Chargeback Reason Code

Chargeback reason codes are unique identifiers provided by card issuers to explain the rationale behind a cardholder's transaction dispute. These codes encompass various categories of disputes, including fraud, non-receipt of goods or services, and unauthorised transactions, giving travel companies valuable insights into the specifics of each chargeback. For travel businesses, grasping these codes is vital for effectively addressing disputes, potentially overturning unjust chargebacks, and safeguarding revenue. Chargeback reason codes are integral to the dispute resolution process, enabling travel companies to pinpoint and tackle frequent customer issues that could result in disputes.

Chargeback Reason Codes in Travel Payments

Chargeback reason codes play a crucial role in the travel sector, where substantial transactions and advance reservations are common, making it particularly susceptible to disputes. When a chargeback occurs, these codes help travel companies pinpoint the reason behind the disagreement, whether it stems from fraud, customer dissatisfaction, or issues with service delivery. This insight enables travel businesses to craft precise responses, compile necessary documentation, and potentially reverse unwarranted chargebacks. By effectively managing disputes, travel companies can uphold their reputation, reduce financial losses, and ensure their chargeback ratio does not adversely affect their relationships with payment processors.

Since chargeback reason codes vary among card issuers like Visa, MasterCard, and American Express, understanding the details for each issuer allows travel companies to optimise their dispute responses. Furthermore, these codes assist in recognising trends in customer complaints, empowering travel businesses to tackle the underlying causes of disputes. For instance, if a significant number of chargebacks are linked to service delivery problems, the company may need to reassess its booking procedures, cancellation policies, or customer communication methods.

Chargeback Reason Code Challenges

One of the main difficulties related to chargeback reason codes is the significant administrative effort required to handle and respond to disputes. Chargebacks demand considerable time and resources, and if not managed properly, they can lead to extra fees and strain the business's relationship with payment processors. A high chargeback ratio can result in increased transaction fees and, in extreme cases, the inability to process certain card payments. For travel companies, especially small and mid-sized businesses with limited resources, it can be particularly challenging to balance the need for quick chargeback resolution with other operational demands.

Another issue is the inconsistency of chargeback reason codes across different card issuers, which necessitates that travel companies become well-versed in the codes and dispute procedures for Visa, MasterCard, and American Express. This inconsistency complicates the dispute process, as each issuer has its own specific guidelines, documentation needs, and timelines for resolving disputes. Furthermore, chargeback codes may lack detailed information, compelling travel companies to conduct further investigations to pinpoint the exact cause of the dispute.

Chargeback Reason Codes by Issuer

A summary of typical chargeback reason codes for Visa, MasterCard, and American Express is provided below, highlighting essential categories pertinent to the travel sector.

Visa Chargeback Reason Codes

• 10.1 – Fraudulent Transaction: The cardholder claims they did not authorise the transaction.‍
• 13.1 – Merchandise/Services Not Received: The customer claims they did not receive the goods or services.
• ‍13.3 – Not as Described or Defective Merchandise: The cardholder argues that the service or goods received were significantly different from what was advertised.‍
• 13.6 – Credit Not Processed: The customer claims they were promised a refund that was not issued.‍
• 11.3 – Incorrect Transaction Amount: The customer claims they were charged the wrong amount for the booking or service.

MasterCard Chargeback Reason Codes

• 4837 – Unauthorised Transaction Claim: The cardholder asserts that the transaction was not authorised.‍
• 4853 – Customer Disputes: A general category encompassing customer grievances, including claims of items not received or inadequate service.‍
• 4863 – Unrecognised Transaction: The cardholder contests the transaction, indicating they do not recognise it.‍
• 4870/4871 – Chip Liability Transfer: Pertains to transactions where card-present verification was not possible (uncommon in travel but applicable in physical booking scenarios).‍
• 4808 – Dispute Over Authorisation: The card issuer challenges the transaction due to insufficient authorisation.

American Express Chargeback Reason Codes

• FR2 – Fraudulent Transaction: This indicates that the cardholder asserts the transaction was not authorised.
• ‍C08 – Goods/Services Not Received: The cardholder reports that the promised travel services or goods were not delivered.
• ‍C31 – Goods/Services Not as Described: The service provided was notably different from the customer's expectations.  ‍
• C28 – Cancelled Recurring Transaction: This applies to disputes where the cardholder states they canceled the service but were still billed.  ‍
• P05 – Credit Not Processed: The customer claims they have not received a promised refund.

How Felloh can Help with Chargeback Reason Codes

Felloh empowers travel companies to effectively manage chargebacks by offering tools that provide in-depth insights into chargeback reason codes. With Felloh’s platform, businesses can pinpoint the underlying causes of disputes and address chargebacks promptly and systematically. By granting access to reason codes from each issuer, Felloh equips travel companies to formulate suitable responses and compile the necessary documentation, thereby enhancing the chances of successfully contesting unjustified chargebacks.

Moreover, Felloh plays a crucial role in minimising chargeback occurrences through the implementation of strong fraud prevention strategies that identify suspicious activities before they escalate into disputes. By utilising transaction monitoring and fraud detection technologies, Felloh helps travel companies reduce fraudulent chargebacks, safeguarding their revenue and brand reputation. Additionally, the platform offers extensive reporting features, enabling travel businesses to monitor chargeback patterns and pinpoint areas needing improvement in customer service or operational efficiency.

By streamlining the chargeback process and providing data-driven insights, Felloh allows travel companies to manage disputes effectively, ensuring that chargeback ratios stay within acceptable limits and mitigating the risk of increased fees or penalties from payment processors. With Felloh, travel companies can concentrate on delivering exceptional customer experiences while confidently navigating chargeback challenges.