The small business’ guide to credit card chargeback codes
We’ll start with the bad news: Chargebacks increase by over 20% each year.
The better news: Merchants have the option to challenge said chargebacks and, when successful, reclaim money lost.
Chargebacks are a reality of running a small business, and a complex one at that. But when you’re familiar with credit card chargeback codes, you have a much better chance of winning a dispute.
What is a chargeback?
Let’s start at the beginning: A chargeback happens when a credit card transaction is disputed, either at the request of the cardholder or a card issuer.
That usually means that a cardholder saw a charge on their account and contacted their bank to dispute it, likely citing fraud as the concern. The bank will investigate the claim, and if they find it valid, they issue a chargeback. The amount of the original sale is deducted from your account, and the funds are returned to the cardholder’s account.
In the simplest of terms, a chargeback is the reversal of a single transaction. But unlike most refunds, the customer contacts the bank for the refund, instead of the business directly. So your business is hit with a chargeback fee, as well as possible long-term damage.
In the simplest of terms, a chargeback is the reversal of a single transaction. But unlike most refunds, the customer contacts the bank for the refund, instead of the business directly.

If you experience a significant volume of chargebacks (accounting to over 1% of your total transactions), your business may be flagged as high-risk by payment processors. That leads to high processing costs, high fees and even the risk of having your account frozen.
Not great, huh? So let’s dive into why chargebacks occur, how you can dispute them and how to avoid them altogether. We’re going to cover:
- Why chargebacks happen
- Credit card chargeback reason codes by category
- Credit card chargeback reason codes by card network
- How to investigate chargebacks and build a rebuttal case
- How to change your business operations and technology to avoid certain chargebacks

Why do chargebacks happen?
A few things can cause someone to dispute a charge, but common chargeback causes include:

A customer never received the goods or services they paid a merchant for

A merchant duplicated a customer’s charge in error

A customer was dissatisfied with a service but the merchant refused to offer a refund

A customer returned an item, but the merchant never processed the refund

Goods or services were purchased on a stolen credit or debit card

Technical issues
Each of these, and more, has what we call a chargeback reason code.
What is the chargeback reason code?
A chargeback reason code is just what it sounds like: A code indicating the reason a charge was disputed and a chargeback occurred. They are provided to the merchant by the issuing bank, and they help all involved parties categorize disputes and determine next steps.
It’s important to note that these are not standardized: Each credit card brand has its own list of reason codes.
How do reason codes help fight chargebacks? First, they let a merchant know what evidence to look for when they’ve been hit with a chargeback, so they’re able to dispute it (if applicable).
For example, if you’re alerted of a Mastercard code 4853 chargeback (goods or services not provided), you can present the issuing bank with delivery confirmation from the shipping partner that delivered the package.
And while chargebacks are never fun to deal with, the silver lining is they can help you improve your business operations and prevent issues from happening in the future. If you’re met with a Mastercard 4837 (no cardholder authorization), that’s a sign that you need to train employees to get a signature from every customer, and confirm that it matches the signature on the back of their card. Unsigned cards should never be accepted.
Top 5 reasons chargebacks occur
30%
Transaction was made with a stolen card26%
Purchase was never delivered15%
Incorrect product was shipped8%
Purchase didn't meet customer expectations3%
Clerical errorsHow are credit card chargeback reason codes grouped?
Chargeback reason codes are divided into four groups: processing errors, fraud, authorization and customer disputes.
Processing errors
If you receive a processing error chargeback, it usually means something went wrong at the point of purchase. That could include duplicate charges, incorrect transaction amount, incorrect currency or missing/incorrect identification data, like billing ZIP code. Processing errors – at least when they occur during in-person transactions – are often due to human error. That means many are preventable on the merchant’s part.
Fraud
Fraud chargebacks refer to all general fraudulent transactions — things like stolen credit cards, compromised card information and card charges that exceed the floor limit (the maximum dollar amount a merchant can charge someone without prior authorization).
EMV compliance is critical to preventing in-person card payment fraud. Without it, you’re a sitting duck for chargebacks, loss of merchandise, and fines. Today’s fraudsters seek out and take advantage of merchants without EMV terminals who rely on magstripe readers. Why? These non-compliant terminals make it easy for counterfeit card holders to get away with illegal transactions.

