There’s always a criteria when responding to disputes. The reason code explains what compelling evidence is needed while the issuer checks if merchants properly formatted all of the documents within their  response. Any infringement could put yourself in jeopardy of receiving a chargeback. And that’s not the only requirements you should be aware of. Some reason codes will have what are called transaction modifiers. This is a crucial, underestimated element that  impacts what evidence you should add to your response.

We’re going to explain what transaction modifiers affect merchants who offer digital goods and services.

But first…

What is a Transaction Modifier?

Think of a transaction modifier as a moderator for a reason code. It clarifies how merchants should respond to reason codes that consolidate more than one reason why a dispute was filed. As a result, modifiers inform merchants on what evidence is needed in order to address the dispute.

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Which Reason Codes Have Transaction Modifiers?

It depends on the card network. And the number of modifiers depend on how well the reason code addresses the reason for the dispute. Here’s one way to understand on the number of transaction modifiers associated to a given reason code:

If a reason code appears to be generic, it will likely have more transactions modifiers to explain the dispute and response method. If a reason code seems to be explicit, it will likely have less transaction modifiers to explain the dispute and response method.

Currently, there are 28 transaction modifiers across all four card networks. MasterCard has the most with 22 modifiers. Before April 14, 2018, Visa had 19 transaction modifiers, which would have placed this card network in second place. However, Visa set its modifiers to expire once Visa Claims Resolution (VCR) had been launched. It now relies on its descriptions to explain how merchants should respond to disputes. E.g., what you see is what you get with Visa.

What Transaction Modifiers Should I Be Aware Of?

Basically, you should be aware of every transaction modifier. Especially those related to digital goods and services. We’re going to provide a list of all the transaction modifiers, its associated reason codes, and identify which digital merchants are most affected by these rules. Some modifiers will only affect one type of merchant while others will affect them all. Either way, we’ll offer explicit advise on how to respond to any reason code with a transaction modifier.

Airline Transaction

This transaction modifier solely affects airline merchants who handle CNP transactions and offer digital goods. E-boarding passes are one example of digital goods. Here are the reason codes that have airline transaction modifiers.

American Express

C08 – Goods or Services Not Received or Only Partially Received

F29 – Card Not Present

How to Respond

One of the following must be provided in your response.

  • You can provide evidence that the cardholder or designated passenger participated in the flight. For example you can show that the boarding pass has been scanned. 
  • Some cardholders may file a dispute related to their frequent flyer miles. You can provide documents that show the cardholder gave consent for using this credit. This is also useful to show that the cardholder used this credit, even if he or she claims otherwise.
  • Any evidence that shows a flight being available during airline bankruptcy proceedings is sufficient.
  • And finally, you can present additional transactions related to the original transaction. Some examples include seat upgrades, baggage payment, or purchases made on board the aircraft.

Discover

RG – Non-Receipt of Goods, Services, or Cash

How to Respond

Discover allows you to respond with the following evidence.

  • Basically, you can provide any evidence that challenges the merit of an disputed airline ticket.
  • Alternatively, the cardholder may have submitted a lost ticket application. You can provide evidence that proves the application is invalid.

MasterCard

4837 – No Cardholder Authorization

How to Respond

MasterCard lets you provide at least one of the following documents and, if necessary, an accompanied explanation.

  • A flight ticket or boarding pass that shows the passenger’s name.
  • A flight manifest that shows the passenger’s name.
  • Any additional transactions connected with the disputed flight. This can include matters like upgrades, excess baggage charges, and in-flight purchases.
  • You can present passenger identification documentation that shows a link to the cardholder.
  • You can also show a connection between the cardholder and the credits of frequent flyer miles for the flight.
  • And finally, any proof of the flight ticket receipt at the cardholder’s billing address is sufficient.

Digital Goods

Digital goods is a more pervasive transaction modifier. This modifier affects all merchants who provide, distribute and accept transactions related to digital goods. This includes, but not limited to, any good that is bought, downloaded and stored on a cardholder’s device. The following reason codes will have a digital goods transaction modifier.

