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What are Chargeback Reason Codes?

Chargebacks can be a significant challenge for merchants, but understanding the cause of each chargeback can empower businesses to tackle disputes effectively. Chargeback reason codes are key to this process—they provide insight into why a transaction was reversed and what steps can be taken to prevent future issues

In this article, we’ll dive into what chargeback reason codes are, how they differ across major card networks, and why understanding them is crucial for keeping your revenue intact.

How to Use Chargeback Reason Codes to Protect Your Business

A chargeback reason code is a standardized explanation used by card networks like Visa, Mastercard, Discover, and American Express to describe why a chargeback was initiated

These codes offer merchants valuable insight into transaction disputes, ranging from fraud suspicions to processing errors. Each code helps merchants understand the root cause of a chargeback, allowing them to provide the right evidence to dispute it and to prevent similar chargebacks in the future.

For example, if a reason code indicates that the customer claims the product was never received, providing shipping confirmations could resolve the issue. Knowing what each reason code means allows you to create an efficient strategy for managing disputes and protecting your bottom line.

Why Are Reason Codes Important for Merchants?

Understanding and managing chargeback reason codes is crucial for two main reasons:

  1. Proactive Chargeback Prevention: Identifying recurring issues with transactions can help prevent future disputes, ultimately lowering your chargeback ratio.
  2. Improving Win Rates: Knowing the exact reason for a chargeback allows businesses to craft more targeted and effective responses when contesting disputes.

Reason Codes Across Major Card Networks

Each credit card network has its own set of reason codes, and understanding the specific codes used by each one is key to effectively managing disputes. Below, we break down the chargeback reason codes for Visa, Mastercard, and Discover.

Visa Chargeback Reason Codes

Visa organizes its chargeback reason codes into categories such as fraud, authorization issues, and processing errors. Below is a table of common Visa chargeback codes:

Code Description
12.7 Invalid Data
14.1 Fraudulent Multiple Transactions
13.7 Canceled Merchandise/Services
13.1 Merchandise/Services Not Received
10.4 Other Fraud: Card-Absent Environment

Mastercard Chargeback Reason Codes

Mastercard’s chargeback reason codes generally begin with '48XX' and cover a wide range of issues, from fraudulent transactions to processing errors.

Code Description
4840 Fraudulent Processing of Transactions
4863 Cardholder Does Not Recognize - Potential Fraud
4857 Card Activated Telephone Transaction
4855 Goods or Services Not Provided
4808 Requested/Required Authorization Not Obtained

Discover Chargeback Reason Codes

Discover uses an alphabetical system for its reason codes, making it easy to identify specific issues at a glance.

Code Description
AA Does Not Recognize
IN Invalid Card Number
NA No Authorization
RG Non-receipt of Recurring Goods or Services
DP Duplicate Processing

American Express Chargeback Reason Codes

Similar to Visa but with an added 'Miscellaneous' category, American Express uses both letters and numbers to clearly outline specific disputes, aiding in effective management and resolution.

Code Description
R03 Insufficient Reply
R13 No Reply
C05 Goods/Services Canceled
C02 Credit (or Partial Credit) Not Processed
C32 Goods/Services Damaged or Defective
P07 Late Submission
F29 Card Not Present
FR6 Partial Immediate Chargeback Program
C18 “No Show” or CARDeposit Canceled
C04 Goods/Services Returned or Refused
P23 Currency Discrepancy
FR2 Fraud Full Recourse Program
P08 Duplicate Charge
F31 EMV Lost/Stolen/Non-Received
C31 Goods/Services Not as Described
F30 EMV Counterfeit
C08 Goods/Services Not Received
C28 Cancelled Recurring Billing

Conclusion

Understanding chargeback reason codes is an essential part of managing and preventing disputes. By knowing the specific cause of each chargeback, businesses can take proactive steps to improve their processes, lower their chargeback ratio, and protect their revenue. 

Tools like Disputifier help automate chargeback handling, allowing businesses to manage disputes more efficiently while boosting win rates. 

Take control of your chargebacks today by leveraging a deeper understanding of reason codes and optimizing your chargeback strategy with Disputifier.

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