Merchants who receive a chargeback for a transaction placed with a Visa card may encounter reason code 12.2, 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 usually tends to be merchant error. Merchants who believe they have received an invalid chargeback under reason code 12.2 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Visa Chargeback Reason Code 12.2?
Visa chargeback reason code 12.2 falls under the “Processing Errors” category. The shorthand description is “Incorrect Transaction Code.” This reason code indicates that the merchant processed a transaction using the wrong transaction code. For example, a debit was processed instead of a credit, or a credit was processed instead of a transaction reversal.
This chargeback reason code may be invoked any time the transaction processed does not match the transaction type submitted for authorization.
Most merchants spend their days processing regular card transactions that tell the issuing bank to take money out of the cardholder’s account and put it in the merchant account. However, there are several different types of transactions—debits, credits, reversals, adjustments—each of which is identified with a transaction code that should be specified during authorization approval and when the transaction is submitted. When these codes don’t agree, there is the potential for this chargeback to result.
What Scenarios Might Lead to This Chargeback?
Merchant error is the leading cause of this chargeback reason code. Where there are cases of friendly fraud where the cardholder claims that the wrong type of transaction has been processed, this chargeback is far more likely to result from genuine processing errors on the merchant’s end.
One common cause for this chargeback is unfamiliarity with the difference between transaction reversals and credits. A transaction reversal simply negates a pending payment transaction, but a credit actually refunds money from the merchant’s account to the cardholder’s. The cardholder may not notice the difference—or care—but a chargeback can still end up getting filed if the issuer notices that the transaction that was authorized does not match the transaction that was posted.
A more serious and noticeable problem is when a transaction that is supposed to be a credit gets processed as a debit instead, resulting in double the charge to the cardholder. You should expect this type of error to be caught and disputed in short order.
The reverse is also possible—a regular transaction can get processed as a credit, putting free money into the cardholder’s account. Some cardholders might keep quiet about this type of error, but issuers who catch the discrepancy probably won’t let it slide.
What are the Important Timeframes?
For this dispute, Visa requires that its cardholders file their claim within 120 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 basis for it is false or erroneous. Your chargeback response should include the following:
- If the transaction was processed correctly and used the appropriate transaction code, provide documentation that proves this.
- 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?
Careful transaction processing can keep you from making the mistakes that can lead to this chargeback. If this chargeback is a recurring problem for your business, it should be clear that there are issues with your payment processing operations that need to be addressed.
The following tips can help you avoid this kind of chargeback:
- Train your staff on the correct use of transaction codes and make sure they understand how to process regular transactions, reversals, refunds, and adjustments.
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.