American Express

C08 – Goods or Services Not Received or Only Partially Received

How to Respond

First of all, you can provide a description of the digital goods for any internet transaction. Especially if that represents the sale of an internet electronic delivery charge. You can also provide the date and time when the digital goods were downloaded. But make sure you include one of the following evidence.

  • You can present the cardholder’s IP address at the time of purchase. And that it matches the IP address where the digital goods were downloaded.
  • You can also match the cardholder’s email address that was used to receive the digital goods. Make sure that you also match the time of purchase with the cardholder’s address.
  • And finally, you can show that the merchant’s website was accessed by the cardholder. This is helpful to show how he or she accessed your website for services after the transaction date.

Discover

RG – Non-Receipt of Goods, Services, or Cash

RM – Cardholder Disputes Quality of Goods or Services

UA02 – Fraud – Card Not Present Transaction

How to Respond

For Discover reason codes RG and RM, provide any of the following evidence.

  • It’ll be great to present the cardholder’s confirmation of registration. Especially if he or she claims the goods or services were not delivered.
  • You can also present the cardholder’s email or IP address. Make sure you connect it to the date and time of download.
  • And finally, you can provide the description of goods downloaded. You can also provide the log that documented the receipt of downloaded material on or after the transaction date.

For Discover reason code UA02, prove that the items were delivered. And that you used the Address Verification Service (AVS) to validate the numeric portion of the cardholder’s billing address. This includes providing the street address and ZIP code. Alternatively, you can provide proof that the AVS request did not verify the cardholder’s address . That’s permitted when the card is issued outside of the United States. Alternatively, you can provide any of the following evidence.

  • You can present the cardholder confirmation of registration. This will show the cardholder was authorized to receive electronic delivery of goods or services. You can also show proof of a successful delivery.
  • You can provide the cardholder’s email or IP address. Make sure you connect it to the date and time of download.
  • And finally, you can provide the description of goods downloaded. You can also provide its log that documented the receipt of downloaded material on or after the transaction date.


MasterCard

MasterCard breaks up digital goods to two transaction modifiers. The card networks classifies both modifiers as Digital Goods Download and Digital Goods at or Under $25 USD. Here are the reason codes associated to each modifier, and its corresponding tips on how to respond.

Digital Goods Download

4837 – No Cardholder Authorization

How to Respond

Make sure that you provide the following piece of evidence.

  • The cardholder’s written confirmation of registration to receive electronic delivery of goods or services.

Digital Goods at or Under $25 USD

4853 – Cardholder Dispute

4855 – Goods or Services Not Provided

How to Respond

You and your acquirer can prove that the merchant offered purchase controls at the time of the transaction. You can do the same for multiple transactions charged back in a batch. Here are some examples of purchase controls.

  • The cardholder can have the option to disable all digital goods purchases. Make sure you state that this was visibly enabled as a default setting.
  • The time period during which a digital goods can be purchased on the cardholder’s account. This is often referred to as the “account open” period. You can state that this time period must not exceed 15 minutes from the time at which the cardholder enters account authentication credentials.
  • You can give the cardholder the option to confirm or cancel the clearly displayed total transaction amount. Make sure that is allowed for each pending digital goods purchase. It’ll be great to receive the cardholder’s consent before the transaction is complete. That can be a great piece of evidence.

What [Other] Transaction Modifiers Should I be Aware Of?

The following transaction modifiers only apply to MasterCard reason codes. Here’s how you should respond to each modifier.

Customer Profile

Reason Code: 4837 – No Cardholder Authorization

How to Respond: This transaction modifier applies to digital and goods that were purchased by a registered cardholder. This includes the authorized user of the customer profile. You must provide documentation that confirms this person is registered to purchase goods with a password. This is helpful, especially if you require this person to register prior to purchasing. Furthermore, you must provide one or more of the following evidence.

