In the realm of payment processing, chargebacks are a common occurrence that can significantly impact businesses, especially in the Fintech sector. Chargebacks are initiated by customers who dispute a transaction with their card issuer, leading to funds being reversed back to the customer’s account. To categorize the various reasons behind chargebacks, the industry employs a system of Chargeback Reason Codes. These codes provide clarity to payment service providers, payment facilitators, and businesses by outlining the specific rationale for each chargeback. This article delves into the concept of Chargeback Reason Codes and presents a list of some of the most common ones.
What Are Chargeback Reason Codes?
Chargeback Reason Codes are alphanumeric identifiers used to classify the underlying reasons for a chargeback. These codes are typically provided by card networks like Visa, Mastercard, and American Express. By using these codes, payment processors and businesses can gain insights into the primary causes of chargebacks, allowing them to take proactive measures to reduce their occurrence.
Common Chargeback Reason Codes
| Code | Reason |
|---|---|
| 30 | Services Not Provided or Merchandise Not Received |
| 41 | Cancelled Recurring Transaction |
| 53 | Not as Described or Defective Merchandise |
| 63 | Card Not Valid or Expired |
| 70 | Misinterpreted Transaction |
| 83 | Fraudulent Transaction – Card Absent Environment |
| 85 | Credit Not Processed |
| 93 | Merchant Fraud Performance |
| 71 | Declined Authorization |
| 72 | No Authorization |
Managing Chargebacks Effectively:
Reducing chargebacks requires a multifaceted approach. Businesses within the Fintech and payment service provider sector can consider the following strategies:
Enhanced Communication: Maintain transparent and detailed transaction descriptors so that customers can recognize their purchases easily.
Robust Customer Support: Promptly address customer concerns and provide clear avenues for dispute resolution.
Fraud Detection and Prevention: Implement robust fraud detection mechanisms to thwart unauthorized transactions.
Refund Policy Visibility: Clearly communicate refund policies to customers to manage their expectations.
Accurate Descriptions: Ensure that product or service descriptions are accurate, leaving no room for misunderstandings.
