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Guide for Chargeback Reason Codes

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Every chargeback has something which activates the first dispute. Chargeback reason codes were made to regulate the list of tolerable reasons why a bank should get a credit card chargeback or debit chargeback on their customer’s behalf.

In speculation, the bank representative can go through the list of reason codes, and each of the two can select the most perfect code for the case at hand or lose the declaration if none of the approved reasons appeal. Anyways, this process can make a lot of uncertainty, specifically at the merchant level, where there’s no insight into the process of allocating a reason code.

We’ve given a breakdown here of the major US-based things to assist and demonstrate the commonness and differences between the chargeback codes of different card networks.

What is a Reason Code?

Reason Code

A chargeback reason code is a 2-to-4-digit alphanumeric code given by the issuing bank tangled in a chargeback, which is meant to know the reason for the dispute. Every of the major card brands, inclusion of Visa, MasterCard, and others, has its acknowledged system of reason codes. Reason codes are very crucial to assist merchants to address recurring chargeback triggers, as well as identifying light-hearted chargebacks, in opposition where the merchant will have to fight back.

Let’s take a situation where a cardholder, or the issuing bank acting on the cardholder’s behalf, takes a conclusion to dispute a transaction. The bank issues a chargeback and fastens a chargeback reason code to the case, which is a 2-to-4-digit alphanumeric code expressed to recognize the cause for the dispute. You, the merchant, can additionally welcome the dispute, or utilize the reason code to construct a case with engrossing proof of why the original transaction was well grounded.

Each of the major card networks—American Express, Discover, MasterCard, and Visa—has its own particular set of codes. Payment service providers like PayPal may also have unique codes.

Having huge lists can be a bit of troubleshooting, but the chargeback justifications at the back remain pretty compatible across all networks. Whatsoever the reason code instating is being reached out, the lists all show the same basic intention: to identify and narrate the basal motivation beyond the transaction issue.

Reason Codes by Card Network

There are various card brands all across the world. Some are particular to specific districts or nations while leaving out are concentrated on particular industries say for example travel and entertainment cards, and each card has its way for chargeback reason codes. However, the four most broadly used in North America and Europe are, MasterCard, American Express, and Visa.

We’ve provided a breakdown here of the four vital US-based schemes to assist in demonstrating on the resemblance and contrast between the reason codes of different card networks:

Visa Chargeback Reason Codes: With the organization of Visa Claims Resolution, Visa continues their entire reason code system, publishing a fresh list grouped into four major categories: processing errors, authorization errors, fraud, and customer disputes. You’ll see each category is represented by a two-digit number, while the particular reason code is a subdivision of the group constituted by a decimal place.

MasterCard Chargeback Reason Codes: Like Visa, MasterCard renovated its reason code system backward in 2016, liquefying the list to try and overhaul the MasterCard chargeback reason code system. All MasterCard chargebacks active as of 2018 are indicated by a four-digit reason code starting with a 48XX name.

American Express Chargeback Reason Codes: The American Express reason code system is split into the same four subheadings used by Visa, along with a more “Miscellaneous” segment. The alphanumeric code utilizes a letter to represent the section, then a number to recognize the particular reason; for example, “No Card member Authorization” is reason code F14; “F” for the fraud category, and 14 for the cause.

When Reason Code ≠ Reason

The aim at the back of the chargeback reason code system is to omit the guesswork and believe-based decisions. All parties can mention the reason code and know the matter that give a rise to the chargeback. Issuing banks have not to explain their decisions, and acquiring banks and merchants know what particular confirmation they require for presentment.

For the maximum part, the process works for legal chargebacks. The problem is that not all chargebacks are legal.

Established chargeback reason codes do an excellent work of labeling processing errors, merchant fraud, and other “legal” reasons for issuing a dispute. But as research depicts, more and more chargebacks are being raised for filing for that reason you have little to do with the given chargeback code.

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The real motives beyond the disputes, such as buyer’s contribution, family fraud, or an undesired item that has reached beyond the payback date, are not declared legal chargeback reasons. In general, they have no code. However, many of the customers do an “end run” near the problem by making sure that the transaction is fraudulent. This practice is famously known as “friendly fraud.”

While there are few instances where friendly fraud might be a misfortune or a simple misconception, most merchants spectate this technique as a method of getting something for free: in modern words, shoplifting.

Some Related Blogs

Visa Chargeback Reason Code 72
A Merchant’s Guide To Chargeback
How To Handle Chargeback Disputes?

Fighting Fraudulent Reason Codes

The arrangement sounds biased to merchants…and it is by nature.

Criminal fraud or merchant ill behavior has no relation to the true origin of the chargeback, but merchants are only permitted to fight back as opposed to the reason mentioned in the code. Sadly, previously the issuing bank gives reason codes, it’s extremely abnormal for them to be switched, even when up-to-date information becomes accessible. You can contest and win a fight of this nature, but even so, a chargeback reversal is just a comfortable prize. You still invest less time opposing the chargeback and are compulsory to pay the chargeback fee by winning or losing it.

It’s far finer if the unwell claim never gets past the issuing bank initially.

Need More Assistance?

You can’t apply constant and successful chargeback prevention plans until and unless you can look at the root cause of chargebacks.

Chargeback Expertz serves as the initial tool ever developed to make this a real life.

Our expert staff will find out the actual chargeback triggers that influence your business and assist you to know the cause beyond the chargeback reason codes. Contact us today for your business chargeback analysis. We’ll show you how much more you can get by perfectly recognizing chargeback causes, applying an effective prevention strategy, and disputing ill legal chargebacks.

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