Merchants who receive a chargeback for a transaction placed with a Visa card may encounter reason code 12.4, 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 most often merchant error. Merchants who believe they have received an invalid chargeback under reason code 12.4 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Visa Chargeback Reason Code 12.4?
Visa chargeback reason code 12.4 falls under the “Processing Errors” category. The shorthand description is “Incorrect Account Number.” This reason code is used when a transaction is posted to the wrong account number, or that one of the following scenarios related to transaction adjustments took place:
- The adjustment was not processed within 45 days of the transaction date.
- The adjustment was posted to an account that was closed or had non-sufficient funds.
- An adjustment was processed more than once for the same transaction.
- The cardholder is disputing the adjustment.
It is rare to post a transaction to the wrong account number when proper processing and authorization procedures are being followed.
Most payment processing systems will return clear error messages if you attempt to even initiate a transaction using an invalid account number. To be able to actually submit one through to the issuing bank, there are a number of safeguards you would have to disable or ignore. Nevertheless, human error and system glitches do allow this mistake to occur.
What Scenarios Might Lead to This Chargeback?
When a transaction is processed against the wrong account number, merchant error is usually the cause. It’s very difficult to make this kind of mistake when physical cards or electronic payment processing systems are involved. Usually, the error occurs when the merchant is manually keying in a transaction. Even then, the authorization approval process should usually catch the error, unless the merchant enters an entire set of incorrect payment credentials—or skips the authorization process.
In cases where this chargeback is filed because of adjustment errors, it is often because the merchant waited too long to post an adjustment or did not process the adjustment correctly.
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:
- Documented proof, such as a sales receipt or transaction log, which proves that the transaction was processed to the correct, valid account number.
- Proof that the cardholder’s account number is the same account number used in the transaction.
- If the issuer is claiming that the account number is not on file, provide documentation that shows that the account number received authorization approval before the transaction was processed.
- 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 and diligent payment processing practices can go a long way toward preventing chargebacks like this. Transaction adjustments should always be approached with caution, and manual keying of transactions is a thing you should only do as a last resort. When it must be done, make sure you are keying in legible, accurate card information.
The following tips can help you avoid this kind of chargeback:
- Always obtain authorization approval before processing any transaction.
- If a “decline” or ambiguous code is sent in response to an authorization request, ask the cardholder to furnish an alternate method of payment.
- Always process cards using the magnetic stripe or EMV chip—manual keying should only be used in an emergency.
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.