Credit Card Processing Blog

Visa uses Reason Code 60 to designate chargebacks resulting when a copy of a sales receipt, requested by the card issuer, is illegible, incomplete or something other than the requested item. MasterCard does not have a reason code that exactly matches Visa’s 60.

What causes these chargebacks? Chargeback Reason Code 60 may be caused by one of the following issues:

• The terminal’s printer ribbon was worn and the ink was too light.
• The printer’s paper roll was nearing its end, and the colored streak indicating this made some of the payment information illegible.
• The copy was on hard-to-read colored paper.
• The carbonless paper of the original sales receipt was mishandled, causing black blotches and making copies illegible.
• The original sales receipt was copied at a reduced size, resulting in illegible copies.
• The document submitted was not a copy of the sales receipt at issue.

How to manage such chargebacks? The time frame to respond to a chargeback Reason Code 60 is 7 days for U.S. transactions and 120 days for international ones. Your response will depend on the particular transaction circumstances and the actions you have taken (or not) so far:

• Legible or complete copy is available. Resubmit the copy, if possible, and make sure it is legible.
• The sales receipt is incomplete. If you don’t have or cannot produce a legible copy, accept the chargeback. Do not issue a credit at this time, as the chargeback has already performed this function.
• The sales receipt is incomplete and the transaction is fraudulent. In such cases, you have no re-presentment rights, as the cardholder cannot be expected to accept a fraudulent charge. You should accept the chargeback.

How to prevent chargeback Reason Codes 60? Most of these chargebacks can be prevented by implementing the following measures:

• Copying sales receipts. Make sure the copies you make of sales receipts are the same size as the originals. Reduced size can produce images that are hard to read.
• Change the ribbon of your point-of-sale (POS) printer. Regularly changing the printer’s ribbon will eliminate faded, hard-to-read sales receipts.
• Change the paper of your POS Printer. Changing the printer’s paper roll when the colored streak first appears increases the legibility of sales receipt.
• Keep the white copy of the sales receipt. Keeping the white copy of the sales receipt ensures better quality copies in the future. Give the colored copy to the customer.
• Handling carbonless and carbon-back paper used for sales receipts. Handle carbonless paper and carbon-back paper carefully. Carbon-back paper appears black when copied. Any pressure on carbonless and carbon-back paper during handling and storage causes black blotches, making copies illegible. Always keep the top copy.
• Placing company’s logo on sales receipts. Make sure your company’s logo is printed on sales receipts in a way that does not interfere with the transaction information.

As you see, preventing this type of chargebacks largely depends on the way you handle sales receipts. A rule of thumb that can be used here is that if you can read the copies of your sales receipts, issuers will also be able to read them and you will never see a Reason Code 60.

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

Both Visa and MasterCard use special Reason Codes to designate chargebacks resulting when a card issuer receives a complaint from a cardholder stating that a merchant did not issue a refund when a purchased product was returned or services canceled, or a refund was issued but for a reduced amount, without proper disclosure. Visa uses Reason Code 85 and its MasterCard’s equivalent is 4860.

What causes these chargebacks? Chargeback Reason Codes 85 and 4860 may be caused because the merchant:

• Did not issue a credit.
• Issued the credit but did not deposit it with its processing bank in time for it to appear on the cardholder’s next statement.
• Did not issue a credit, because it does not accept returns, but did not properly disclose its return policy.

How to manage such chargebacks? The time frame to respond to Reason Codes 85 and 4860 is 120 days. Your response will depend on the particular transaction circumstances and the actions you have taken (or not) so far:

• Returned product or cancellation was not received. If you never received the returned merchandise or the service was not canceled, contact your processor immediately and explain the situation.
• Product was returned contrary to the disclosed policy. If the merchandise was returned not in the manner described in your return policy, provide your processor with documentation proving that the customer did agree with it and signed it. Keep in mind that, if your return policy is located on the back of the sales receipt, you will have to obtain your customer’s initials there, in addition to the signature on the front. When providing supporting evidence, you must send copies of both the front and the back of the receipt.
• Credit was issued. If you did issue a credit for the returned merchandise at issue, contact your processor and provide them with the date and amount of the credit.
• Credit is not yet issued. If you did not issue a credit for product that was returned according to your return policy, there is no remedy and you should accept the chargeback. Do not process the credit now, as the chargeback has already done that for you.