Since chip cards are impossible to duplicate, if the merchant had required the fraudster to dip or tap the card, they wouldn’t have been able to complete the transaction without knowing the correct PIN number and the fraudulent purchase wouldn’t have happened.
In fact, some fraudsters will use their own legitimate EMV chip card at vulnerable merchant locations where they can swipe their card instead of dip it in an EMV enabled terminal. These clever criminals make a legitimate purchase, and then later claim a chargeback. Since the merchant isn’t EMV compliant they don’t stand a chance in a chargeback dispute. Stay tuned for more on that and the importance of EMV in preventing chargebacks.
Since 2015, EMV-compliant merchants have seen counterfeit fraud drop 76%
Authorization
These are cases in which a charge was simply not authorized. The customer may have not signed for a purchase, or they signed for an amount different than what they were charged. It is critical for merchants to be vigilant about obtaining payment authorization for every transaction. These days, it’s tempting to allow customers to walk away without signing a receipt – especially when you provide email or text receipts – but doing so can come back to haunt you later.
Customer disputes
Customer dispute chargebacks usually occur when a cardholder has an issue with what they were charged for a good or service — perhaps the product was never received, it wasn’t available for pick-up by the guaranteed date or monthly charges continued after services were canceled. Other times, customers have received the service or product they ordered but are dissatisfied with it. Ideally, said customers will contact you directly to resolve, but unfortunately some will go to their bank first, or turn to their credit card issuer for support if they’re dissatisfied with your response. We’ll discuss working with customers directly to resolve disputes in a bit.
Chargeback reason codes by card type
Each credit card brand has a unique set of chargeback codes, totaling over 100. You won’t be memorizing those, so we recommend bookmarking this page, so you can always quickly reference it.
More insights continue after this chart, so keep scrolling!
Scroll to bottomChargeback code | Description |
---|---|
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|
Processing | |
12.1 | Late Presentment |
12.2 | Incorrect Transaction Code |
12.3 | Incorrect Transaction Currency Code |
12.4 | Incorrect Account Number |
12.5 | Incorrect Amount |
12.6 | Duplicate Processing/Paid by Other Means |
12.7 | Invalid Data |
Fraud | |
10.1 | EMV Liability Shift Counterfeit Transaction Fraud |
10.2 | EMV Liability Shift Non-Counterfeit Fraud |
10.3 | Other Fraud-Card Present Environment |
10.4 | Other Fraud-Card Absent Environment |
10.5 | Visa Fraud Monitoring Program |
Authorization | |
11.1 | Card Recovery Bulletin |
11.2 | Declined Authorization |
11.3 | No Authorization |
Dispute | |
13.1 | Merchandise/Services Not Received |
13.2 | Cancelled Recurring |
13.3 | Not as Described or Defective Merchandise/ Services |
13.4 | Counterfeit Merchandise |
13.5 | Misrepresentation |
13.6 | Credit Not Processed |
13.7 | Cancelled Merchandise/Services |
13.8 | Original Credit Transaction Not Accepted |
13.9 | Non-Receipt of Cash or Load Transaction Value |
![]() |
|
Processing | |
P01 | Unassigned Card Number |
P03 | Credit Processed as Charge |
P04 | Charge Processed as Credit |
P05 | Incorrect Charge Amount |
P07 | Late Submission |
P08 | Duplicate Charge |
P22 | Non-Matching Card Number |
P23 | Currency Discrepancy |
Fraud | |
FR2 | Fraud Full Recourse Program |
FR4 | Immediate Chargeback Program |
FR6 | Partial Immediate Chargeback Program |
F10 | Missing Imprint |
F14 | Missing Signature |
F24 | No Cardmember Authorization |
F29 | Card Not Present |
F30 | EMV Counterfeit |
F31 | EMV List / Stolen / Non-received |
Authorization | |
A01 | Charge amount exceeds authorization amount |
A02 | No valid authorization |
A08 | Authorization approval expired |
Dispute | |
C02 | Credit not processed |
C04 | Goods / services returned or refused |
C05 | Goods / services canceled |
C08 | Goods / Services Not Received or Only Partially Received |
C14 | Paid by Other Means |
C18 | “No Show” or CARDeposit Canceled |
C28 | Canceled Recurring Billing |
C31 | Goods / Services Not as Described |
C32 | Goods / Services Damaged or Defective |
M10 | Vehicle Rental - Capital Damages |
M49 | Vehicle Rental - Theft or Loss of Use |
Other | |
R03 | Insufficient Reply |
R13 | No reply |
M01 | Chargeback Authorization |
![]() |
|
Processing | |
IN | Invalid Card Number |
LP | Late Presentment |
Fraud | |
UA01 | Fraud / Card Present Environment |
UA02 | Fraud / Card-Not-Present Environment |
UA05 | Fraud / Counterfeit Chip Transaction |
UA06 | Fraud / Chip-and-Pin Transaction |
UA10 | Request Transaction Receipt (swiped card transactions) |
UA11 | Cardholder claims fraud (swiped transaction, no signature) |
Authorization | |
AT | Authorization Non-compliance |
DA | Declined Authorization |
EX | Expired Card |
NA | No Authorization |
Dispute | |
AA | Cardholder Does Not Recognize |
AP | Canceled Recurring Transaction |
AW | Altered Amount |
CD | Credit Posted as Card Sale |
DP | Duplicate Processing |
IC | Illegible Sales Data |
NF | Non-Receipt of Cash from ATM |
PM | Paid by Other Means |
RG | Non-Receipt of Goods or Services |
RM | Quality Discrepancy |
RN2 | Credit Not Received |
NC | Not Classified |
![]() |
|
Processing | |
4834 | Point of Interaction Error |
4834 | Transaction Amount Differs |
4834 | Late Presentment |
4834 | Point-of-Interaction Currency Conversion |
4834 | Duplication/Paid by Other Means |
4834 | ATM Disputes |
4834 | Loss, Theft, or Damages |
Fraud | |
4837 | No Cardholder Authorization |
4849 | Questionable Merchant Activity |
4870 | EMV Chip Liability Shift |
4871 | EMV Chip/PIN Liability Shift |
Authorization | |
4807 | Warning Bulletin File |
4808 | Authorization-Related Chargeback |
4812 | 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 |
Dispute | |
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 |
4854 | Cardholder Dispute Not Classified Elsewhere |
Other | |
4850 | Installment Billing Dispute (Participating Countries Only) |
4999 | Domestic Chargeback Dispute (Europe Region Only) |

