Chargeback Reason Code

Visa Chargeback Reason Code 13.1: Merchandise/Services Not Received

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 13.1: Merchandise/Services Not Received

What is Visa Chargeback Reason Code 13.1?

Chargebacks involving cardholder claims of not receiving services or goods paid for fall under Visa reason code 13.1. Itā€™s a simple one that shouldnā€™t take long or many emails to resolve. However, you must identify the cause and whether the goods or services were not received as claimed.

Youā€™ll receive these chargeback messages with the shorthand descriptor ā€œMerchandise/services not received.ā€ The reason code covers online and offline transactions, provided cash was exchanged for goods or services. It could be that the cardholder paid for the items physically with your payment terminal or made an internet, phone, or mail order.

A few things must be considered before chargebacks are issued under this reason code. They include the following:

  • The cardholder paid for goods and servicesĀ 
  • You and the customer agreed upon a delivery date.
  • The cardholder did not receive the goods or services as expected.

An example is paying for an online subscription, which should be reflected in your account immediately. However, you cannot access the service after processing the transaction. Money has left your card, but the service is not available.

You can paint a similar picture with a point-of-sale purchase where goods shouldā€™ve been delivered after payment but were not. Cardholders will dispute the transaction, prompting the issuer to process a chargeback under this reason code. There are ways to fight the chargeback if you feel it shouldnā€™t be there.

We will review the steps to fight it, including the necessary documents. In the meantime, letā€™s see why you may receive chargebacks under this reason code.

Why Did It Occur?

This chargeback occurs when a cardholder cancels or disputes a transaction because they did not receive the services or merchandise purchased. It often applies to delays in fulfillment after the expected delivery and pick-up times. However, it can occur before the expected delivery date (friendly fraud).

Todayā€™s e-commerce thrives because of fulfillment centers and companies that deliver merchandise to customers. Most e-commerce sellers rely on these centers or companies to ship their products. In addition, merchants estimate the delivery date, often in days.

This estimate can result in several unexpected events that will cause this chargeback. With that in mind, here are the primary reasons for the chargeback:

  • Non-provision of services or merchandise: Non-receipt of the purchased services or merchandise is the most common cause of this chargeback. The cardholder could have reached the pickup point on the agreed date but did not find the merchandise. Or the service (online subscription, utility repairs, etc.)
  • Late Arrival of services or merchandise: A cardholder may file a dispute for a transaction before receiving the merchandise or services. It could be that the customer grew impatient or your end had a non-communicated delay. Collecting the merchandise or using the service later should nullify the chargeback, as seen subsequently.
  • Billing before shipping: Processing payment before shipping a product can cause this chargeback. The cardholder may have a knee-jerk reaction and dispute the transaction.

Cyber Shop-lifting

Cybershoplifters often order, pay for, and receive products but file chargeback claims. The dispute could be any of the following:

  • Not receiving the products or services
  • Receiving damaged products

Even after the chargeback, these online shoplifters rarely return the merchandise. Chargebacks for this reason will amount to actual fraud because the cardholder intends to commit fraud.

Besides actual fraud, a customer may dispute a transaction before delivery. While issuers are diligent enough to recognize friendly fraud, a few cases may slip through and cause chargebacks.


How to Fight Visa Chargeback Reason Code 13.1: Merchandise/Services Not Received

Letā€™s explore ways you can fight this chargeback based on the events leading up to it:

  • The merchandise or service was delivered at the agreed-upon location and date: This is easy, as all you need is documentation to show that the cardholder received the merchandise or service as authorized. Signed receipts can work for merchandise and physical services, while acknowledgment emails can work for online services.
  • The chargeback occurred before the agreed-upon delivery date: Chargebacks before the delivery date are illegitimate. Submitting documentation that shows the agreed-upon delivery date and the pre-delivery chargeback date should quickly resolve it.
  • Cardholder canceled the order before delivery: You should not be liable if a cardholder cancels an order even when the merchandise or service was ready before delivery. Provide documentation to show these dates and your service or merchandise delivery before the delivery date.
  • A balance is required before delivery: Based on your agreement or terms and conditions, you may have requested two installments before merchandise or service delivery. Provide documents to show that the cardholder still has outstanding payments.
  • You have processed a refund before the chargeback: Send documents that prove your credit or reversal transaction to the cardholder. Ensure that you state the amount and the transaction date.
  • The cardholder has informed you about withdrawing the dispute: Request a letter or email from the cardholder and present it. You will receive a refund once that is confirmed.

You may need additional evidence to validate your claims and get a refund. We recommend referring to the Compelling evidence chart for merchants to see which evidence applies to the scenario. Also, ensure your submissions are within 30 days of the chargeback.

How to Prevent Visa Chargeback Reason Code 13.1: Merchandise/Services Not Received

Itā€™s better to avoid the stress of proving your case to reverse a chargeback. We understand how overwhelming operations can be with customers paying for and expecting their purchased merchandise. Nevertheless, we have a few recommended things to do to prevent this chargeback.

They include the following:

  • Inform the cardholder of any anticipated delays and the new projected delivery date early. You should also provide an option for the customer to cancel the order.
  • Process cancellation requests promptly. Issue refunds as soon as possible (that depends on your cancellation policy).
  • Request proof of delivery and collection. A certified mail or carrierā€™s certification can suffice. Signed receipts from the cardholders are also acceptable. This proof should indicate delivery to the correct address and pickup by the cardholder.


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