As an e-commerce store owner, it's important to understand the concept of chargebacks and the role they play in your business. Chargebacks occur when a customer disputes a transaction with their credit card issuer, and the funds are returned to the customer. While chargebacks can sometimes be legitimate, they can also be costly and damaging to your business.
Mastercard, one of the largest credit card issuers in the world, uses a set of reason codes to categorize chargebacks. Understanding these reason codes can help you identify the cause of the chargeback and take steps to prevent it from happening again in the future.
In this article, we will provide you with a comprehensive list of all Mastercard chargeback reason codes, and provide detailed explanations of each code, including potential causes and prevention strategies.
By the end of this article, you will have a better understanding of how chargebacks work and the steps you can take to reduce them, which will help you save money and protect your business's reputation.
Mastercard Chargeback Reason Codes
As an e-commerce store owner, chargebacks can be a frustrating and costly problem. That's why it's essential to understand Mastercard chargeback reason codes. These codes are used to categorize and identify the reason for a chargeback. By understanding the codes, you can take steps to prevent chargebacks from happening in the first place.
There are several types of Mastercard chargeback reason codes, each with its own unique set of circumstances. Below is a comprehensive list of the most common Mastercard chargeback reason codes and their explanations, along with prevention strategies you can implement to reduce the likelihood of chargebacks.
Fraudulent Transactions (Codes 4800 - 4855)
Fraudulent transactions are one of the most common reasons for chargebacks. These codes are used when a cardholder claims that a transaction was made without their authorization or that their card was stolen and used fraudulently.
Code 4807: Fraudulent Card-Present Transaction
This code is used when a cardholder claims that a fraudulent transaction occurred in a face-to-face environment, such as a retail store.
Prevention strategy: Implement EMV chip card technology to reduce the risk of fraudulent card-present transactions.
Code 4812: Cardholder Does Not Recognize - Potential Fraud
This code is used when a cardholder claims that they did not authorize a transaction and suspect that their card may have been stolen.
Prevention strategy: Use address verification services (AVS) to ensure that the billing address entered matches the one on file with the card issuer.
MasterCard Chargeback Reason Codes: Authorization Issues (Codes 3000 - 3011)
Authorization issues occur when a merchant fails to obtain proper authorization for a transaction or when the transaction amount exceeds the authorized amount.
Code 3000: Fraudulent Transaction - Card Present Environment
This code is used when a merchant fails to obtain proper authorization for a transaction in a face-to-face environment.
Prevention strategy: Ensure that all transactions are properly authorized before completing the sale.
Code 3010: Partial Authorization
This code is used when a transaction exceeds the authorized amount, and the merchant does not obtain additional authorization from the card issuer.
Prevention strategy: Always obtain additional authorization if the transaction amount exceeds the authorized amount.
Processing Errors (Codes 4831 - 4834)
Processing errors occur when a merchant makes an error during the transaction process, such as submitting an incorrect transaction amount.
Code 4831: Incorrect Transaction Amount or Account Number
This code is used when a merchant submits an incorrect transaction amount or account number.
Prevention strategy: Always double-check the transaction amount and account number before submitting the sale.
Code 4833: Fraud Detection - Transaction Not Recognized as Fraud
This code is used when a merchant fails to detect a fraudulent transaction.
Prevention strategy: Use fraud detection tools to identify potentially fraudulent transactions.
Consumer Disputes (Codes 4853 - 4855)
Consumer disputes occur when a cardholder disputes a charge for a valid reason, such as receiving a damaged or defective product.
Code 4853: Defective Merchandise or Services
This code is used when a cardholder receives defective merchandise or services.
Prevention strategy: Ensure that all products and services are of high quality and meet customer expectations.
Code 4854: Not as Described or Defective Merchandise
This code is used when a cardholder receives merchandise that is not as described or is defective.
Prevention strategy: Provide accurate and detailed product descriptions to avoid customer confusion.
Canceled Transactions (Codes 4862 - 4863)
Canceled transactions occur when a cardholder cancels a transaction after it has been authorized.
Code 4863: Cardholder Does Not Recognize - Potential Fraud
This code is used when a cardholder does not recognize a transaction and suspects that the transaction may be fraudulent.
Prevention strategy: Send confirmation emails or receipts to the cardholder after the transaction has been completed to ensure that they recognize the purchase.
Code 4862: Counterfeit Transaction Magnetic Stripe POS Fraud
This code is used when a cardholder claims that a transaction was made using a counterfeit card.
Prevention strategy: Implement EMV chip card technology to reduce the risk of counterfeit card fraud.
MasterCard Chargeback Reject Codes
Mastercard chargeback reject codes are specific codes used by Mastercard to indicate the reasons why a chargeback request from a cardholder has been rejected by the issuing bank.
A chargeback is a process that allows cardholders to dispute a charge on their credit card statement for various reasons.
When the cardholder initiates a chargeback, the issuing bank investigates the claim and may decide to reject it if they find that it does not meet certain criteria.
Here are some common Mastercard chargeback reject codes:
Code 4853: Defective Merchandise or Services
This code is used when the cardholder's chargeback claim is related to receiving defective merchandise or services.
Code 4855: Non-Receipt of Merchandise
This code is used when the cardholder claims that they did not receive the merchandise they ordered.
Code 4856: Transaction Exceeds Floor Limit
This code is used when a magnetic stripe transaction exceeds the floor limit.
Code 4857: No Cardholder Authorization
This code is used when the cardholder claims that they did not authorize the transaction.
Final Thoughts on Mastercard Chargeback Reason Codes
In conclusion, understanding Mastercard chargeback reason codes is crucial for e-commerce store owners. The list of reason codes can seem overwhelming, but taking the time to familiarize yourself with them can help you prevent chargebacks and protect your business.
By knowing the different types of chargeback reason codes, you can take proactive steps to prevent them. For instance, by addressing authorization issues or processing errors before they lead to chargebacks, you can keep more of your revenue.
In addition, having a plan in place for handling consumer disputes can help you avoid chargebacks and maintain positive relationships with your customers. By being prepared and having prevention strategies in place, you can reduce the likelihood of chargebacks occurring.
Overall, understanding Mastercard chargeback reason codes is an important part of running an e-commerce store. By taking the time to learn about them and implementing prevention strategies, you can protect your business and keep more of your hard-earned revenue.