How to investigate and build a case based on the chargeback code
Chargebacks can stem from misunderstandings, human and technical errors. Unfortunately, they can also be due to a customer’s attempt to take advantage of a merchant. It might not even be an overt case of criminal fraud, like a stolen credit card. Instead, many are the product of “friendly fraud,” which refers to a customer making a legitimate purchase on their card, then disputing it — likely in an attempt to get the goods or service for free.
What is friendly fraud? When a customer makes a legitimate purchase, then later denies it
Whether innocent mistake or fraud, merchants will still need to investigate all chargebacks and build a rebuttal case based on the code. You’ll want to move quickly here, as you usually have a short timeframe to fight a chargeback once it has been filed. In some cases, it makes sense to reach out to the customer directly and attempt to resolve the dispute. If they’re amenable, you may be able to resolve their complaint and have them retract the chargeback, or submit proof of the resolution yourself. Either way, the outreach will ideally help you maintain a good relationship and keep them from writing a negative review or speaking ill of you to others.
If the customer does not take the bait, or if the situation doesn’t warrant approaching the customer directly, continue compiling evidence. This is called chargeback representment: the process in which you, as the merchant, contest the chargeback by providing relevant data and proof that the charge was legitimate.
The good news is, the chargeback reason code should give you a great indication of where to start. Depending on the code, that could mean gathering proof of authorization, signed receipts, proof of delivery, email correspondence and/or the cardholder’s IP address with transaction date and time for online purchases.
Once you have pulled supporting materials, you’ll present your acquiring bank or payment processor with a written rebuttal for them to pass along to the issuing bank. The investigation continues from there, with the acquirer working as a mediator. Again, keep your tight time limit in mind — it’s often only 7-10 days.
Friendly fraud will represent 61% of all chargebacks issued in North America by 2023
Merchandise most at risk for chargebacks

