There are 151 reason codes to categorize chargebacks across Visa, MasterCard, American Express and Discover. These reason codes can be grouped into five main categories: Fraud / No Authorization, Cancel Recurring Billing, Products / Services, Liability Shift, and Other.
Specific breakdowns vary by card network. And it all can be found in the Reason Code Encyclopedia. But overall, Fraud / No Authorization chargebacks account for 52 percent of all disputes. Cancel Recurring Billing Disputes represent the next largest group of chargebacks at 19 percent. Product / Service chargebacks are a close third, at 18 percent of all chargebacks seen. Liability Shift and Other chargebacks represent just 3 percent of chargebacks, respectively. Here's a graph that gives a good visualization.
Fraud / No Authorization
As you can see, Fraud and No Authorization reason codes will represent the majority of chargebacks. Fraud chargebacks are used to represent disputes, where a cardholder’s payment information was stolen and used without their knowledge. No Authorization chargebacks show when customers don't believe their payment information was compromised. But they still don't recall authorizing the transaction.
Potential Fraud Chargeback Dispute Situations
Fraud chargebacks can represent a few different situations. And each card network has unique reason codes that explain the reason for a customer dispute:
Potential No Authorization Chargeback Dispute Situations
Here's the subtle difference between Fraud and No Authorization chargebacks. No Authorization suggests the cardholders were in possession of the card at the date and time of purchase. But they do not recognize a transaction on their statement. Or they just don't remember authorizing a transaction.
No Authorization chargebacks can represent dispute situations, including:
| Dispute Situation | Reason Codes |
| The cardholder did not authorize the transaction. But he or she was in possession of the card at the date and time of purchase. | Mastercard reason code 4837 Mastercard reason code 6321 Mastercard reason code 4837 |
| The cardholder did not authorize a card-not-present transaction. | Mastercard reason code 4540 Discover reason code UA38 Discover reason code 7030 |
| The merchant did not receive authorization for the purchase at the time of the transaction. | Mastercard reason code 4847 Discover reason code UA01 Visa reason code 11.3 |
| The cardholder’s bank can’t verify if authorization was obtained. | Mastercard reason code 4807 Mastercard reason code 4808 Discover reason code IS Discover reason code NA |
| The cardholder’s bank declined authorization at the time of the transaction. | Discover reason code UA20 Discover reason code DA Visa reason code 11.2 |
| The account number does not exist or does not match any accounts on file. | American Express reason code P22 Mastercard reason code 4812 Discover reason code IN Visa reason code 12.7 |
| The cardholder’s bank receives a transaction that the cardholder has already not authorized. | Mastercard reason code 4752 |
Cancel Recurring Billing
Businesses with subscription billing become very familiar with Cancel Recurring Billing chargebacks. There are many things merchants can do to avoid recurring billing chargebacks. But even with every best practice followed, Cancel Recurring Billing chargebacks will likely still appear.
Potential Cancel Recurring Billing Chargeback Dispute Situations
There are a handful of situations that Cancel Recurring Billing chargebacks can represent. This includes:
| Dispute Situation | Reason Codes |
| The cardholder cancelled the recurring transaction by notifying the merchant. But he or she was still billed in the following transaction. | Visa reason code 13.2 Mastercard reason code 4841 American Express reason code 4544 American Express reason code C05 Discover reason code 4541 |
| The cardholder notified the merchant of recurring billing cancellation. But he or she had multiple subsequent cycle transactions have taken place. | Mastercard reason code 4860 American Express reason code C10 American Express reason code C28 Discover reason code AP |
| The cardholder’s credit card on record was expired. Or it was not yet valid when the recurring billing transaction occurred. | Visa reason code 13.2 Mastercard reason code 4835 American Express reason code F22 Discover reason code EX |
| The cardholder was unaware that they were agreeing to a recurring transaction. | Visa reason code 13.2 American Express reason code 176 |
Products / Services
Products / Services chargebacks represent customer disputes that involve issues with the merchant’s merchandise or service. In addition, the cardholder must contact, or attempt to contact, the merchant to resolve the issue. But they can contact their issuing bank if the merchant refused to adjust the price. Or other matters like not having the merchandise replaced. And no issue of credit is a good reason.
Potential Products / Services Chargeback Dispute Situations
Cardholder disputes regarding product or service issues can represent varying circumstances:
Liability Shift
The chip liability shift took effect on October 1, 2015, in the US. It meant big changes for card-present merchants. Instead of the issuer absorbing the losses associated with a counterfeit transaction, merchants that aren’t chip-enabled are liable for the transaction amount.
It didn’t take long to realize that wide-spread EMV adoption would take much longer and cause more losses than expected. That resulted in a large influx of EMV-related chargebacks for merchants who await terminal certification. As a result, the card networks made adjustments to soften the initial chargeback shock for card-present merchants.
Until April 2018, American Express and Visa blocked all U.S. counterfeit fraud chargebacks under $25. And issuers were limited to charging back 10 fraudulent counterfeit transaction per account. Mastercard also had policies in place that limit merchant exposure to Liability Shift chargebacks.
| Dispute Situation | Reason Codes |
| The cardholder claims they were in possession of the chip credit card on the date of the transaction. Or they did not participate or authorize in a card-present transaction used at a magnetic stripe terminal. |
Discover reason code UA05 |
Other
The catch-all chargeback category is fittingly described as ‘Other’. These chargebacks represent a small portion of overall chargebacks seen. Don't get us wrong. There are some chargebacks that represent dispute situations that are unique to the other categories. But there are also reason codes that the card networks use as a catch-all to represent disputes. E.g., some disputes aren’t covered by any other reason code.
Potential Other Chargeback Dispute Situations
Other chargebacks merchants can potentially see include:
| Dispute Situation | Reason Codes |
| A cardholder is disputing the converted amount of the charge on an international transaction. | American Express reason code P23 Mastercard reason code 4846 |
| The cardholder has provided the issuer with proof of payment by another method. | American Express reason code C14 Visa reason code 12.6 |
| The cardholder's bank has not specified the reason for the dispute. | American Express reason code M36 Mastercard reason code 21 |
| The cardholder’s dispute cannot be classified by an existing reason code. | Discover reason code NC Discover reason code UA99 |
Take an In-Depth Look at Chargeback Reason Codes
You can deepen your knowledge beyond the five reason code categories. And there is a way to dig into each card network’s set of chargeback reason codes. You can learn what they mean, what evidence is needed and how you should respond. You can learn it all right here with the Chargeback Reason Code Encyclopedia.