Chargeback and Re-Presentment Process for PIN-Based Debit Transactions
As you probably know full well by now, chargeback is a transaction that is returned (charged back) as a financial liability by the card issuer to the acquirer and most often to the merchant for resolution after the associated sale has been settled. Most of the usual chargeback and re-presentment rules apply in a PIN debit environment, but there are some specifics that I will touch on in this and following articles.
This post uses Visa chargeback reasons and reason codes, but the principals apply to MasterCard transactions as well.
Chargeback Overview
Before initiating a chargeback, the issuer is required to attempt to honor the transaction. If that fails and the sale’s amount has already been billed to the cardholder’s account, the issuer must issue a credit. However, the cardholder should never be credited twice for the same transaction as a result of a chargeback and processing of a credit transaction by the merchant.
An issuer can initiate a chargeback under certain conditions and within specified time limits, as listed in the table below:
|
Chargeback Reasons |
Reason Code |
Time Limit (Calendar Days) |
|
Services or Merchandise Not Received |
2430 |
120 |
|
Not as Described |
2453 |
120 |
|
Counterfeit Transaction |
2462 |
120 |
|
Invalid or unpostable Adjustment |
2480 |
120 |
|
Credit Not Processed |
2485 |
120 |
|
Duplicate Processing |
2496 |
120 |
|
Processing Error |
2498 |
120 |
The chargeback amount can be equal to or less than the transaction amount, but cannot exceed it.
Re-presentment Overview
Before re-presenting a transaction, the acquirer is required to research and attempt to resolve the chargeback using records it has on file or documentation provided by the merchant.
An acquirer can re-present a charged back transaction to the issuer under certain conditions and within a specified time frame, as listed in the table below:
|
Re-presentment Reason |
Condition |
Time Limit (Calendar Days) |
|
Adjustment Already Issued |
An adjustment has been previously processed by the acquirer, correcting the original transaction which was charged back. |
45 |
|
Invalid Chargeback |
Conditions vary by reason code. |
45 |
|
Invalid Account Number |
— |
45 |
|
Credit Already Issued |
A credit transaction has been previously processed by the acquirer, correcting the original transaction which was charged back. |
45 |
|
Invalid Credit Chargeback |
The acquirer finds no transaction based on the transaction date specified in the chargeback message for “Credit Not Processed.” |
45 |
|
Mis-sorted Chargeback |
The chargeback received by the acquirer did not belong to that acquirer. |
45 |
|
Required Data Not Received |
The chargeback clearing record received by the acquirer did not contain the required information in the member message field, or the issuer did not fax the required documents within 8 calendar days of the chargeback processing date. |
45 |
An issuer is not permitted to charge back a transaction a second time, nor is an acquirer allowed to present one a third time.
The Takeaway
If an issuer and an acquirer cannot resolve the validity of a chargeback between themselves, the case can be sent for arbitration to the applicable Association (Visa or MasterCard) whose ruling is final.
In future articles I will review the specific chargeback conditions, rights and processing requirements for each of the seven reason codes listed above.
Image credit: Olsdallas.com.
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