsters will make up a fake credit card number if they need to supply one but know that the card will not be charged immediately.

Get the guide, Chargebacks 101: Understanding Chargebacks & Their Root Causes

What are the Important Timeframes?

The acquirer and/or merchant have 20 days to respond to this chargeback after it is filed. No special timeframes apply to the cardholder.

How Can Merchants Fight this Chargeback Code?

As rare as this chargeback may be, it would be rarer still to receive it on error. If a merchant receives a chargeback because they posted a transaction under an invalid account number, they can resubmit the transaction under the correct account number, if it is known. If you do believe that you have received this chargeback in error and that the card number was correct and valid, you can try fighting it by sending the following pieces of evidence:

  • A copy of the physical or digital card imprint.
  • A copy of the charge record from the terminal that electronically read the card number.
  • Proof that you received an authorization approval for the card number that was submitted.
  • If you have already processed a refund for the transaction in question, provide documentation that proves you have credited the cardholder’s account.

How Can Merchants Prevent this Chargeback Code?

Merchants who use updated point-of-sale terminals and payment processing software should not have much to worry about when it comes to this chargeback reason code. You can further eliminate any possibility of charging a transaction to a bad account number by requesting and obtaining an authorization approval message for every transaction you process.

It’s best to avoid manual keying when entering payment credentials for processing, but sometimes this is unavoidable. Always make sure the card information you are entering is clear and legible—if any numbers are ambiguous or missing, try to reconfirm it with the cardholder before entering it in your payment processing system.

Follow these tips to avoid any chargebacks resulting from invalid or incorrect data entry:

  • Always request authorization before completing a transaction.
  • If an authorization request is denied, cancel the transaction and ask the cardholder if they can provide an alternate form of payment.
  • Never “force” a transaction that has been declined. If you must reattempt a declined card, only process the transaction once you have received an approval message.
  • Always swipe or dip a card to read it. Only use fallback options like manual keying in an emergency situation.

About American Express Chargeback Reason Codes

Reason codes are alphanumeric codes that provide the justification for granting a chargeback. Pursuant to the Fair Credit Billing Act of 1974, cardholders have the right to dispute unauthorized or erroneous charges and issuing banks must reverse a disputed transaction of the cardholder’s claim is valid.

When a cardholder contacts their issuing bank to dispute a transaction and receive a chargeback, the dispute is assigned a reason code that most closely matches the substance of the cardholder’s claims. The reason code provides the merchant and other stakeholders in the dispute with a concise explanation for why a chargeback has been granted.

Each card network—Visa, Mastercard, American Express, and Discover—defines and maintains their own unique set of reason codes, which are applied to disputes by the banks that issue credit and debit cards under their brands.

As both a card network and an issuer, American Express specifies 34 reason codes under the categories of Fraud, Authorization, Processing Errors, Card Member Disputes, and Inquiry/Miscellaneous. Each American Express reason code consists of one or more letters, indicating the category, and a number that identifies the specific dispute reason.

Understanding chargeback reason codes is one of the most essential parts of effective chargeback management. Identifying the chargeback reason code and the evidence required to fight it is the first step in chargeback representment, and analyzing your chargeback reason codes can provide you with insights into what types of disputes are causing you the most trouble. With this information, you can determine the root causes of your chargebacks and take action to prevent them from reoccurring.