What is a Transaction Modifier?

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What is a Transaction Modifier
By looking at reason codes and transaction modifiers to create dispute responses and operational practices, merchants will be in the best position to prevent disputes and recover revenue.

In the world of dispute management, knowing what evidence is required in a dispute response document and gathering that evidence are the most vital parts of regaining lost revenue. When a dispute is filed, there will be a reason code attached to provide understanding into why a specific chargeback occurred and, most importantly, what specific evidence can be provided by a merchant who wants to challenge the dispute.

Dispute responses are most powerful when the compelling evidence provided is exactly what the card network rules and regulations request. This is why a knowledge of reason codes and transaction modifiers is necessary to successfully recover revenue and win disputes.

What is a Transaction Modifier in Dispute Management?

A transaction modifier (or modifier) represents specific circumstances associated with a card sale that change what compelling evidence is required in the response document. Think of a transaction modifier as a moderator for a reason code that makes the evidence more relevant depending on the merchant's industry, type of delivery, and other factors.

For example, MasterCard Reason Code 4837 is one of the reason codes with several modifiers. Reason Code 4837 is used for disputes claiming "No Cardholder Authorization." The types of transactions that could be disputed with this reason code are incredibly varied, with customers purchasing everything from digital goods to airline tickets. Because of this, MasterCard has attached multiple transaction modifiers to the reason code that changes the required compelling evidence to be more relevant to the disputed transaction.

How do Transaction Modifiers Impact Responses?

Merchants looking to create dispute responses should be aware of modifiers as they potentially impact the evidence needed to respond. As was mentioned, the exact compelling evidence that the card networks ask for is vital in making the strongest case possible.

How do Transaction Modifiers Look Across the Card Networks?

Some card networks have only a few modifiers, Visa does not have any, and MasterCard has over 20. Here are some common transaction modifiers across networks:

Airline Transaction

Airline merchants can provide specific evidence to prove the cardholder purchased the tickets or used their service. Depending on the card network, airline merchants could provide evidence such as:

  • Flight ticket or boarding pass showing the passenger's name
  • Evidence that the cardholder or designated passenger participated in the flight (e.g., scanned boarding pass or passenger manifest)
  • Additional transactions connected with the disputed flight, such as upgrades, excess baggage charges, and in-flight purchases

Site-to-Store

Site-to-Store or BOPIS (Buy Online Pickup In-Store) purchases can have a transaction modifier. Depending on the card network and reason code merchant could provide evidence such as:

  • The cardholder signature on the pick-up form
  • Any additional proof to demonstrate that the identity of the cardholder was verified at the time of pick-up

Dispute Prevention in Operations

Reason codes and transaction modifiers help merchants know what compelling evidence is required in a dispute response. They also can help merchants create operational practices that can help prevent and win disputes.

Let's take the example of the site-to-store transaction modifier. If a merchant is not asking for the cardholder's signature or ID at the time of pick-up, not only are they opening their business to possible disputes, they don't have the evidence they need to regain revenue from disputes.

By looking at reason codes and transaction modifiers to create dispute responses and operational practices, merchants will be in the best position to prevent disputes and recover revenue.

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