Discover Chargeback Reason Code NA: Authorization

Table of Contents

1. What is Discover chargeback reason code NA?
2. What causes code NA chargebacks?
3. What's the time limit to respond to code NA chargebacks?
4. How can merchants fight code NA chargebacks?
5. How can merchants prevent code NA chargebacks?
6. About Discover chargeback reason codes

Merchants who receive a chargeback for a transaction placed with a Discover card may encounter reason code NA, which indicates an improperly authorized transaction that the cardholder does not believe they should be responsible for paying. The actual underlying cause of this chargeback may be true fraud, friendly fraud, or merchant error. Merchants who believe they have received an invalid chargeback under reason code NA may be able to represent the transaction and reverse the chargeback with the right compelling evidence.

What is Discover chargeback reason code NA?

Discover chargeback reason code NA falls under the “Authorization” category. The shorthand description is “No Authorization.” This reason code is used when a transaction is processed without first obtaining authorization approval.

This may mean that the merchant forced a transaction through with no authorization, or that they waited too long between requesting authorization and finalizing the transaction, or that they added a tip amount to the transaction that exceeded the authorization amount.

Except under the most extraordinary circumstances, merchants should never force a transaction through without authorization approval. Most payment processing systems and terminals will require you to go through the authorization step before moving forward with a transaction, but there can be ways to bypass this.

Transactions conducted without authorization are always highly vulnerable to chargebacks and merchants will be hard-pressed to fight them.

What causes code NA chargebacks?

Code NA chargebacks are most often caused by the merchant making some error in authorization or skipping the authorization process entirely.

Fraudsters may try to persuade merchants to process stolen cards without going through the proper authorization protocols, knowing that a “stolen—pick up card” response might give them away. This usually results in a chargeback.

Perpetrators of friendly fraud might also do this, knowing that they will have an airtight case for a chargeback if they dispute an unauthorized transaction.

Usually, though, code NA chargebacks are caused by simple mistakes. For example, it’s not uncommon for merchants to add a gratuity amount that exceeds the authorized total when they finalize a transaction.

What's the time limit to respond to code NA chargebacks?

The acquirer or merchant has 30 days to respond to a chargeback filed under reason code NA.

How can merchants fight code NA chargebacks?

Merchants can fight this chargeback if the transaction was, in fact, authorized. Include a copy of the authorization response along with the transaction date and amount. If you receive a chargeback on a transaction that never received authorization approval, it’s usually best to accept it.

How can merchants prevent code NA chargebacks?

Avoiding this chargeback is simple, in theory: Make sure that you always receive an authorization approval prior to completing any transaction, and don't wait too long between the steps of initiating a transaction, requesting approval, and finalizing it.

Sometimes, however, you may have difficulty authorizing what you have reason to believe will be a valid transaction. Here are some tips you can follow to avoid exposing yourself to this type of chargeback: 

• If your point-of-sale terminal is having trouble reading a card because of equipment problems, or because the card is damaged, call Discover’s card authorization center and request authorization by providing the card information. If approval is granted, make sure the approval code is printed on the receipt in the correct location. If you get voice authorization over the phone, you may have to manually write it on the receipt.
• If you have had trouble receiving authorization responses, check in with your payment processor and make sure your point-of-sale systems are working properly.
• Don’t add tips or gratuities that exceed the maximum authorized amount.
• Train your staff carefully on processing card transactions with authorization and make sure the correct procedures are followed for processing payments that include tips.

About Discover 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 if 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, Discover specifies 26 reason codes under the categories of Fraud, Not Classified, Authorization, Expired, Processing Errors, Services, and Dispute Compliance. Most of Discover’s reason codes are a two-letter abbreviation of the dispute description.

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.

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