Visa Chargeback Reason Code 12.4: Incorrect Account Number

What is Visa Chargeback Reason Code 12.4?

The chargeback reason code 12.4 indicates a processing error where an incorrect account number is used for a transaction. Modern payment systems can detect when a transaction is posted to the wrong account number. However, system glitches and human errors can allow this to happen, resulting in a chargeback.

Swiped or chip-read transactions rarely have errors that lead to this chargeback. They’ll quickly detect an incorrect account number and return an error message. At that point, we expect the staff to reject the payment method and request or suggest an alternative one.

Errors that cause this chargeback rarely come from the cardholder’s end. Of course, they could mistakenly provide the wrong details during checkout. Still, it is up to the merchants to fish out the errors and reject the transaction.

The reason code 12.4 does not only apply to chargebacks where a transaction was posted to an incorrect account number. Using an account number that is not on the issuer’s master file can also result in chargebacks with this reason code. Again, we expect modern payment terminals (online or offline) to detect this error and reject the transaction.

Fighting this chargeback is challenging since merchant errors are often to blame for it. That is why we recommend you do all you can to avoid chargebacks in your operations. We’ll give you practical ways to prevent it from happening and put you in a tough spot.

All hope is not entirely lost if this chargeback occurs. There are a few ways to fight it, but you must first understand what led to it. For that, we’ll explore every cause in our experience.

Then, you can sum up your fighting strategy with that understanding. With that in mind, let’s examine why chargebacks under reason code 12.4 occur.

Why Did It Happen?

The primary cause of chargebacks under reason code 12.4 is posting a transaction to an invalid account number. It could also occur if transactions are posted to valid account numbers that are not on the issuer’s master file. That means that the account exists, but it is not on the issuer’s master file, and as such, payment cannot be processed.

The following are common reasons for this chargeback:

• You used an incorrect account number to process the transaction.
• The transaction was not authorized and was posted to an account number that is not on the issuer’s master file.
• The adjustment to correct the processing error was not made within 45 days of the transaction.
• Your acquirer posted the adjustment to an account with insufficient funds or that closed recently.
• The transaction had the adjustment processed multiple times.

As seen from the above reasons, efforts to correct a processing error can still result in a chargeback. Adjustments are made to correct processing errors, and acquirers can debit or credit merchants depending on the error. Hence, you can also receive this chargeback due to mistakes from your acquirer.

A cardholder’s dispute can also lead to this chargeback, which rarely happens. It’s unlikely for customers to complain about an invalid account number. Nevertheless, we can’t rule out the possibility of disputes on their end.

The above-listed errors that cause chargebacks under reason code 12.4 are primarily human-based. System glitches or even hacks can cause errors that result in a chargeback. Hence, there could be cases of actual fraud with high-level hackers.

Disabling safeguards that spot an incorrect account number can also lead to this chargeback. Hence, it's best to keep those on to avoid these chargebacks.

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How to Fight Visa Chargeback Reason Code 12.4: Incorrect Account Number

Hope is not totally lost if you have chargebacks under this reason code. The crucial thing is recognizing why it happened and investigating further. Yes, you’ll need a bit of fact-finding to gather pieces of evidence to dispute the chargeback.

We encourage you to take these steps (as applicable) within 30 days. With that in mind, here’s how you can fight chargebacks under reason code 12.4:

• If the account number on the dispute is the same as the one on your receipt: Provide the receipt to show that the processing error is not from your end. Both account numbers matching should invalidate the chargeback and necessitate a refund. You can also provide the authorization log to defend your transaction if the error shows that the account number is not on the issuer’s master file.
• If the issue is resolved with the cardholder: Provide documents to prove the credit or reversal to the cardholder. The transaction date and amount should be included in the presented documents.
• If the customer has withdrawn the dispute: Although unlikely, cardholders may withdraw disputes involving these chargebacks. Show emails or letters from the cardholder stating their withdrawal from the dispute.

Besides these steps, you are left with only one choice: accept the dispute. Do this if the following are true:

• The account number stated in the dispute differs from the one on your receipt
• The transaction failed authorization

We hope you never face this chargeback in your operations. If it comes, take time to go through the reasons. Then, apply any of the above-listed solutions to fight it.

How to Prevent Visa Chargeback Reason Code 12.4: Incorrect Account Number

Using modern Visa-approved payment terminals will reduce the probability of getting these chargebacks. Also, you must be careful when processing payments to avoid entering the wrong account number. Other steps you can take to prevent chargebacks under reason code 12.4 include the following:

• Don’t process transactions without authorization. If authorization has failed, reject the payment method and request another one.
• Request or suggest another payment method if the transaction is declined or fails due to ambiguous reasons. Don’t force payment or switch to manual entry.
• Train your staff to be diligent to avoid as many human errors as possible. They should know what procedures to follow when authorization or a transaction fails.
• Update your payment terminals to the latest approved ones.

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