The cardholder
The cardholder initiates everything by contacting you, their issuing bank, with a complaint about a transaction. They'll need to provide details and sometimes evidence to support their claim.
Chargeback reason codes: the complete guide for issuing banks
When a cardholder contacts their bank saying, "I didn't make this charge" or "I never got what I paid for," what happens next can make or break their trust in your institution. Behind every disputed transaction is a reason code, a small alphanumeric label that carries big implications for how the dispute gets resolved, who pays, and what evidence is needed.
If you're working at an issuing bank, understanding these codes isn't just about winning disputes. It's about spotting patterns, preventing future problems, and protecting both your portfolio and your customers. Let's dive into what you really need to know about Visa dispute codes and Mastercard chargeback codes in 2025.
What are chargeback reason codes?
Think of reason codes as the diagnostic language of payment disputes. When a cardholder challenges a transaction, these standardised identifiers tell everyone in the payment chain exactly what went wrong and how to fix it.
A chargeback (Mastercard's term) or dispute (Visa's preferred label) happens when a cardholder questions a transaction on their statement. Maybe they don't recognise the charge, never received their order, or noticed they were billed twice. The reason code is the shorthand that captures the specific problem, and more importantly, determines who's responsible for making it right.
For issuing banks, these codes are your roadmap. They tell you:
- What evidence you need to gather
- How much time you have to respond
- Whether you have a strong case for shifting liability to the merchant
- What patterns might be emerging across your portfolio
Without standardised reason codes, every disputed transaction would require custom communication between banks worldwide. Instead, a code like "10.4" instantly tells everyone "this is a card-not-present fraud claim," triggering specific procedures and timelines.
The key players in every dispute
Before we dive into specific codes, let's clarify who does what when a dispute happens:
The issuer
You (The issuer) investigate the claim, determine if it's valid, and represent your cardholder's interests. You're their advocate in the dispute process, but you also need to follow network rules carefully.
The acquirer
The acquirer represents the merchant's interests, much like you represent the cardholder. They'll defend valid transactions and manage any financial adjustments to the merchant's account.
The merchant
The merchant provides evidence to their acquirer to prove the transaction was legitimate. They're often the ones who can resolve disputes fastest by issuing refunds directly.
The card networks
The card networks (Visa, Mastercard, etc.) set the rules, provide the infrastructure for dispute resolution, and make final decisions when disputes escalate to arbitration.
Visa dispute reason codes 101
Visa organises its dispute codes into four main categories, each addressing different types of problems. Here's what you need to know about each:
Category 10: Fraud Disputes - Your first line of defence
Fraud disputes are triggered when cardholders deny making or authorising a transaction. These are often your most time-sensitive cases, and getting them right protects both your customers and your bottom line.
10.1 EMV Liability Shift Counterfeit Fraud
This applies when a counterfeit chip card is used at a terminal that should have read the chip but didn't. If you've invested in issuing EMV chip cards but the merchant hasn't upgraded their terminals, the liability shifts to them. It's a powerful incentive for merchants to adopt secure technology.
10.2 EMV Liability Shift Non-Counterfeit Fraud
Similar principle, but for lost, stolen, or never-received cards. If a PIN-preferring chip card is used at a terminal that can't process PINs properly, the merchant bears the liability. This protects you when merchants fail to use available security features.
10.3 Other Fraud - Card-Present Environment
Watch for patterns here. This code applies when merchants manually key in card numbers instead of using the chip or magnetic stripe. High volumes of 10.3 disputes from specific merchants often signal training issues or deliberate security bypasses.
10.4 Other Fraud - Card-Absent Environment
Your bread and butter for online, phone, and mail-order fraud. Success here depends on using tools like Address Verification Service (AVS), CVV2 verification, and 3D Secure during authorisation. When merchants provide "compelling evidence," you'll need to carefully review it with your cardholder before accepting liability.
10.5 Visa Fraud Monitoring Program
Your safety net. When Visa identifies a merchant with excessive fraud and you can't dispute under other conditions, this code lets you recover funds from systemically problematic merchants.
Category 11: Authorisation disputes - Keeping merchants honest
These disputes ensure merchants follow proper authorisation procedures. They're often your strongest cases because the rules are clear-cut.
11.1 Card recovery bulletin
Less common today, but still relevant for transactions below floor limits where merchants should have checked the Card recovery bulletin but didn't.
11.2 Declined authorisation
This is as straightforward as it gets. If you declined a transaction and the merchant forced it through anyway, they're fully liable. Monitor for these closely: they indicate serious merchant compliance issues.
11.3 No Authorisation/Late presentment
Now includes what used to be code 12.1. Covers missing authorisations, expired authorisations, and late-presented transactions.
Category 12: Processing errors – Getting the details right
These disputes fix technical mistakes in how transactions were processed. They're usually straightforward but require attention to detail.
12.2 Incorrect Transaction Code
When credits are processed as debits or vice versa.
12.3 Incorrect Currency
Dynamic Currency Conversion gone wrong.
12.4 Incorrect Account Number
Transaction posted to the wrong account.
12.5 Incorrect Amount
Simple math or data entry errors.
12.6 Duplicate Processing/Paid by Other Means
Double charges or alternate payment scenarios.
12.7 Invalid Data
Wrong merchant category code or transaction date.
For 12.6 disputes where cardholders paid another way, you'll need proof of the alternate payment. Educate your customers to keep those receipts!
