Chargeback Reason Codes
Understanding chargeback reason codes is essential for subscription businesses and e-commerce merchants who want to minimize revenue loss and maintain healthy payment processing relationships. Each card network defines hundreds of codes representing very specific reasons for dispute claims, many of which overlap across all networks, but the key to effective chargeback management lies in recognizing patterns and implementing data-driven prevention strategies.
Visa Chargeback Reason Codes
Visa is the world’s largest card network and therefore the one merchants will be dealing with most often, both when accepting payments and when those payments turn into chargebacks. For subscription businesses, Visa’s streamlined reason code system under the Visa Claims Resolution (VCR) initiative is particularly important to understand.
With over 3.6 billion Visa cards in circulation globally and processing more than 150 billion transactions annually, Visa’s policies and procedures have an outsized impact on the payment ecosystem. The network’s dominant market position means that changes to Visa’s dispute resolution processes ripple throughout the entire industry, making it essential for merchants to stay current with Visa’s evolving requirements and opportunities.
The Visa Claims Resolution initiative, launched in April 2018, represents the most comprehensive overhaul of Visa’s dispute management system in over two decades. This initiative was specifically designed to address the growing complexity of digital commerce, reduce dispute resolution timeframes from months to weeks, and provide clearer guidance for merchants navigating the dispute process. For subscription businesses, VCR introduced both streamlined opportunities and new challenges that require careful navigation.
The VCR system categorizes all Visa reason codes into four clear categories, making it easier for merchants to quickly identify the dispute type and implement appropriate response strategies. These categories—Fraud (10.x codes), Authorization (11.x codes), Processing Errors (12.x codes), and Consumer Disputes (13.x codes)—each require distinct types of evidence, operate under different timeframes, and respond to different prevention strategies. This is especially valuable for subscription businesses that process recurring transactions and need to identify patterns in dispute behavior across multiple billing cycles, customer segments, and service delivery touchpoints.
The systematic approach enables subscription businesses to develop specialized response protocols for each category while building comprehensive prevention strategies that address the root causes of disputes rather than just reactive damage control. Understanding these categories allows merchants to allocate resources more effectively, focusing prevention efforts where they’ll have the greatest impact on both dispute reduction and customer satisfaction.
Fraud
Description
EMV Liability Shift Counterfeit Fraud
Time Limit (Issuer/Cardholder)
120 days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder has a chip card and someone made a counterfeit copy of it
- You processed a transaction with the counterfeit card on a terminal that wasn’t EMV-compliant
- The transaction should have used chip reading technology that would have detected the fraud
- Liability shifted to merchant due to improper EMV processing
Transaction Modifiers
- EMV Liability Shift Counterfeit Fraud
Prevention Steps
- Only use EMV-compliant terminals and keep them updated
- Always use the correct cardholder verification method—signature, PIN, etc.
- Create an electronic or manual imprint for every card-present transaction
- Train staff to always attempt chip reading before falling back to swipe
Description
EMV Liability Shift Non-Counterfeit Fraud
Time Limit (Issuer/Cardholder)
120 days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder has a PIN-preferring chip card, but you didn’t use a chip-reading device to process the transaction
- You used a chip-reading device that wasn’t PIN compliant
- The cardholder claims the purchase was unauthorized
Transaction Modifiers
- EMV Liability Shift Non-Counterfeit Fraud
Prevention Steps
- Only use EMV-compliant terminals
- Always use the correct cardholder verification method—signature, PIN, etc.
- Create an electronic or manual imprint for every card-present transaction
- Train staff on proper chip transaction procedures
Description
Other Fraud: Card-Present Environment/Condition
Time Limit (Issuer/Cardholder)
120 days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder claims the transaction was unauthorized and it was either a key-entered or unattended transaction
- Card was manually entered without proper verification procedures
- Fraudulent use of stolen card in physical environment
Transaction Modifiers
- Other Fraud – Card Present Environment
Prevention Steps
- Use fallback options—like manually entering transaction data—as a last resort
- If you do perform a key-entered transaction, make a manual imprint of the card
- Make sure you differentiate between card-absent and card-present transactions during clearing
- Verify cardholder identity through proper ID checks
Description
Other Fraud – Card-Absent Environment
Time Limit (Issuer/Cardholder)
120 days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder claims a card-not-present transaction was unauthorized
- Account takeover resulting in unauthorized purchases
- Identity theft with stolen card information
- Family member disputes after discovering charges
Transaction Modifiers
- Other Fraud – Card Absent Environment
Prevention Steps
- Consider using all the tools available to you—including Visa Secure, card security code (CVV2), and Address Verification Service (AVS)
- Use pre-sale fraud detection service providers that can help verify the cardholder’s identity
- Use a billing descriptor that is easily recognized by the cardholder
- Always submit an authorization request, no matter the transaction amount
- Make sure you differentiate between card-absent and card-present transactions during clearing
Description
Visa Fraud Monitoring Program
Time Limit (Issuer/Cardholder)
120 days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- Your business is enrolled in the Visa Fraud Monitoring Program and the issuer was allowed to dispute the fraudulent transaction
- Merchant fraud rates exceeded Visa thresholds
