Visa Chargeback Reason Code 12.2: Incorrect Transaction Code

What is Visa Chargeback Reason Code 12.2?

The Visa chargeback reason code 12.2 refers to transactions that were submitted with the wrong transaction codes. It falls under processing errors with close ties to the chargeback reason code 12.3. Visa split them from the legacy code 76 when it phased out legacy codes for chargebacks.

Prominent transaction codes you must submit include merchant location, merchant category codes (MCC), and other VisaNet data formats. You can refer to the Merchant Data Standards manual for transaction codes required for processing.

Transactions can be debits, credits, or reversals. The transaction codes you send during transaction authorization tell Visa what transaction you want to perform.

All transactions go through two stages, as follows:

• The authorization stage: This stage is where you send an approval request for the transaction. The cardholder enters their authorization details (PIN, signature, token, etc.) while Visa checks to see if they have sufficient funds. Then, the card issuer places a hold on the cash to ensure it will be available for subsequent processing.
• The processing stage: At this stage, Visa transfers the money to your merchant account. This stage can take a few days, depending on the issuer. Also, you can reverse the process for credit transactions.

You must submit transaction codes during the authorization and processing stages. Errors in this submission are where chargebacks under reason code 12.2 can come from. Hence, we often trace the chargebacks back to merchant errors.

Cardholder complaints can cause Visa to review the transaction codes. That can also result in chargebacks under this code.

You can dispute these chargebacks easily. However, you must have the correct transaction codes and proof that they match the authorization and processing documents.

Most of your transactions involve taking money from the cardholders’ accounts. Hence, the possibility of submitting a credit transaction as a debit is always there.

We will show you how to resolve chargebacks under this reason code. Fortunately, Visa is open to hearing your case.

Why Did It Happen?

Merchant errors and customer complaints can cause chargebacks with the reason code 12.2. Here’s how they may occur:

• Submitting a wrong transaction code: You may have submitted a debit transaction code during the authorization stage. Submitting a credit transaction code during the processing stage will cause this chargeback. The same thing applies to credit transactions submitted as debit payments.

Credit transactions and reversals are more susceptible to this error. A credit transaction involves taking money from your account to the cardholder’s account. However, a reversal means refunding a pending transaction.

For reversals, the money remains with the issuer pending processing. Submitting a credit transaction code will force Visa to reject the transaction.

• Cardholder complaints: Chargebacks under this reason code do not occur because of cardholder complaints. However, the latter can cause Visa to review the transaction code for discrepancies. The issuer will process a chargeback under the 12.2 reason code if discovered.

Chargebacks under this reason code are often valid. That is because cardholder claims boil down to the transaction.

Some cardholders may expect a credit transaction even when they authorize a debit transaction. Oversights like these occur in the merchant world. However, that is a subject for another chargeback reason code.

Friendly or actual fraud cannot cause chargebacks under this reason code. However, Visa might be incorrect in their review. Card issuers are thorough in their reviews, but errors can still occur.

A thorough review of your transaction codes should give you enough evidence to dispute chargebacks under this code.

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How to Fight Visa Chargeback Reason Code 12.2: Incorrect Transaction Code

Unlike most chargebacks, there’s little we can do to dispute this chargeback. Visa allows 30 days to provide evidence that the chargeback is unwarranted.

The following are a few ways you can dispute chargebacks under this reason code:

• The transaction codes are correct: Provide evidence showing that the transaction codes for authorization and processing are the same. That proves that you submitted an intended credit or debit transaction correctly.
• You have processed a refund: Submit credit statements to show you have processed a refund to the cardholder. Explain any shortages that can come from non-refundable fees or deposit securities.
• Reaching an alternative agreement: Show a written correspondence from the cardholder agreeing to the alternative resolution. That could mean providing goods and services in place of a refund.
• The chargeback was processed after 120 days: Visa’s rules allow for chargebacks within 120 days of the disputed transaction. If the chargeback occurred after 120 days, you can dispute it as per Visa’s terms.

The only option left if none of the above applies is to accept the chargeback. Move on to implementing strategies to prevent future chargebacks.

How to Prevent Visa Chargeback Reason Code 12.2: Incorrect Transaction Code

Chargebacks under reason code 12.2 are disputable, but you have limited ways to dispute them. They often arise from preventable merchant errors. Hence, the best course of action is to prevent them. The prevention approach covers back-office and point-of-sale staff.

You must prevent recurring chargebacks for this reason. If they continue to occur, that might indicate a prominent fault in your payment processing systems.

Here are a few tips for preventing chargebacks under reason code 12.2:

• Use the credit transaction code on your POS terminal for credit vouchers.
• Train your staff on the proper way to issue credit vouchers and
• Ensure your staff is well-trained in processing credit, debit, and reversal transactions.
• Know the correct codes for payment adjustments as they occur after processing.
• Respond promptly to any inquiries from Visa.
• Improve your customer service to ensure fewer customer complaints.
• Process refunds immediately.
• Inform the cardholder of any unavoidable delays in their refunds.
• Ensure the cardholders are aware of the type of transactions they authorize.
• Review your transactions and codes before submitting them for final processing. We recommend submitting transactions in batches.
• Ensure your terms and conditions for a refund are well-written to prevent customers from expecting a refund when it is not due.

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