4808 – Stand-in or X-Code Approval

DESCRIPTION

Why did I receive a ‘stand-in or X-code approval after issuer decline’ chargeback?

You received this chargeback because you submitted an authorisation request for a CNP transaction, and the issuer declined it. You tried again later, and the issuer’s technology happened to be offline or having an outage. So Mastercard stepped in to approve the transaction on the bank’s behalf with either the stand-in or X-code authorisation process. Now, the bank claims the transaction should not have been approved.

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CLASSIFICATION

How does Mastercard classify this dispute?

Mastercard nests several subcategories under general, overarching reason codes. This ‘stand-in or X-code approval after issuer decline’ subcategory is part of reason code 4808 — authorisation-related chargebacks.

Authorisation-related disputes usually happen when an issuer claims a transaction was not properly authorized.

Mastercard has two transaction processing workflows: dual message and single message. 4808 is a dual message reason code.

ISSUER TIME LIMIT

How long can the issuer wait to file a ‘stand-in or X-code approval after issuer decline’ chargeback?

Issuers must file a ‘stand-in or X-code approval after issuer decline’ chargeback within 90 days of the transaction processing date.

SECOND PRESENTMENT

Can I fight a ‘stand-in or X-code approval after issuer decline’ chargeback?

Yes, you can fight this chargeback. But you might not want to.

If you fight an authorisation-related chargeback — a process called second presentment, representment, or submitting a chargeback response — you have to have an irrefutable case backed by evidence. If you don’t have this — if your case is incomplete, inaccurate, or unwarranted — the issuer can file arbitration. And arbitration is expensive.

Here’s a list of reasons that might warrant a second presentment.

• The issuer approved the transaction after previously declining the same transaction.
• You have already refunded the transaction.
• The chargeback was invalid.

There are a couple of reasons why a chargeback might be invalid.

• The chargeback does not meet Mastercard’s filing requirements.
• The chargeback was processed after the time limit.
• A single transaction had more than one chargeback.
• The primary account number (PAN) and acquirer reference number (ARN) used in the chargeback does not match what was sent in the original transaction record.

SUPPORTING DOCUMENTATION

What supporting documents are needed for a ‘stand-in or X-code approval after issuer decline’ chargeback?

If an issuer inaccurately files an authorisation-related chargeback and it can be disputed, your acquirer’s chargeback technology should automatically catch the error and respond on your behalf.

If your acquirer doesn’t automatically respond and you receive a chargeback notice, you can challenge the chargeback yourself. Here’s how.

Create a chargeback rebuttal letter and explain why the chargeback should be reversed. Include information that supports your case and is relevant to the reason for fighting the chargeback. To increase efficiency, you could also include the corresponding message code the acquirer will need when submitting your second presentment.

The information you share depends on the reason for fighting the chargeback.

If you are fighting a chargeback because a refund has already been issued, share the date and acquirer reference data (ARD) for the refund. The message code is 2011 (Credit Previously Issued).

If you are fighting a chargeback because the issuer didn’t follow Mastercard’s rules, explain why the chargeback was invalid in your rebuttal letter. The message code is 2713 (Invalid Chargeback).

If you are fighting a chargeback because it was issued after the deadline, share the transaction processing date and the chargeback processing date. The message code is 2702 (Past Chargeback Time Limit).

If you are fighting a chargeback because the issuer had previously filed a chargeback for the same transaction, provide the processing date and the reference number for the first chargeback. The message code is 2701 (Duplicate Chargeback).

If you are fighting a chargeback because you do have issuer approval, share the transaction approval date and authorisation response code. You’ll also need to explain which of the following is true:

• The initial issuer decline response code was ‘cannot approve at this time, try again later’.
• The issuer — not Mastercard — approved the transaction after the initial decline.
• The cardholder resubmitted the online order.

If you state the cardholder resubmitted the order, you’ll need to provide supporting documents to validate your claim.

The message code for this reasoning is 2008 (Issuer Authorized Transaction).

NOTE: This information applies to chargebacks processed with the dual message system (which nearly all card-not-present transactions use). Chargebacks for single message transactions use a slightly different process.

ACQUIRER TIME LIMIT

How quickly do I need to file a chargeback response?

In most situations, a second presentment must be submitted to the issuer within 45 calendar days of the chargeback processing date.

However, there are a few timeline exceptions. The following countries have alternate time limits in certain situations — either 10, 20, or 30 days instead of 45.

• Costa Rica
• Kazakhstan
• Nigeria
• Mainland China
• Tanzania

NOTE: These time limits are for the acquirer — not you, the merchant. Merchant time limits are usually much shorter. Review your chargeback notice or check with your acquirer to find out how long you have to respond.

ADVANCING THE CASE

Are pre-arbitration and arbitration an option for a ‘stand-in or X-code approval after issuer decline’ chargeback?

Yes, in most situations and regions, an issuer can advance the dispute after completing the chargeback and second-presentment stages of the dispute lifecycle.

For this subcategory of reason code 4808, Mastercard does not require pre-arbitration in most regions — it’s optional. In fact, “Mastercard strongly recommends skipping the optional pre-arbitration case step and proceeding to filing an arbitration case.” The only exceptions are Costa Rica and Tanzania.

If an issuer files pre-arbitration, you — the merchant — have an opportunity to respond or accept liability. If the issuer files arbitration, you could be responsible for paying the expensive filing fees.

Check our Mastercard pre-arbitration and arbitration guide to learn more.

PREVENT

How can I avoid chargebacks like this in the future?

Here are steps you can take to avoid this type of chargeback in the future.

• Always send an authorisation request before processing a transaction.
• Avoid partial refunds or reversals when possible. Only resolving part of the issue means the remaining transaction amount can still be disputed.
• If you process transactions with multiple authorisations or clearings, make sure you fully understand Mastercard’s rules and regulations.
• Build your authorisation retry strategy wisely. Don’t retry hard declines. And consider whether a stand-in authorisation does more help or harm.
• Promptly issue refunds for qualified requests. And let the cardholder know when to expect their account to be credited.

Want more information about preventing authorisation-related chargebacks? Visit our detailed guide on authorisation.

NOTE

Mastercard chargeback rules are complex. The guide is over 1,500 pages long — compared to 67 pages for Visa — and contains detailed rules for both issuers and acquirers.

In an attempt to simplify the complex, we are only sharing information that is most relevant to merchants. If you are an acquirer and in need of more details, reach out to our team. We’d be happy to walk through the specifics with you.