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Merchant Card Service - Resources - Chargebacks Overview
Visa and MasterCard have rules that govern all members. These rules determine
the way transactions are handled. They affect procedures for handling sales by
merchants, guidelines for processing by the centers, and requirements for cardholders
presenting bankcards as payment. When any of these rules are violated, the transaction
may become a chargeback. The term "CHARGEBACK" refers to an item that has
been through the settlement process, charged to the card-issuing bank (ISSUER),
and then charged back to the merchant's processing bank (ACQUIRER) because it
is in dispute. A chargeback may occur when the item reaches the ISSUER, or after
it has posted to the cardholder account. Like the transactions themselves, chargebacks
must follow specific guidelines and time limits to be valid. If the chargeback
rules are broken, the center may lose monies in the amount of the transaction
and, possibly, additional monies in the form of penalties.
Chargebacks originate from one of two sources. The first source is the CARDHOLDER (your customer). When the cardholder questions a transaction, they call or write their card-issuing bank. The second source is the card ISSUING BANK. The ISSUING BANK may initiate a chargeback if they cannot post an item to an account, or the sale should not have been completed due to a problem with the transaction. At this point, regardless of who initiates the request, the card ISSUING BANK will forward a request to the processor for proof of the sale. This comes to the merchant in the form of a retrieval request. Prompt response (retrieval requests are dated and there is a time limit) will help eliminate the possibility of a chargeback (funds are not debited from the merchant account at the retrieval request stage). If the merchant does not respond to the retrieval request within the time limit, or if the sale did not comply with the Visa and MasterCard rules, a chargeback results, and the funds are debited from the merchant's account.
To guard against chargebacks, it is important for the merchant to handle Visa and MasterCard transactions properly at the time of the sale. The following section describes the merchant's responsibilities when accepting a Visa or MasterCard sale.
What causes Chargebacks - Example of possible Chargeback scenarios
- Customer-disputed transactions
- Fraud
- Authorization Issues
- Inaccurate or incomplete transaction information
- Processing errors
Chargeback Reason
Chargeback Code |
| VISA |
MC |
Reason |
| 82 |
34 |
Duplicate processing |
| 79 |
01 |
Non Receipt Requested Item |
| 40 |
|
Fraud |
| 61 |
37 |
No Authorization |
| 85 |
60 |
Credit Not Issued |
| 73 |
35 |
Card Not Valid/Expired |
| 41 |
41 |
Cancelled Recurring Transaction |
Chargeback Best Practices
- Act promptly when customers with valid disputes deserve credits
- Provide data rich responses to sales draft retrieval requests
- Know your representment rights
- Clearly display your refund policies
Basic Fraud Tools
- Address Verification Service (AVS)
- CVV2/CVC2/CID
- Card number expiration date
- Card type & Account number
- Visa card types begin with 4
- MasterCard card types begin with 5
- American Express card types begin with 3
- Discover card types begin with 6
We offer competitive services for wireless merchants, home businesses utilizing telephone, mail and Internet sites.
Our center is scalable enough to meet the needs of small to large size establishments.
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| VISA CHARGEBACK |
Rules for Visa Merchants Card Acceptance and Chargeback Management Guidelines.
Download here
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