Merchants who receive a chargeback for a transaction placed with a Visa card may encounter reason code 76, 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 76 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Visa Chargeback Reason Code 76?
Visa chargeback reason code 76 falls under the “Point-of-Interaction Error” category. The shorthand description is “Incorrect Currency or Transaction Code.”
This reason code indicates that the merchant processed a transaction using the wrong type of currency or an inappropriate transaction code.
What Scenarios Might Lead to This Chargeback?
This chargeback is usually attributable to merchant error. When processing complex transactions that involve currency conversion or special transaction types, untrained or inexperienced staff may enter the wrong information and process the transaction incorrectly. If the cardholder notices the error they may dispute it with their bank, especially if the error resulted in an unfavorable conversion rate or an erroneous charge.
Dynamic Currency Conversion is often one of the motivating factors behind this chargeback, as it sometimes ends up costing cardholders more than they expect. Even if the cardholder did agree to use Dynamic Currency Conversion, they may file a friendly fraud chargeback claiming otherwise if they are sufficiently displeased with the final transaction amount.
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 should include transaction modifiers that determine the forms of evidence required. Your chargeback response should include the following:
- If the chargeback carries the “Credit Refund” modifier, provide an explanation, with documents if possible, that shows why a credit transaction was appropriate rather than a reversal or adjustment.
- If the chargeback carries the “DCC Selected by Merchant” modifier, provide a copy of the transaction receipt and documented proof that the cardholder chose and approved the use of Dynamic Currency Conversion.
- If the chargeback carries the “DCC Unknown/Refused” modifier, provide proof furnished by your acquiring bank that you are registered to offer Dynamic Currency Conversion, along with a copy of the transaction receipt that displays your local currency.
- If the chargeback carries the “Incorrect Transaction Code” modifier, provide transaction receipts or other documents that show why the transaction code you used was correct and appropriate.
- If the chargeback carries the “Transaction Currency Mismatch” modifier, provide transaction receipts or other documents that show that you used the correct transaction currency.
How Can Merchants Prevent this Chargeback Code?
One way to avoid chargebacks related to currency conversion is to require transactions in local currency only, but this isn’t a realistic tactic for merchants who serve international customers.
Make sure that you and your employees understand the rules, costs, and procedures that relate to currency conversion, and make sure you fully explain the currency conversion options and costs to your customers before processing their transactions.
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.
- 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.
- Train your staff on the use of transaction codes and the correct procedures for handling foreign currency transactions. Make sure you have established protocols for dealing with different currencies.
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.