clothing

Digital content

Furniture

Products that can easily be resold

Products that are easily turned into cash

High-end merchandise
How to modify operations and technology to avoid certain chargebacks
When you win a chargeback dispute, you will recover your lost profits; however, all chargebacks – whether you win, lose or don’t even dispute – negatively affect your chargeback-to-transaction ratio. That means your merchant account is still at risk, and it could be terminated if you face too many chargebacks. This is why it’s critical to be vigilant and re-evaluate your technology and operations any time related chargebacks occur.
When you keep track of your chargeback reason codes, you can spot trends. And when you spot a trend, you need to consider modifying your operations to avoid future chargebacks of the same category.

Collect as much customer, payment and inventory data as possible
By now, you can probably tell that presenting compelling evidence is critical to making a chargeback dispute. So, the more data you collect from a customer up front, the better. That includes name, billing, shipping and contact information. Just remember that certain states have stricter privacy laws than others, so be sure you are aware of and follow consumer data collection regulations at all times.
Depending on what you sell, make sure you have very specific inventory or service names loaded into your point of sale. The line items on the receipt should say, for example, “Women’s haircut - $50,” “Blowdry - $35” and “Partial Highlight - $95” instead of lumping all services together and printing a receipt that just says “Hair services - $180.” If your technology doesn’t allow for an inventory breakdown like that, it may be time to consider a switch.

If you accept online payments, require the customer’s email and send them order, payment, shipping and delivery notifications. Require a backup contact method as well, like phone number, in case emails bounce. Make sure your return and cancellation policies are posted clearly across your website (link them on every product page and throughout the checkout experience).
Card-not-present transactions over the phone or email are riskier than in-person transactions, but if you choose to process them, make sure your staff records the card number, CVV2, expiration date, full billing address, phone number and the customer’s name (exactly how it appears on the card).
If card-not-present transactions are unavoidable in your business, don’t panic. Solutions like Heartland Virtual Terminal help you securely and quickly process transactions over the phone or through a cloud-based online bill pay portal with built-in fraud protection like address verification.
79% of all card fraud incidents in 2020 occurred in card-not-present channels

Accept EMV payments
EMV-enabled cards – also known as chip cards or smart cards – provide seamless, secure and contactless checkout experiences. If you are not using EMV technology to accept chip card payments, and are instead forcing consumers to swipe their chip card through the magnetic stripe card reader, you significantly increase your risk of fraudulent transactions and chargebacks. You’ll also have a much harder time disputing them. The nationwide shift to EMV compliance started in 2015, and today, the party with the least secure technology is responsible for any related chargebacks. A merchant that fails to process a chip card via EMV is the least secure party and therefore holds all the liability. Even worse? They lose not once, not twice, but three times over. In addition to being saddled with fees, merchants who process fraudulent transactions end up issuing refunds for products they never get back; essentially paying for their own inventory twice. Here’s how:
- Merchant purchases products for inventory
- Scammers purchase products with a stolen or counterfeit credit card
- The bank initially approves the purchase
- The real card holder eventually sees and disputes the charge by filing a chargeback
- The card issuing bank discovers fraud and determines the chargeback is valid
- The merchant bank deducts the cost of the fraudulently purchased products from the merchant’s account.
- The merchant pays chargeback fees, non-compliance fines, and never recovers the products, since the scammers made off with them long ago
Learn more about our EMV-compliant payment processing solutions.
EMV cards have reduced in-person credit card fraud by 76% since 2015

