MasterCard Chargeback Reason Codes

MasterCard Chargeback Reason Codes


The life cycle of a credit card transaction doesn’t always end with its settlement and the deposit of the associated sales amount into the merchant’s account. Sometimes, the issuer or its cardholder may determine that, for a given reason (specified below), the transaction may be invalid. The issuer may then return the transaction to the acquirer as a “chargeback”, which will reverse the sale and the chargeback amount will be debited to the merchant and credited to the cardholder.


Each chargeback is identified by a code that specifies the reason why an issuer is disputing a transaction’s validity. Visa and MasterCard use different reason codes and often a code used by one of the Associations does not have an exact equivalent at the other. Visa’s reason codes are two-digit numbers, while MasterCard uses four-digit numbers. In this article I will review MasterCard’s chargeback cycle and reason codes.

MasterCard Chargeback Life Cycle


The table below identifies the transaction stages when the issuer initiates a chargeback.


Stage

Description

MIT-Function Code(s)
First Presentment Acquirer submits the transaction to the issuer.

1240-200

Cardholder or issuer disputes the first presentment.
Retrieval Request Issuer may request a copy of the sales receipt to support or identify a potential chargeback. Note: Most chargebacks do not require a retrieval request.

1644-603

Chargeback Issuer initiates a chargeback within the time frame applicable to the specific message reason.


Note: If an issuer receives a legible copy of the sales receipt through a second presentment for message reason code 4802 — Requested / Required Information Illegible or Missing, and after viewing the item for the first time determines that it has another right of chargeback for a different message reason code, the issuer must start the process again with a new chargeback.

1442-450 (full amount)

1442-453 (partial amount)

Second Presentment When applicable, the acquirer may process a second presentment within 45 calendar days of the chargeback date. 1240-205 (full amount)

1240-282 (partial amount)

Arbitration Chargeback When applicable, the issuer may initiate an arbitration chargeback within 45 calendar days of the date of the second presentment. 1442-451 (full amount) 1442-454 (partial amount)
Arbitration Case Filing The acquirer may file an arbitration case to MasterCard, for a decision on the dispute, within 45 calendar days of the date of the arbitration chargeback.

N / A


MasterCard Chargeback Reason Codes


An issuer can process a chargeback if it determines that a transaction can be charged back to the acquiring bank for one of the valid chargeback reasons specified in the table below.


Code Chargeback Reason
4801 Requested Transaction Data Not Received
4802 Requested / Required Information Illegible or Missing
4807 Warning Bulletin File
4808 Requested / Required Authorization Not Obtained
4812 Account Number Not on File
4831 Transaction Amount Differs
4834 Duplicate Processing
4835 Card Not Valid or Expired
4837 No Cardholder Authorization
4840 Fraudulent Processing of Transaction
4841 Canceled Recurring Transaction
4842 Late Presentment
4846 Correct Transaction Currency Code Not Provided
4847 Requested / Required Authorization Not Obtained and Fraudulent Transaction
4849 Questionable Merchant Activity
4850 Credit Posted as Purchase
4853 Cardholder Dispute – Defective / Not As Described
4854 Cardholder Dispute – Not Elsewhere Classified (U.S. Region Only)
4855 Nonreceipt of Merchandise
4857 Card-Activated Telephone Transaction
4859 Services Not Rendered
4860 Credit Not Processed
4862 Counterfeit Transaction Magnetic Stripe POS Fraud
4863 Cardholder Does Not Recognize – Potential Fraud
4870 Chip Liability Shift
4871 Chip / PIN Liability Shift


An issuer can only process one first chargeback per presented transaction within the time frame applicable for the chosen chargeback reason code (typically 180 days). To generate a chargeback, the issuer must submit the First Chargeback / 1442 message with the applicable message reason.


MasterCard’s Corporate Purchasing Department Account Program does not have chargeback rights for the following message reason codes:

  • 4835 — Card Not Valid or Expired.
  • 4837 — No Cardholder Authorization.
  • 4840 — Fraudulent Processing of Transactions.
  • 4847 — Requested / Required Authorization Not Obtained and Fraudulent Transaction.
  • 4862 — Counterfeit Transaction Magnetic Stripe POS Fraud.
  • 4863 — Cardholder Does Not Recognize — Potential Fraud.


We have reviewed in detail the causes for chargebacks designated with some of the Reason Codes mentioned in this post and have suggested preventive measures in separate articles and will do so for the others in the near future.


Image credit: Vinacorp.vn.

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