Visa Chargeback Reason Code 12.7: Invalid Data

What is Visa Chargeback Reason Code 12.7?

The Visa chargeback reason code 12.7 covers chargebacks that occur because of incorrect transaction data. It falls under the processing error category and often points back to merchant error. Visa phased out the legacy code 72, resulting in several chargeback codes, including 12.7.

All transactions pass through two stages: the authorization stage and the processing stage. These stages require transaction codes that must match for Visa to process the transaction. A mismatch will result in a chargeback or rejection.

Besides mismatching, a transaction code might be invalid, meaning it is incorrect for that particular transaction. Chargebacks under reason code 12.7 often occur at the authorization stage. The prominent details required for approval requests include the following:

• The transaction dates
• The merchant category code
• The merchant or transaction type indicator
• The country or state code
• The special condition indicator

These details allow Visa to determine the transaction type before approving the final processing. These details shouldn’t bother you. They must’ve been set up with your payment processor and remain largely unchanged.

Visa uses the data to process transactions based on its rules. For example, the rule in Canada might differ from the one in the US. Indicating the country allows Visa to know which country’s rules apply to your transaction.

Special conditions may call for slight changes to these transaction details. An example is merging or expanding your business and obtaining a new merchant category code.

Mistakes can change one or two codes, resulting in invalid data. Visa will not recognize or align the data with other details, leading to chargebacks.

Cardholders do not care about the merchant code category or other details you send for authorization. They are concerned with the transaction amount and their authorization code (card PIN). Hence, they rarely initiate disputes that result in chargebacks under this code.

Issuers are more likely to process chargebacks under reason code 12.7. This guide will show you how to dispute these chargebacks. Nonetheless, pay attention to the preventive measures. Repeated chargebacks under this reason code leave a poor reputation for your business.

Why Did It Happen?

Chargebacks with reason code 12.7 occur because of errors or invalid data in the transaction details for authorization. They can originate from a merchant error while inputting details for authorization approval from Visa. Nonetheless, the following can also cause these chargebacks:

• Corrupted data
• Faulty hardware and software that control your payment systems
• Network glitches

Background radiation and the aging of storage devices can corrupt data over time. Sudden program crashes and slow computer operations are typical symptoms of faulty hardware and software. These faults can corrupt the storage when not handled, sending faulty data to the issuer for authorization approval.

Changes in business conditions can also cause chargebacks under this reason code. Moving to a different location or expanding your business should place you in a different merchant category code. Using the former code for authorization approval will appear as invalid data because your new location does not match.

Common merchant errors that result in chargebacks under this reason code include the following:

• Entering an incorrect date
• Transposing numbers on the MCC or transaction type
• Using wrong state initials, which represent another state outside your location
• Failing to indicate or notify Visa that special conditions were involved in the transaction

Repeated chargebacks under this reason code are a call for concern. Besides the poor reputation, it points to a vital equipment failure. We can’t rule out hacks in this regard, even if they have the lowest possibility of causing chargebacks under this code.

Glitches on Visa’s end can return valid transaction data as invalid. Hence, you shouldn’t rule that chargebacks under this reason code always originate from your end.

Fortunately, Visa will specify the invalid data in the chargeback message. That gives you leverage to dispute or accept the chargeback if you are in error.

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How to Fight Visa Chargeback Reason Code 12.7: Invalid Data

Determine the precise data Visa flagged as invalid before disputing chargebacks under this reason code. Fortunately, Visa’s rules give you 30 days to prepare your response. With that in mind, here are ways to dispute chargebacks under reason code 12.7:

• The transaction data is correct: Double-check the invalid data with what should’ve been the correct data. If they match, submit documents showing you used the correct transaction data for authorization approval. That shows the authorization approval was based on correct data and remains valid.
• A refund to the cardholder was processed: Invalid data does not mean that Visa did not approve the transaction initially. Early recognition can lead you to process a refund for the cardholder. Submit evidence to show you processed the credit to correct the disputed transaction.

Early detection might cause you to contact the cardholder. An alternative agreement may occur that does not involve a credit or refund. If that happens, submit the details with the cardholder’s correspondence to Visa.

The best approach to chargebacks under this reason code, if your findings reveal an error on your part, is to accept it. The chargeback is not the end of your business. Apologize to the cardholder if necessary and work towards preventing future occurrences.

How to Prevent Visa Chargeback Reason Code 12.7: Invalid Data

Personnel errors are not the only cause of chargebacks under this reason code. We’ve seen how faulty hardware and software (payment processing) can cause them. Hence, your preventive measures must cover both humans and equipment.

Add the following tips to your payments to prevent chargebacks under reason code 12.7:

• Review your transaction data before final submission (transaction clearing).
• Update your merchant category code if you move to a new location or complete an expansion or merger.
• Update your payment hardware and software.
• Train your staff on identifying transaction types and providing the correct data for authorization approval.
• Process refunds as soon as you notice an error.
• Inform cardholders of any unavoidable delays affecting prompt refunds.
• Review all crucial fields before submitting a transaction for issuer authorization approval.

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