  • You can show the cardholder or authorized user completed other undisputed purchases. This includes purchased that occurred prior to, or after, the alleged fraudulent transaction.
  • You can also show the cardholder or authorized user completed the disputed purchase from a registered device and IP address.
  • It’ll be great to provide details of the purchase.
  • Or you can provide signed proof of delivery.
  • It’s helpful to provide the email addresses that supported digital download delivery.
  • Another piece of evidence is the cardholder and authorized user’s registered device and IP address. Make sure you show these elements completed the disputed transaction.
  • In addition, you show the cardholder or authorized user was registered for the disputed goods or services. For example, registration for purposes of warranty or future software updates is sufficient.
  • And finally, you can show proof of a fully enabled SecureCode transaction. Make sure you show that this transaction was used to register a PAN for future transactions.

Ecommerce Transaction: Partial Shipment or Balance Due

Reason Code: 4837 – No Cardholder Authorization

How to Respond: You must provide a statement that documents all of the following evidence. This must be accompanied with proof that shows you obtained authorization for a related transaction involving a partial shipment or the payment of a balance due. All of it must verify the authenticated ecommerce transaction. Here is the additional evidence you’ll need to provide.

  • You must show the original transaction was a digital, secure remote payment (DSRP) transaction. Alternatively, you can show that that the transaction was initiated by a SecureCode.
  • You need to provide the description of the goods or services purchased in the initial transaction.
  • Also, make sure you include the date and authorization of the approval code for the initial transaction.
  • And finally, prove that the initial transaction was not disputed.

Non-Receipt

Reason Code: 4853 – Cardholder Dispute

How to Respond: You can provide evidence that meet the following descriptions.

  • The cardholder received the goods or services.
  • The deficiency that led to this dispute has been corrected.

Recurring Transaction – Digital Goods

Reason Code: 4841 – Cancelled Recurring Transaction

How to Respond: You can provide documentation to support that the dispute is remedied or invalid.

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What Else Should I Know About Transaction Modifiers?

Keep in mind that modifiers explain specific details related to a dispute, especially those related to generic reason codes. These become useful when card networks decide to consolidate more ‘reasons’ within its reason codes. For example, MasterCard Reason Code 4853 – No Cardholder Dispute has nine transactions modifiers. That means this reason code has 33.3% of all the transaction modifiers that are available among the card networks. And as we’ve shown above, two of 4853’s modifiers affect digital merchants. Those modifiers are Digital Goods at or Under $25 USD and Non-Receipt.

Transaction modifiers may seem overwhelming at a first glance. But once it’s compiled into one resource, suddenly dispute management seems more manageable. And there’s a lot more we can offer along with an informative blog post. Here are some more resources that consolidate transaction modifiers, its associated reason codes and response tips all in one place.

Chargeback Reason Code Encyclopedia

Our most popular resource not only has all of the card networks’ reason codes compiled into one ebook. It also offers the transaction modifiers, time limits and compelling evidence associated to a given dispute. The Chargeback Reason Code Encyclopedia also provides an in-depth explanation of Visa’s new dispute process. You can learn more about the VCR and more by downloading the Encyclopedia right here.

Real-time Resolution

Think of this resource as a countermeasure to the automation initiated by the card networks. The Chargeback App allows you to prevent disputes from becoming chargebacks. It allows merchants to provide issuers and cardholders with real-time order, usage and delivery data. As a result, you’ll be able to repurpose time for more important matters while reducing the likelihood of a chargeback.

In addition, the Chargeback App automatically generates response templates and extracts all transactional data related to the dispute. This will give you more time to gather evidence and draft a compelling response. That best thing about the App’s auto-generation is that it generates response documents in accordance to the card networks’ rules. That includes transaction modifiers, and that’s one less thing you’ll have to worry while proving your innocence to the issuer.

Feel free to contact us to learn more Real-time Resolution and the Chargeback App. You can also see our prices to learn about its benefits—and how much you’ll save with your current dispute intake. And finally, you can always request a demo in order to get a feel of Real-time Resolution.

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The post What Transaction Modifiers Affect Digital Goods? appeared first on Chargeback.

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