Merchants who receive a chargeback for a transaction placed with a Mastercard card may encounter reason code 4846, which indicates an improperly processed transaction that the cardholder does not believe they should be responsible for paying. The actual underlying cause of this chargeback is usually merchant error or friendly fraud. Merchants who believe they have received an invalid chargeback under reason code 4846 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Mastercard Chargeback Reason Code 4846?
Mastercard chargeback reason code 4846 falls under the “Point-of-Interaction Error” category. The shorthand description is “Correct Transaction Currency Code Not Provided.” The use of this reason code indicates that the cardholder is claiming that the merchant did not give them an option to choose the currency they wanted to use for the transaction, or that the merchant used point-of-interaction currency conversion incorrectly.
For some merchants, foreign currency transactions are uncommon. Other merchants deal with a higher proportion of international customers, and may encounter currency conversion issues more regularly.
It is important to present the customer with all of the options available to them and inform them about fees and currency conversion options.
If they end up with an erroneous charge amount or an unfavorable exchange rate, you may find yourself dealing with this type of chargeback.
What Scenarios Might Lead to This Chargeback?
This chargeback usually occurs because of merchant error. Merchants may select the wrong type of currency when processing the transaction, or they may apply the Dynamic Currency Conversion service without asking the customer for permission first. Card networks prohibit merchants from doing this, but some may still do it out of habit or ignorance, and customers aren’t always aware of the potential costs of Dynamic Currency Conversion. When they review their charges and see a much higher total than they were expecting, they will often file a chargeback—and they may be entirely within their rights to do so.
Sometimes, customers will forget which currency they transacted in, or that they authorized Dynamic Currency Conversion on a particular purchase. Or, they may simply experience buyer’s remorse when they realize that the exchange rate caused them to pay a higher price than they’d assumed. These situations can turn into friendly fraud chargebacks.
What are the Important Timeframes?
Mastercard recommends that its cardholders file their dispute within 120 calendar days of placing the transaction. The acquirer and/or merchant have 45 calendar days to respond to this chargeback after it is filed.
How Can Merchants Fight this Chargeback Code?
Merchants can fight this chargeback if the cardholder’s claims are false. Your chargeback response should include the following:
- Proof that the transaction amount and currency code were both correct.
- A transaction receipt showing that you used the correct currency indicator.
How Can Merchants Prevent this Chargeback Code?
You are only at risk for these chargebacks when currency conversions are performed, so one way to avoid them is to request payment in local currencies only—but this will not be a feasible option for every merchant.
No matter if you’re using Dynamic Currency Conversion or a different method of accepting foreign currencies, it is essential that you and your staff have a thorough understanding of the rules, costs, and procedures involved, and that you fully explain the conversion options to your customers before they finalize their purchase.
The following tips can help you avoid this kind of chargeback:
- Do not use Dynamic Currency Conversion as the default option when processing transactions. Ask the customer if they want to use the service, but don’t make it mandatory or apply it automatically.
- Train your staff on the correct procedures for handling foreign currency transactions. Make sure you have established protocols for dealing with different currencies.
- Always inform customers ahead of time about any currency conversion that needs to take place, as well as any applicable fees they may be charged.
- Always give customers the option to pay using local currency.
About Mastercard 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.
Mastercard specifies 21 reason codes under the categories of Fraud, Authorization, Point-of-Interaction Error, and Cardholder Disputes. Mastercard uses a four-digit numbering scheme for its chargeback reason codes.
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.