Chargeback Reason Code

Visa Chargeback Reason Code 10.3: Other Fraud: Card-Present Environment/Condition

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, Mastercardā€™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 theyā€™ve been grouped under more comprehensive ā€œumbrellaā€ codes.

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Visa Chargeback Reason Code 10.3: Other Fraud: Card-Present Environment/Condition

What is Visa Chargeback Reason Code 10.3?

Visa chargeback reason code 10.3 falls under the fraud category for physical card keying or processing at unattended terminals. In both cases, the cardholder must be present to process the payment by providing enabling details like a PIN or signature. These transactions are common in the merchant industry, with advances allowing unattended payment terminals.

Fraud-based chargebacks filed under the conditions of physical card keying or unattended terminals will use this reason code. You will incur a chargeback if the cardholder denies authorizing payment for these transactions. Of course, we understand that someone can steal a physical card and its details and process payments quickly.

Hereā€™s a simple scenario that will likely lead to this chargeback: A cardholder walks into your merchant store, picks up, and pays for items. Depending on your preferred approach, the cardholder might provide a PIN or signature or use an unattended terminal.

Assuming the card was stolen, the original owner can file chargeback claims, denying even being physically present on the transaction date. A case of actual fraud is easy to deal with, but that is not always the case. Hence, you must review the transactions carefully before accepting or fighting the chargeback.

The first step we recommend is knowing why the chargeback occurred. Weā€™ll take you through the likely causes before exploring ways to fight and prevent the chargeback. With that in mind, hereā€™s all you need to know about chargeback reason code 10.3:

Why Did It Happen?

This chargeback occurs if a cardholder denies authorizing or participating in a key-entered or unattended terminal transaction. As mentioned earlier, both scenarios require the card to be present, hence the shorthand description: Other Fraud: Card-Present Environment. A card-present transaction does not necessarily mean that you received the card from the buyer.

Here are other ways this transaction can occur:

  • You or your representative completed the transaction on behalf of the buyer, meaning the transaction is key-entered.
  • The cardholder used an unattended cardholder-activated payment terminal (automatic fuel dispensers and self-checkout systems are famous examples)
  • A contactless payment device may be present (examples include the Apple Watch)

With that in mind, here are the possible causes for this chargeback:

  • You or your representative failed to ensure that the card was adequately chip-read or swiped
  • There was no manual imprint of the card account information on the payment receipt. This case applies to key-entered transactions.
  • The transaction was a card-absent one, but there was no adequate identification as an internet, mail, or telephone order.

Actual fraud is often the cause of this chargeback, where fraudsters use stolen cards to make physical purchases. The card provider or issuer expects you to take all steps to prevent this. However, a few cases may slip through your security checks and necessitate this chargeback.

We agree that you shouldnā€™t be liable for chargebacks if you take all preventive and fraud-identification measures. Notwithstanding, Visa provides a simple way to fight it and receive a refund. Weā€™ll show you that and also explain how you can prevent it.

Friendly fraud can also cause chargebacks under this code. A cardholderā€™s denial of a legitimate transaction can cause the issuer to file a chargeback. Nevertheless, cases of friendly fraud can be a case of ignorance, not necessarily an intent to defraud.


How to Fight Visa Chargeback Reason Code 10.3: Other Fraud: Card-Present Environment/Condition

Our suggestions in this section are best implemented within 30 days. Do that, and you should successfully fight this chargeback and receive a refund. Letā€™s track back to the plausible causes of this chargeback and fight it within specific scenarios.

The best way to fight this chargeback is to prove the transaction was legitimate. That means it was adequately authorized at the checkout point, or the card was chip-read or swiped.

With that in mind, here are our suggested ways to fight this chargeback:

  • Submit the authorization record as proof that your payment terminal read the cardā€™s magnetic stripe or chip on payment. This solution applies if you processed a card-swiped or chip-read transaction.
  • Provide proof of a manual imprint for the transaction. We encourage you to get this information for all your transactions. Nevertheless, this approach may not apply to those in the European region.

Besides these approaches, there is little you can do. The best way will be to accept the dispute and move on. However, chargebacks under this reason code can still occur even after refunding the customer.

Send proof of the credit transaction with details of the amount processed and the date. That should invalidate the chargeback and cause a refund.

Weā€™ve seen scenarios where the cardholder withdraws the dispute, but a chargeback has occurred. Either they did not notify the issuer after withdrawing it, or the issuer processed the refund before the cardholder could inform it. Whichever is the case, send proof of this withdrawal.

Emails and written messages, including chats, are enough to back your claim of a withdrawal.

How to Prevent Visa Chargeback Reason Code 10.3: Other Fraud: Card-Present Environment/Condition

Thereā€™s no point in waiting for this chargeback when you can actively prevent it with a few simple actions. One way is by eliminating unattended payment terminals. However, we understand that those may be necessary for your business.

You can level up in other areas as follows:

  • Donā€™t key in transactions manually if you can help it.
  • Ensure you have a manual card imprint for all manual transactions.
  • Ensure you adequately separate your card-absent transactions from the card-present ones. That will eliminate confusion that can arise, causing the cardholder to file chargeback claims even when the transaction was legitimate.
  • Keep your billing descriptors as straightforward and descriptive as possible for easy merchant recognition.
  • Use modern fraud deterrents to avoid processing stolen cards. Update your terminals to the latest the issuer provides. This approach will also prevent the issuer from shifting the liability of actual fraud onto you (see our Visa chargeback reason code 10.2).

Issuers develop new ways to counter fraud and ensure fair transactions. Therefore, keep yourself informed on the recent security features.


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