Mastercard chargeback reason codes consist of a series of identifiers utilized to categorize various chargeback circumstances, which represent the disagreements raised by cardholders against merchants.
These codes play a crucial role in organizing disputes and guiding the subsequent actions required. Each chargeback is linked to a distinctive 4-digit alphanumeric code provided by the cardholder’s bank, which specifies the reason for the challenge.
Prominent card networks, including Visa and Mastercard, maintain their own unique sets of these codes. For merchants, these codes are essential as they assist in identifying recurring issues that lead to chargebacks and in recognizing baseless claims that require the merchant’s response.
Purpose of Mastercard Chargeback Reason Codes
The primary function of Mastercard chargeback reason codes is to establish a standardized terminology and system for recognizing, discussing, and addressing conflicts between cardholders and merchants. These codes act as a valuable reference for comprehending the fundamental reasons for each chargeback. Because chargebacks can impose significant costs on both merchants and card issuers, employing a uniform set of reason codes facilitates the efficient management and resolution of these issues. This standardization allows for faster pinpointing of the concerns involved and empowers merchants to implement measures to avert future chargebacks.
List of Mastercard Chargeback Reason Codes: By Category
The list of Mastercard chargeback reason codes can be divided into a few different subgroups. We’ve outlined these below:
Authorization-Related Chargebacks
- 4808 — Warning Bulletin File
- 4808 — Authorization-Related Chargeback
- 4808 — Account Number Not on File
- 4808 — Required Authorization Not Obtained
- 4808 — Expired Chargeback Protection Period
- 4808 — Multiple Authorization Requests
- 4808 — Cardholder-Activated Terminal (CAT) 3 Device
- 4834 — Late Presentment
Point of Interaction Error Chargebacks
- 4834 — Point of Interaction Error
- 4834 — Transaction Amount Differs
- 4834 — Point-of-Interaction Currency Conversion
- 4834 — Duplication/Paid by Other Means
- 4834 — ATM Disputes
- 4834 — Loss, Theft, or Damages
No Cardholder Authorization/Fraud-related Chargebacks
- 4837 — No Cardholder Authorization
- 4849 — Questionable Merchant Activity
- 4870 — Chip Liability Shift
- 4871 — Chip / PIN Liability Shift–Lost / Stolen / Never Received Issue (NRI) Fraud
Cardholder Dispute Chargebacks
- 4853 — Cardholder Dispute of a Recurring Transaction
- 4853 — Goods or Services Not Provided
- 4853 — No-Show Hotel Charge
- 4853 — Addendum Dispute
- 4853 — Credit Not Processed
- 4853 — Goods/Services not as Described or Defective
- 4853 — Digital Goods $25 or less
- 4853 — Counterfeit Goods
- 4853 — Transaction Did Not Complete
- 4853 — Credit Posted as a Purchase
Installment Billing Dispute
- 4850 — Installment Billing Dispute
Cardholder Dispute Not Classified Elsewhere
- 4854 — Cardholder Dispute Not Classified Elsewhere (US)
Legacy Reason Codes (No Longer In Use)
- 4807 — Warning Bulletin File
- 4812 — Account Number Not on File
- 4859 — No Show / Addendum / ATM Dispute
- 4860 — Credit Not Processed
The Reason Code Is Not Always Correct
Chargeback reason codes are designed to remove uncertainty and simplify the decision-making process. By using these codes, all parties involved can readily understand the circumstances that prompted the chargeback.
Issuing banks are not required to justify their choices, while acquiring banks and merchants gain clarity on the documentation needed for representment. Seems to make sense, right? Well, the challenge arises when we learn that not all chargebacks are warranted.
Reason codes are useful in pinpointing processing mistakes, merchant fraud, and other justifiable dispute causes. But, studies suggest a growing trend of chargebacks being initiated for reasons that do not align with the provided code.
Valid grievances like buyer’s remorse, fraud perpetrated by relatives, or non-returnable items lack appropriate codes for chargebacks. Nevertheless, customers often try to sidestep this issue by falsely alleging that the transaction was a fraud; this tactic is referred to as “friendly fraud.”
While friendly fraud can sometimes stem from errors or miscommunication, most merchants view it as a scheme to receive goods or services without compensating. Essentially, this behavior parallels shoplifting. Although a merchant’s conduct may not pertain to the actual chargeback cause, they are only able to dispute the reason outlined by the assigned code.
Once issuing banks designate reason codes, altering them after the fact is uncommon, even with the introduction of new evidence. While challenging and overturning such disputes can occasionally be successful, having a chargeback reversed remains a secondary accomplishment. Merchants still dedicate resources to contesting chargebacks, and incur the resulting fees, regardless of the outcome.