Transaction Modifiers
- Visa Fraud Monitoring Program
Prevention Steps
- Monitor your fraud-to-transaction ratio and take necessary steps to prevent breaching thresholds established by Visa
- Implement robust fraud detection and prevention tools
- Review and improve authentication processes
Authorization
Description
Card Recovery Bulletin
Time Limit (Issuer/Cardholder)
75 days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The transaction was above your floor limit, but you didn’t request authorization
- Since the authorization process wasn’t used, you didn’t realize the account number was listed in the Card Recovery Bulletin
- The transaction should have been terminated
Transaction Modifiers
- Card Recovery Bulletin or Exception File
Prevention Steps
- Always send an authorization request before processing a transaction if the amount is above your floor limit
- Check the Card Recovery Bulletin if the transaction is below your floor limit
- If you process transactions with multiple authorizations, make sure you fully understand Visa’s rules and regulations
Description
Declined Authorization
Time Limit (Issuer/Cardholder)
75 days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- You received a Decline or Pickup authorization response, but chose to complete the transaction anyway
- Multiple authorization attempts after initial decline
Transaction Modifiers
- Declined Authorization
Prevention Steps
- If you receive a Decline or Pickup authorization response, either terminate the transaction or submit a second authorization request
- Never proceed without authorization
- If you process transactions with multiple authorizations, make sure you fully understand Visa’s rules and regulations
Description
No Authorization
Time Limit (Issuer/Cardholder)
75 days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The transaction was processed without any attempt to gain authorization
- Authorization was requested after the fact or for a different amount
Transaction Modifiers
- No Authorization
Prevention Steps
- Always send an authorization request before processing a transaction if the amount is above your floor limit
- If you process transactions with multiple authorizations, make sure you fully understand Visa’s rules and regulations
Processing Errors
Description
Late Presentment
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The merchant does not process a transaction in a timely manner; the account was no longer in good standing at the time of processing
Transaction Modifiers
- Late Presentment
Prevention Steps
- Make sure you send completed transactions to your payment processor within the timeframe specified in your merchant agreement
- A good practice is to submit transactions on the day of the sale or as soon as possible
Description
Incorrect Transaction Code
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The merchant processed a debit instead of a credit, processed a credit instead of processing a reversal
- In some other way processed a transaction that differed from the obtained authorization
Transaction Modifiers
- Incorrect Transaction Code
Prevention Steps
- Hold regular staff training sessions to ensure everyone on your team knows how to correctly process transactions, refunds, and adjustments
Description
Incorrect Currency
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The transaction currency differs from the currency transmitted through Visa
- The cardholder was not advised or did not agree that Dynamic Currency Conversion (DCC) would occur
Transaction Modifiers
- Incorrect Currency
Prevention Steps
- Don’t automatically apply Dynamic Currency Conversion (DCC) to transactions
- Give customers the option to select the service if they are interested, but don’t require its use
- Have systems in place to manage multiple currencies
Description
Incorrect Account Number
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The transaction was processed to an incorrect account number
- The adjustment was processed more than 45 days from transaction date
- An adjustment was posted to a “closed” or “non-sufficient funds” account more than 10 days after the transaction date
Transaction Modifiers
- Incorrect Transaction Account Number
Prevention Steps
- Always request authorization before completing a transaction
- If an authorization request is denied, stop the transaction and ask for an alternate form of payment
- Always swipe or dip a card—only use fall-back options in emergency situations
Description
Incorrect Amount
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder claims the transaction amount is incorrect
- An error was made entering numbers manually; the amount of the transaction was changed without the cardholder’s consent
Transaction Modifiers
- Incorrect Transaction Amount
Prevention Steps
- Unless authorized, never change the amount of a completed transaction without the cardholder’s consent
- Use caution when entering handwritten transaction information
- Always swipe or dip a card—only use fall-back options in emergency situations
Description
Duplicate Processing/Paid By Other Means
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The merchant tries to submit multiple batches at one time; the transaction has multiple receipts
- The transaction is duplicated in the merchant’s system
- The transaction was processed but the cardholder paid for the same merchandise or service by other means
Transaction Modifiers
- Duplicate Processing or Paid by Other Means
Prevention Steps
- If you notice a duplicate transaction, issue a credit as soon as possible
- Double check all transaction receipts before they are deposited
- Only send batches one time
- If the customer wants to change to a different form of payment after initially offering the payment card, be sure to void the charge
Description
Invalid Data
Time Limit (Issuer/Cardholder)
75 days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The merchant submits an authorization request containing an incorrect transaction date, MCC, merchant or transaction type indicator, country or state code, or other required field
Transaction Modifiers
- Invalid Data
Prevention Steps
- Supply all necessary information with each authorization request, including transaction date, MCC, transaction type indicator, country code, and state code
- Make sure your correct MCC is used in the authorization request and it matches what will be sent with transaction clearing