Partner with a reputable shipping service
Use a reliable shipping service, such as USPS, UPS or FedEx if you’re based in the United States. Set up an account with your chosen provider so you have a record of all tracking numbers and delivery confirmations in one place that you can easily reference in the case of a missing package chargeback.
You can even use shipping apps that integrate with POS and ecommerce platforms; these automatically add tracking numbers to the customers’ order confirmations, so you’re able to reference them quickly and without having to leave your software.
While some courier and last-mile services are less expensive alternatives, they are often less reliable, so do your research before working with one of them. You could end up paying the difference in lost package costs if you don’t, not to mention dealing with chargebacks and associated fees.

Don’t skimp on staff training
Employee training is critical. If staff members communicate incorrect information to customers – be it about shipping, return policies, service fees, ingredients or whatever – you don’t have much of a leg to stand on. Don’t let your staff skip capturing customers’ signatures and verifying they match the signature on the payment card. If they never actually signed for a purchase, they can easily dispute it. Keep an eye on card expiration dates, too.
Remember that efficient and helpful customer service is critical to a business’ success, and especially in the case of chargebacks.
Learn more employee training best practices including chargeback prevention and dispute resolution
When customers can trust you to quickly and easily resolve their issues, they’re far more likely to contact you directly instead of going to their bank. Post your customer service contact information prominently on your customer receipts, website and all email correspondence.

The chargeback upshot
Chargebacks are a reality of running a business, so don’t fret if you are met with them every once in a while (you aren’t alone!). In summary, keep the following in mind to best dispute, resolve and avoid them:
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Don’t dawdle. While cardholders often have at least 45 and up to 180 days to submit a chargeback (depending on the card association), the merchant has closer to 7-10 days to submit their rebuttal. If you’re going to attempt to contact the customer directly, do it as soon as possible, so you still have time to compile and submit your evidence if it isn’t resolved internally.
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The right technology can make a world of a difference. When considering a POS, choose a data-centric solution with unlimited fields. Then pack that POS with data, including highly detailed inventory and descriptions, as well as customer and payment data during the purchase. A cloud point of sale makes it easy to access and report on any of this data in real time from any device — a necessary feature when you’re trying to quickly and efficiently dispute a chargeback.
As you’re evaluating payment processors and payment terminals, make sure yours accepts EMV chip cards to ensure secure transactions and decrease the risk of chargebacks. If you don’t have EMV-capable POS terminals, contact your payment processor ASAP. They likely offer EMV hardware add-ons at a reasonable cost so you can close the loop on in-person card fraud.
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Emphasize product/service and operations knowledge when training your staff. One small piece of incorrect or misrepresented information delivered to a customer could turn into a huge, expensive headache for you.
Be proactive in your communications as well. Keep customers updated about things like shipping delays, product recalls and even staff errors (for example, if you notice a customer was charged twice as you’re closing your register at the end of the day). That kind of customer service goes a long way, and it will likely prevent any associated chargebacks.
Chargebacks are complex, but we hope this guide has given you a better understanding of the steps you can take when and if you’re ever faced with one. You’ll increase your chances of winning a dispute, while decreasing the chances of a repeat case.
Nearly 1,000,000 entrepreneurs trust Heartland to provide the technology to run and grow sustainable businesses--technology to make money, move money, manage employees, and engage customers. We develop tools to help entrepreneurs respond to market changes and stay competitive. We know it’s not enough to just look good and have fancy features. That’s why Heartland delivers human-tech across all of our solutions, service, and support. All designed to help entrepreneurs overcome the challenges encountered every day. Learn more at heartland.us.