Merchants who receive a chargeback for a transaction placed with a Visa card may encounter reason code 72, 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 72 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Visa Chargeback Reason Code 72?
Visa chargeback reason code 72 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.
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 most disputes, Visa recommends 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. This chargeback may include transaction modifiers that require specific forms of evidence. Your chargeback response should include the following:
- If the chargeback carries the “Authorization Data Invalid” modifier, provide both the VIP System Authorization record and the clearing record of the transaction.
- If the chargeback carries the “Exceeds Floor Limit” modifier, provide the transaction receipt, the dates the transaction was initiated and completed, and the dates, authorized amounts, and authorization response codes for the approved authorizations.
- If the transaction was in fact authorized, provide a sales receipt and other documentation that shows the authorization approval response code that was sent.
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.
- If a “decline” or ambiguous code is sent in response to an authorization request, ask the cardholder to furnish an alternate method of payment.
- Pay close attention to authorization response codes that are sent back to you and follow the guidelines specified by your acquirer or payment processor.
- Never “force” a transaction to go through without authorization, or after receiving a non-approval response.
- Train your staff on proper transaction handling procedures.
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.