Chargeback Reason Code

American Express Chargeback Reason Code P23: Currency Discrepancy

General Information about Reason Codes

In 2016, Mastercard chargeback reason codes were condensed and consolidated, in a restructuring that resembled Visa Claims Resolution. Prior to this, Mastercard’s list of reason codes was long, convoluted, and confusing; now there are fewer than ten different reason codes relevant to most merchants. All the old reasons are still there, but they’ve been grouped under more comprehensive “umbrella” codes.

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American Express Chargeback Reason Code P23: Currency Discrepancy

What is American Express Chargeback Reason Code P23?

International sales have their perks and drawbacks, which local merchants supplying local customers often have no worries about. Currency conversions are necessary to process payments from customers with different local currencies. The American Express chargeback reason code P23 deals with transactions with currency discrepancies arising from customer disputes.

American Express begins dispute resolution by working with the card member. If there’s enough information to warrant a chargeback, AmEx will process it with this reason code. Otherwise, you’ll receive an inquiry for a retrieval request to get more information about the dispute.

In chargebacks with reason code P23, the cardholder claims you processed payment in another currency than the one approved on checkout. For example, the cardholder may have approved payment in British pounds, but you used the U.S. dollar instead. These disputes can be resolved before escalating to chargebacks, but some customers can approach their issuers directly.

International transactions are not the only ones that can lead to chargebacks with reason code P23. Travelers may still hope to purchase your merchandise in their local currency even when they are in your country. This is common, as most travelers opt to avoid the stress of getting new cards for purchases when traveling.

The dynamic currency conversion (DCC) system addresses payments in currencies other than your local currency. Issuers do not provide dynamic currency conversion, leaving you to patronize third parties. However, using a DCC has fees that may make exchange rates slightly higher than in the forex market.

Merchant error is a primary cause of chargebacks under this reason code. However, cardholders can make false claims even when you maintain industry-best business practices.

This guide will explore how to dispute chargebacks under this reason code and earn a reversal. American Express will rescind the chargeback if your reply addresses the dispute successfully. Hence, we will show you the typical causes and the best approach for each scenario.

Why Did It Happen?

Chargebacks under reason code P23 often occur for the following reasons:

  • Merchant error: You used the wrong currency when processing the transaction. That discrepancy will result in an erroneous charge or an amount higher than the cardholder’s expectations. The cardholder will dispute the charge by contacting you or the issuer.

Errors in this category often occur when selecting the currency for final processing. It is an input error that can be avoided with extra diligence and carefulness. Also, you or your staff are likely to make the error if you are unfamiliar with international currency conversions.

  • Using dynamic currency conversion without the cardholder’s consent: Cardholders should have the option to use dynamic currency conversion in their transactions. That gives them an expected final charge or range. Omitting this step and forcibly applying dynamic currency conversion may cause the final charge to be higher than the cardholder’s expectations.

Cardholders will dispute transactions if the final charge is above their expectations. American Express or the issuer, on investigation, will tie the chargeback to a currency discrepancy since it involves currency conversions.

Merchants still apply dynamic currency conversions unknowingly. Most customers do not understand the implications of using this solution for transactions.

Friendly and actual fraud

Cardholders can forget their approved currency for transactions and file friendly fraud chargebacks. Buyer’s remorse can also occur when the final charge is much higher than the customer’s expectations. These cases qualify as friendly fraud.

Some cardholders may intentionally file chargeback claims after agreeing to a dynamic currency conversion or the final charge. This practice is prevalent in cyber shoplifting, where the shoplifters want to get their money back without returning the merchandise.

All you must do is review the transaction for the cardholder’s prior approval. You have nothing to worry about if approval is available.


How to Fight American Express Chargeback Reason Code P23: Currency Discrepancy

American Express provides 20 days to respond to this chargeback. Review the transaction during this period and prepare a thorough response to address all issues in the chargeback message. With that in mind, here’s how to approach chargebacks under reason code P23:

  • If the cardholder agreed to use dynamic currency conversion: Submit proof that the cardholder checked the option to use dynamic currency conversion on the checkout page. You can also show receipts or invoices for offline or in-store purchases to show that the cardholder agreed to DCC’s use.
  • If no currency conversion occurred: Submit proof that you did not implement any currency conversion for the purchase.
  • If you’ve refunded the cardholder: Submit documentation to show the refund to the cardholder. The document should include the transaction date and amount. Also, the amount should match the disputed transaction.

You can push for an alternative resolution with the cardholder where necessary. For example, the customer may agree to provide an extra item or service. Submit proof of this agreement to your acquirer or the issuer.

Accept the chargeback if the error is from the merchant end. However, ensure you take adequate steps to prevent currency discrepancies in future transactions.

How to Prevent American Express Chargeback Reason Code P23: Currency Discrepancy

Dynamic currency conversion makes transactions in foreign currencies easy for the cardholder. However, ensure you allow your customers to choose when to apply the system to their transactions. Provide the option on the checkout page for online transactions and receipts for offline transactions.

Other preventive measures include the following:

  • Implement robust systems to manage multiple currencies
  • Use billing descriptors that customers will quickly recognize on their account statements.
  • Address all customer complaints promptly.
  • Explain dynamic currency conversion to your cardholders.
  • Process and submit credit refunds promptly.
  • Respond to inquiries or retrieval requests promptly.
  • Give a clear overview and explanation of the documents included in your response.
  • Keep your emails active and use notifications to stay on top of customer complaints, inquiries, and chargeback messages.
  • Always process transactions in the cardholder’s expected currency.
  • Keep records of your transactions.
  • Keep your transaction data in secure, fireproof, and easily accessible locations.


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