Merchants who receive a chargeback for a transaction placed with a Visa card may encounter reason code 11.3, 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 11.3 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Visa Chargeback Reason Code 11.3?
Visa chargeback reason code 11.3 falls under the “Authorization” category. The shorthand description is “No Authorization.” This reason code indicates that the merchant processed a transaction without first obtaining a correct and valid authorization approval, or that the authorization request was sent after the transaction was submitted, or for a different transaction amount.
Every time a merchant processes a transaction, they are supposed to send an authorization approval request to the issuer. If the card is in good standing and has funds sufficient to clear the transaction, an “Approved” response will be sent.
Any other response means that the issuer cannot provide assurance that the transaction is safe to process, and some response codes may indicate that the card is lost, stolen, or otherwise compromised.
Without going through the authorization approval process, the merchant cannot be sure that they are processing their transaction against a valid card.
What Scenarios Might Lead to This Chargeback?
While authorization-related disputes may be instigated for a variety of reasons, ranging from true fraud to friendly fraud (and may sometimes be initiated by issuers independently of any cardholder dispute), the ultimate root cause boils down to merchant error: if the merchant had followed the correct authorization procedures to begin with, there would not be any grounds for an authorization chargeback.
Sometimes, merchants get talked into pushing unauthorized transactions through due to some extenuating circumstances or a persuasive cardholder. It may be an emergency situation, or the merchant knows the customer, or the payment terminal is having issues.
In the end, it comes down to an individual choice for merchants to decide whether or not to bypass authorization procedures, but doing so invariably creates a situation where the cardholder or issuer can file a chargeback that may be impossible to fight.
What are the Important Timeframes?
For this dispute, Visa requires that its cardholders file their claim within 75 calendar days of placing the transaction. The acquirer and/or merchant have 20 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:
- If an authorization request was sent, provide documentation that shows the response code you received, the transaction amount that was approved, and the date of the authorization request.
- If the clearing record lists an incorrect transaction date, provide documentation that shows the correct transaction date.
- If the transaction required special authorization procedures, provide the date the transaction was initiated, the date it was completed, the amounts and response codes of all approved authorizations, and proof of the following (where applicable):
- The first authorization request included an estimated transaction amount.
- Subsequent authorization requests included incremental transaction amounts.
- The same transaction identifier was used for each authorization request.
- The clearing record was submitted within the allowed timeframe.
- If you have already processed a refund for the transaction in question, provide documentation that proves you have credited the cardholder’s account.
- If you have resolved the issue directly with the cardholder, provide proof, such as written correspondence, that proves they no longer wish to dispute the charge.
How Can Merchants Prevent this Chargeback Code?
Obtaining authorization approval prior to finalizing a transaction is one of the most important things a merchant can do to protect themselves from chargebacks. While authorized transactions are not immune from disputes, most chargebacks filed under the “Authorization” category result from merchants disregarding warning messages or bypassing the authorization step altogether. Ensuring that all transactions receive an immediate and clear approval response means you shouldn’t have to worry about this entire category of chargebacks.
The following best practices can help you avoid this kind of chargeback:
- Always obtain authorization approval before processing any transaction that is above your floor limit.
- Always follow the rules and regulations provided by Visa and your acquirer when processing transactions involving multiple authorizations.
About Visa 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.
Visa specifies 46 reason codes under the categories of Fraud, Authorization, Point-of-Interaction Error, Consumer Disputes, and Processing Errors. Visa uses a numeric 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.