How to prevent chargeback Reason Codes 85 and 4860? Many of these chargebacks can be prevented by implementing the following best practices:

• Issue credits promptly and as agreed. If merchandise is returned according to your return policy, make sure to promptly issue a credit and to immediately notify your customer that it has been issued.
• Only issue credit to the card used in the sale transaction. Credit for returned merchandise should only be issued to the same card that was used in the original transaction. Ask your customers to retain the credit receipt until they see the credit posted on their accounts.
• Gift returns. If product was returned by a gift recipient and not by the cardholder, the credit to the gift recipient must be in the form of cash, check or a store credit. Be advised that, if the credit is to be issued to a bank card, it can only be issued to the one used in the transaction.
• Return policy disclosure. Make sure that your return policy is posted on the sales receipt. If not and until you do that, present an additional document (an invoice or contract) to your customer to sign. If the return policy is on the back of the receipt, make sure the customer initials it.
• No-return policy disclosure. If your organization does not accept returns, your policy should be clearly posted on the sales receipt and at checkout, for both virtual and physical stores.
• Obtain customer signature. Customer signature should always be obtained on your return policy; a verbal disclosure is not enough.

While it is not likely that you will ever be able to completely eliminate this type of chargebacks, developing a customer-friendly return policy will go a long way toward minimizing them. Customers expect that, if they are not satisfied with their purchase, a return will be accepted and a full refund issued. Otherwise, they will probably file a dispute with their credit card company. You will want to avoid such disputes, even if you believe you will win them, because customers are likely to broadcast them on the internet and damage your reputation. Customer disputes and resulting chargebacks are also closely monitored by processing banks that will promptly freeze your merchant account, if there is any uptick in such activities.

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

Both Visa and MasterCard use special Reason Codes to designate chargebacks resulting when a card issuer receives a written claim from the cardholder, stating that a product or service purchased was not the same as described. For the chargeback to be valid, the cardholder must have made an attempt to either resolve the dispute with the merchant or return the merchandise. Visa uses Reason Code 53 and its MasterCard’s equivalent is 4853.

What causes these chargebacks? Chargeback Reason Codes 53 and 4853 may be issued for one of the following reasons:

• The merchant sent the wrong merchandise to the customer.
• The product or service did not match its description. For example:
  • The cardholder states that the quality of the product is not as described.
  • The cardholder states that the specified color, size, or quantity is not as described.
  • The cardholder states that the merchant did not perform the services as described.
• The merchant did not cancel the services purchased by the cardholder, as requested.
• The merchant did not accept the returned merchandise or accepted it, but did not credit the cardholder’s account.
• When delivered, the products arrived broken or could not be used for the intended purpose. For example, the cardholder received concert tickets after the date of the concert.

How to manage such chargebacks? The time frame to respond to Reason Codes 53 and 4853 is 120 days. Your response will depend on the particular transaction circumstances and the actions you have taken (or not) so far:

• Credit was processed. If merchandise was returned and a credit was processed, provide your processing bank with supporting evidence.
• Returned merchandise was not received or services were not canceled. If neither the merchandise was returned nor the service canceled, contact your processor and explain the situation. Remember that the customer must make a valid attempt to return the product or cancel the service.
• Returned merchandise was received, but credit was not processed. If the customer returned the merchandise or canceled the service, but you did not issue a credit, there is no remedy and you should accept the chargeback. Do not process a credit at this time, as the chargeback has already done it for you.
• Merchandise was as described. If your merchandise was just as described, provide your processor with supporting evidence.
• Service was performed as described. If you performed the service as you described it in your advertisement or sales pitch, provide your processor with specific supporting documentation and address, in detail, your customer’s objections.

How to prevent chargeback Reason Codes 53 and 4853? While there will always be disputes about the quality of your products or services, you can minimize the resulting chargebacks by implementing the following best practices:

• Provide accurate descriptions of merchandise and services. We have written on how to improve a service or product description before and will not go into great detail here. Be as accurate as you can and provide the complete manufacturer product sheet, both in all promotional materials and on the sales receipts.
• Provide product photos and images, if applicable. Use high-quality images and provide shots from various angles of the product.
• Honor returns cancellation requests. If a product was returned or a service canceled in accordance with your return policy, accept your customer’s decision and immediately issue a refund.

The chargeback amount for Reason Code 53 and 4853 chargebacks is limited to the amount of the returned merchandise or canceled service and it may include shipping and handling fees. The card issuer must wait at least 30 calendar days from the date the cardholder returned the merchandise, before charging back the transaction.

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

Both Visa and MasterCard use special Reason Codes to designate chargebacks resulting in connection with recurring payment plans. The triggering point is usually when a card issuer receives a claim by a cardholder that the merchant processed a transaction after the cardholder requested cancellation or when the transaction amount is higher than the pre-authorized one. This Reason Code may also be issued if the merchant fails to notify the cardholder prior to processing a transaction, after agreeing to do so before each recurring payment. Visa uses Reason Code 41 and its MasterCard’s equivalent is 4841.