Consumer Disputes
Description
Merchandise/Services Not Received
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The customer claims you didn’t provide the goods or services as promised
- The merchant delays delivery; the merchant charges the cardholder prior to shipping or delivery
- The merchant ships on time or has the product available for pick-up but does not inform the customer
Transaction Modifiers
- Services Not Provided or Merchandise Not Received
Prevention Steps
- Abide by the delivery date you promised
- Have merchandise ready for pickup at the time you specified it would be available
- Make sure you accurately describe the services that will be provided
- Don’t charge the card until the merchandise has been shipped
- Notify the customer as soon as possible if merchandise is out of stock or the delivery will be delayed
Description
Cancelled Recurring Transaction
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder claims you processed a recurring transaction after they requested a cancellation
- You processed a recurring transaction on an account that had been closed
- The cardholder withdraws permission to charge the account or cancels payment for subscription
Transaction Modifiers
- Cancelled Recurring Transaction
Prevention Steps
- Make sure qualified cancellation and non-renewal requests are fulfilled promptly
- Send a notification after you’ve cancelled the recurring payment
- If new fees are incurred after the cancellation, communicate with the cardholder about how those charges should be handled
- Clearly and concisely communicate your cancellation policy and make it easy for customers to find the information
- Remind customers of upcoming charges, especially if a significant amount of time passes between each recurring billing cycle
Description
Not As Described Or Defective Merchandise/Services
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder claims goods or services provided didn’t match the description listed or verbally provided at the time of purchase
- Were defective or damaged, or the quality wasn’t what was expected
- The merchandise was damaged in transit; the merchandise does not match the merchant’s description
Transaction Modifiers
- Not as Described or Defective Merchandise/Services
Prevention Steps
- Make sure all service and merchandise descriptions are complete, accurate, and not misleading
- Use the correct size boxes and sufficient packing material so items won’t break in transit
- Make sure your fulfillment department is familiar with your merchandise, has a complete understanding of what has been purchased, and knows what to ship
- Resolve the issue yourself. Don’t refer the cardholder to the manufacturer instead
Description
Counterfeit Merchandise
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The merchant is unaware of the counterfeit merchandise; the customer fraudulently claims the goods are not genuine
- (Note: This reason code supersedes merchants’ return policy)
Transaction Modifiers
- Counterfeit Merchandise
Prevention Steps
- Only sell genuine merchandise
- Make sure all product descriptions are complete, accurate, and not misleading
Description
Misrepresentation
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The merchant’s product descriptions are vague, inaccurate, or insufficient
- Examples of typical merchant types for this dispute include: timeshare reseller, debt consolidation, credit repair, foreclosure relief services, investment products, and the like
Transaction Modifiers
- Misrepresentation of the purchased good and/or service
Prevention Steps
- Make sure all descriptions of the services or merchandise are complete, accurate, and not misleading
- Clearly and concisely communicate your terms of service and make it easy for customers to find the information
- Fully comply with all of Visa’s requirements for free trials, introductory offers, and upsells
Description
Credit Not Processed
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The merchant didn’t credit the account; the merchant issued the credit but not in time to be posted to the customer’s most recent statement
- The customer misunderstood the return policy; the merchant processed a transaction receipt that should have been voided
Transaction Modifiers
- Credit Not Processed
Prevention Steps
- Take care not to accidentally process transactions that should be voided or cancelled
- Adhere to any promises for credits or refunds
- Fulfill all qualified cancellations or refund requests promptly so the credit will appear on the cardholder’s next statement
Description
Cancelled Merchandise/Services
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder claims to have returned merchandise or cancelled a service, but credit hasn’t been applied to the cardholder’s statement yet
- The merchant has not yet issued a due credit; issued the credit but it hasn’t posted to the customer’s account yet
Transaction Modifiers
- Cancelled Merchandise/Services
Prevention Steps
- If you never received returned merchandise from the cardholder, provide documentation that proves inaction on the cardholder’s part
- If you received returned merchandise but didn’t accept it because it violated your return policy, provide documentation that proves you refused delivery
- If the cardholder didn’t abide by your cancellation policy, provide documentation that proves why you didn’t fulfill the cancellation requisition
Description
Original Credit Transaction Not Accepted
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder did not accept the credit or local laws prohibit the issuer from allowing original credit transactions (OCTs)
Transaction Modifiers
- Original Credit Transaction Not Accepted
Prevention Steps
- Maintain accurate records
- Familiarize yourself with usage laws for areas you serve
Description
Non-Receipt of Cash or Load Transaction Value
Time Limit (Issuer/Cardholder)
120 Days
Time Limit (Acquirer/Merchant)
30 days (cut to 20 days in 2019)
Typical Causes
- The cardholder claims not to have received cash or only received a partial amount from an ATM withdrawal
- Or, the cardholder did not receive the correct load transaction value
Transaction Modifiers
- Non-Receipt of Cash or Load Transaction Value at ATM
Prevention Steps
- Reconcile ATMs promptly
- Adjust out-of-balance ATMs
- Process a credit as soon as possible if you notice a discrepancy