Category 13: Consumer disputes – Managing customer satisfaction
These are often your most complex cases, requiring detailed evidence and usually an attempt at direct merchant resolution first.
13.1 Merchandise/Services Not Received
Rising volumes from specific merchants can signal financial distress or operational problems. Require cardholders to attempt merchant resolution first, but watch for patterns.
13.2 Cancelled Recurring Transaction
Straightforward but common. Ensure you're educating cardholders about proper cancellation procedures.
13.3 Not as Described or Defective
May require neutral third-party opinions. Guide cardholders through evidence collection—photos, expert assessments, and documentation matter.
13.4 Counterfeit Merchandise
No return required, but starting April 2025, formal notification from an authority will be needed. Simplifies your process significantly.
13.5 Misrepresentation
Covers deceptive practices in timeshares, debt consolidation, tech support scams, and more. Watch for patterns by merchant category.
13.6 Credit Not Processed
When promised refunds don't appear. Usually easy to win, but causes significant customer frustration.
13.7 Cancelled Merchandise/Services
Focus on whether cancellation policies were clearly disclosed. Non-disclosure strengthens your case significantly.
13.9 Non-Receipt of Cash at ATM
High-priority customer service issue. Usually easily verified through ATM logs.
Mastercard chargeback reason codes 101
While Mastercard's system parallels Visa's, there are important distinctions you need to know:
Fraud-related chargebacks
4837 No Cardholder Authorisation
Similar to Visa's 10.4, but may have different evidence requirements.
4870/71 Chip Liability Shift
Matches Visa's EMV fraud principles, but be aware of regional timeframe differences.
Authorisation chargebacks
4808 Authorisation-Related
Comprehensive code covering missing, expired, or invalid authorisations with region-specific variations.
Processing errors
4834 Duplicate Processing
Nearly identical to Visa's approach.
4831 Transaction Amount Incorrect
Same concept, potentially different evidence requirements.
Consumer disputes
4853 Cardholder Dispute
Mastercard consolidates many scenarios under this broader category.
4850 Instalment Billing Dispute
Specific to instalment payment issues.
Visa vs. Mastercard: Quick comparison
Time limits: Your critical deadlines
Missing a deadline means losing the dispute, regardless of merit. Here's what you need to remember:
Visa disputes:
- Fraud (Category 10): 120 days from transaction
- Authorisation (Category 11): 75-120 days depending on specific code
- Processing Errors (Category 12): 75-120 days
- Consumer Disputes (Category 13): 120 days, with some extending to 540 days
Mastercard chargebacks:
- Generally 120 days for fraud and consumer disputes
- 90 days for authorisation issues
- Some exceptions extend to 540 days for specific scenarios
Turning reason codes into strategic intelligence
Here's where you move beyond just processing disputes to actually improving your portfolio:
Proactive prevention: Use your dispute data to identify vulnerabilities. High 10.4 volumes? Time to enhance your fraud detection capabilities. Seeing lots of 13.2 recurring billing disputes? Consider improving your payment processing systems to better handle cancellations.
Merchant intelligence: Share insights with your acquirer partners. When you identify problematic merchant behaviours, collaborative solutions benefit everyone.
Customer education: Use dispute trends to create targeted education. If you're seeing lots of DCC-related disputes (12.3), teach cardholders how to spot and avoid unwanted currency conversions.
Best practices for issuing banks
For fraud disputes:
- Report to Visa/Mastercard fraud databases within required timeframes
- Maintain comprehensive authorisation logs
- Review compelling evidence thoroughly before accepting liability
- Use ASAF and similar tools to list compromised accounts
For authorisation disputes:
- Train staff on MCC-specific variance allowances
- Monitor for forced transactions immediately
- Verify all authorisation records before disputing
For processing errors:
- Ask detailed questions during intake to identify the exact error
- Cross-reference internal records meticulously
- Educate cardholders about keeping receipts and documentation
For consumer disputes:
- Enforce merchant resolution attempts where required
- Guide cardholders through evidence collection
- Document merchandise disposition carefully
The technology advantage
Great dispute management happens when banks know the codes, and have the right tools. Consider how automated dispute management systems can help you:
Automatically assign the correct reason code based on cardholder descriptions
Track deadlines and generate alerts
Identify patterns across your portfolio
Gather compelling evidence
Interface seamlessly with Visa Resolve Online (VROL) and Mastercom
What will dispute management look like?
The industry is changing fast, so anticipating is now a critical part of the business. EMV adoption has shifted fraud online, leading to more sophisticated card-not-present fraud schemes. New technologies like tokenisation and biometric authentication are creating new dispute scenarios. Regulations around consumer protection continue expanding globally.
Staying current means more than memorising codes. It means understanding the strategic implications of dispute trends, investing in the right technology, and building processes that protect your cardholders while managing operational costs.
Your action plan
- Audit your current dispute processes against these reason codes. Where are your weak points?
- Analyse your dispute data for patterns. Which codes appear most frequently? What do they tell you about your portfolio?
- Invest in training for your dispute team. Deep knowledge of reason codes and their nuances pays dividends.
- Enhance your technology stack to automate routine disputes and focus human expertise on complex cases.
Understanding chargeback and dispute reason codes isn't just about winning individual cases, it's about building a stronger, more resilient card portfolio. When you master these codes, you're protecting your bottom line while also protecting the trust your cardholders place in you every time they use their card.
Every dispute is an opportunity to demonstrate your value as an issuer. Make sure you're equipped to make the most of it.