What causes these chargebacks? Chargeback Reason Codes 41 and 4841 may be caused by one of the following actions:

• The cardholder:
  • Did not authorize the charge.
  • Canceled the recurring plan.
  • Canceled the card account.
• The card issuer:
  • Has previously processed a chargeback on a transaction from the recurring plan at issue and the cardholder did not expressly renew the plan.
  • Canceled the card account.
• The merchant:
  • Was notified prior to processing the transaction that the customer’s card account was closed.
  • Exceeded the pre-authorized amount without notifying the cardholder in writing within 10 days of processing the transaction or did notify the customer but the customer requested that the account not be charged.

How to manage such chargebacks? The time frame to respond to Reason Codes 41 and 4841 is 120 days. Your response will depend on the particular transaction circumstances and the actions you have taken (or not) so far:

• The transaction was canceled and credit was issued. If you issued a credit after your customer canceled a transaction, contact your processing bank and give them the details, including when the credit was processed.
• The transaction was canceled, but credit is not yet processed. If a customer canceled a payment but you failed to process the credit, there is no remedy and you should accept the chargeback. Do not process a credit at this time, as the chargeback has already done it for you.
• The transaction was not canceled. If you have no record that cancellation was requested you should still accept the chargeback, as the customer does not have to prove that he or she requested a transaction to be canceled.
• The transaction was canceled, but the services were used. If the customer claims that he or she was billed after requesting cancellation, but the bill was for services used between the date of the last billing statement and the cancellation date, provide to your processor some kind of supporting evidence.
• Final billing. If a cancellation request was received, but there is still a final payment to be made, contact your customer directly and request a payment.

How to prevent chargeback Reason Codes 41 and 4841? Many of these chargebacks can be prevented by implementing the following best practices:

• Customer cancellation requests. You should regularly check for cancellation requests and respond promptly. Inform the customer when his or her account was closed and request another form of payment if there is an outstanding balance.
• Credit cardholder account. Make sure that credits are processed promptly and notify customers immediately.
• The transaction exceeds the pre-authorized amount ranges. Always notify customers within 10 days of processing if the transaction amount will exceed the pre-authorized one. If there is a dispute, send a copy of the notification to your processor.
• Customer complaints. Always check and immediately address customer complaints. If unaddressed, complaints can easily deteriorate into chargebacks.

The only cause for a Reason Code 41 or 4841 chargeback that you cannot address is when a customer claims that he or she canceled their recurring plan, but you have no record of such a request. Visa and MasterCard have chosen to side with the cardholders in such cases and do not require any proof from them.

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

Visa uses chargeback Reason Code 86 to designate chargebacks resulting when the card issuer receives a written complaint from the cardholder stating that the payment for the transaction at issue was made by other means, not with the credit card that was charged. MasterCard does not have a reason code that exactly matches Visa’s 86.

What causes these chargebacks? Reason Code 86 chargebacks typically occur when the cardholder initially submits a card to pay for the transaction, but then decides to use another payment method. The merchant then fails to void the card transaction and deposits the sales receipt, in addition to the actual one.

How to manage such chargebacks? The time frame to respond to a chargeback Reason Code 86 is 120 days for both U.S. and international transactions. Your response will depend on the particular transaction circumstances and the actions you have taken (or not) so far:

• The card was the only form of payment presented by the customer. If the card was in fact the only form of payment that was processed, provide your processing bank with the sales records and any other supporting evidence that you may have.
• Another form of payment was presented by the customer, in addition to the card. If you deposited a card sales receipt after another form of payment was used, there is no remedy and you should accept the chargeback. Do not issue a credit at this time, as the chargeback has already performed this function. If you have issued a credit, contact your processor and explain what happened. Provide a copy of the credit transaction, if required.

How to prevent chargeback Reason Codes 86? As these chargebacks are caused solely by a failure to void card transactions where payments were made by other means, preventing them is entirely within your control. Consider implementing the following preventive measures:

• Develop procedures for voiding card transactions, after payments are made in other ways. If, after swiping her card, your customer changes her mind and decides to pay in cash, by check, or even using another card, you must void the original card transaction. This is all you need to do to prevent a chargeback.
• Train your point-of sale staff. Your sales staff should be trained on both when and how to void a card transaction. A good policy would be to place a step-by-step guide on voiding transactions near the register to help newer members of your sales staff.

If you follow the suggestions above, you will greatly minimize or may even completely eliminate Reason Code 86 chargebacks. If you still can’t get the desired results, however, you should start reviewing each batch of transaction receipts prior to deposit to ensure that no single order was paid multiple times.

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).