Mastercard Chargeback Reason Code 4860: Credit Not Processed

What is Mastercard Chargeback Reason Code 4860?

This chargeback reason code represents chargebacks that occur when a cardholder files a claim for not receiving a refund. It can apply to card-present and card-not-present transactions and depends on an initial claim for a refund. It's essential to clarify a few aspects regarding this code.

First, this chargeback depends on your initial agreement to refund the buyer's payment. This implies the buyer anticipates a refund based on the initial agreement. If the refund doesn’t come, the cardholder can file a chargeback claim, and the issuer will process it.

Let’s assume you have a return policy on an online subscription you offer. A buyer purchases the subscription but fulfills all conditions for a refund and requests one. You promise a refund, but the cardholder files a chargeback claim before you credit the account.

There are other reasons for receiving a chargeback under this reason code. Sometimes, it could be a mistake on your end or even friendly fraud after being credited. 

We’ll address more reasons for its occurrence subsequently. You’ll also learn how to fight and prevent it in your operations. The process is straightforward, provided you have adequate documentation.

In the meantime, let’s clear the air on a necessary change.

Important Notice

Although chargebacks under this code may still occur, Mastercard has reconfigured its structure. As a result, the reason code is now under 4853, the “credit not processed” sub-category. They mean the same thing.

Why Did It Happen?

An issuer will file this chargeback if the cardholder claims the credit due was not processed. In other words, you have acknowledged the request for the credit but have yet to process the payment when expected. That puts this chargeback under the “Cardholder disputes” category.

However, it doesn't always imply the cardholder's claim is accurate. While we agree that sometimes the claims are legitimate, we’ve also seen oversights from the buyers. For example, you’ve processed the payment, but the chargeback is still being processed.

Here are a few reasons why this chargeback occurs:

• You promised a refund but forgot to process the credit on the due date or past the projected time frame.
• Another reason could be the buyer's impatience, leading to a premature claim filing before the refund's due date.
• You’ve processed the credit, but the cardholder still filed a chargeback claim.

You may wonder what could possibly lead you to promise a refund. There are many reasons for this, and they tie back to your return policy. Remember that this chargeback applies to point-of-sale (POS) and card-not-present (e-commerce) transactions.

Reasons that may result in a refund include the following:

• The buyer returned the merchandise
• The merchandise was non-functional or damaged on arrival
• The merchandise did not match the description provided before the purchase
• Other reasons that qualify under your merchant refund policy

What if you’ve processed a refund but still received this chargeback? This situation might arise if the buyer filed the claim before the refund was processed or missed noticing the posted credit. That would be a case of friendly fraud.

Sometimes, a cardholder can file this claim even when you did not promise a refund. For example, the buyer returns merchandise when they have violated your return policy and do not qualify for a refund.

Debit Instead of Credit

Another reason for this chargeback could be processing a debit instead of a credit to the cardholder. It could be due to an incorrect transaction code. A keying error can also cause this chargeback.

Such an error typically reflects on the merchant's part. Hence, you must be careful when addressing chargebacks to avoid debiting instead of crediting, and vice versa.

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How to Fight Mastercard Chargeback Reason Code 4860: Credit Not Processed

Fighting this chargeback falls into three major categories, as follows:

• Credit issued
• Cancellation or returns
• Purchase properly posted

Each category requires distinct documentation to substantiate your defense against an unjustified chargeback. So, here are the documents you need according to your scenario:

For Credit Issued

You need documents to show that you processed the credit or reversal. Include the date (day, month, and year) in your refutation.

For Cancellation or Returns

Regarding cancellations or returns, you must ensure the following are true before filing your second presentment:

• You did not issue a credit slip or notice to the buyer. That excludes you from promising a credit or reversal.
• You did not accept the service cancellation or the return of your merchandise.
• You never received the returned merchandise, meaning the cardholder never returned it.

The documents you need include the following:

• Proof that the cardholder never returned your products or continued using your service
• Evidence that you correctly disclosed the credit or cancellation policy to the cardholder and it wasn’t adhered to.

This condition does not apply to timeshare transactions where the cardholder cancels the payment within 90 days.

For Purchase Properly Posted

You can substantiate that the buyer processed the transaction correctly. Provide a copy of the TID to prove that the payment involved a retail sale, not a credit.

Violation of Mastercard Rules

The issuer must follow specific Mastercard rules to validate this chargeback. An example is the mandatory 15-day waiting period before charging back a canceled timeshare transaction. If you were charged before the expiration of the waiting period, you could fight it.

Also, this chargeback will be invalid if you adequately inform the cardholder that you cannot process a refund or credit. Maybe the buyer violated your policy. Hence, you can provide supporting documents for your claim.

How to Prevent Mastercard Chargeback Reason Code 4860: Credit Not Processed

While completely eliminating chargebacks is challenging, this particular one is largely preventable. We say “to a degree” because intentional fraud may occur where the cardholder wants to gain on both sides. Notwithstanding, here are things you can do to prevent it:

• Ensure your return and refund policies are clear, and the buyer must agree to them before processing payment.
• Issue promised refunds promptly, provided the cardholder adheres to your policy.
• Refuse delivery of returned goods or services if they violate your policy.
• Ensure the buyer is aware of the amount if it involves a lesser amount
• Use strategies like printing “No Refunds” or “In-store credit only” for card-present transactions.

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