12.3 – Incorrect Currency

DESCRIPTION

Why did I receive a Visa 12.2 chargeback?

You received this chargeback because you mismanaged the transaction’s currency in one of two ways.

Either you applied Dynamic Currency Conversion (DCC) without the cardholder’s permission or the currency you used to process the transaction doesn’t match what you sent through VisaNet.

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CLASSIFICATION

How does Visa classify this type of dispute?

Visa reason codes are divided into four categories: fraud, authorisation errors, processing errors, and consumer disputes.

Reason codes that start with 12 are processing errors.

ISSUER TIME LIMIT

How long can the issuer wait to file a chargeback with a 12.3 reason code?

The maximum amount of time that can pass between the transaction processing date and the dispute processing date is 120 calendar days.

VALIDITY

What would make a 12.3 chargeback invalid?

An issuer is not allowed to use reason code 12.3 if any of the following characteristics are applicable:

• The transaction used straight-through processing.
• The transaction was a mobile push payment.
• The transaction happened at an ATM located outside the US but was settled in USD.

SUPPORTING DOCUMENTS

Can I fight a chargeback with reason code 12.3?

Yes. You can fight a chargeback with this reason code as long as you have documents to support your case.

If you don’t use DCC, you can provide one of the following:

• Evidence that the chargeback is invalid. (Note: Your acquirer’s technology should catch these errors and automatically respond on your behalf. If your acquirer doesn’t automatically respond and you receive a chargeback notice, you can challenge the chargeback yourself.)
• Evidence that you credited the cardholder’s account before the chargeback was filed.
• Evidence that proves the cardholder no longer wishes to dispute the transaction.

If you do use DCC but the transaction was processed in your local currency, provide one of the following:

• An acquirer certificate that shows you are registered to offer DCC.
• A transaction receipt showing the local currency was used.

If the transaction was processed with DCC, provide all of the following:

• Proof the cardholder expressly agreed to DCC.
• An acquirer certificate stating the checkout process requires cardholder involvement and you, the merchant, can’t make the choice yourself.
• A copy of the transaction receipt.

WORKFLOW

What process do I use to respond to a chargeback with reason code 12.3?

Visa reason code 12.3 is managed with the collaboration workflow.

You should submit a dispute response with a rebuttal letter (feel free to use our rebuttal letter guide) and the supporting documents listed above.

ACQUIRER TIME LIMIT

How quickly do I need to file a chargeback response?

Your acquirer must submit your chargeback response within 30 calendar days of the chargeback filing date.

NOTE: This is the acquirer time limit. The amount of time you, the merchant, have to prepare and submit your response will be much less. Usually, merchant time limits are about 3-20 days. Make sure you know how much time your acquirer allows.

ADVANCING THE CASE

Can the issuer file pre-arbitration after a 12.3 dispute response?

Yes. An issuer can file pre-arbitration for any collaboration dispute — including disputes with 12.3 reason code.

The pre-arbitration process allows the issuer to address information or evidence provided in your dispute response.

After receiving a collaboration dispute response, the issuer can advance the case to pre-arbitration for any of the following reasons.

• The issuer can provide new documents or information about the original dispute.
• The issuer changes the reason code because of information or documents provided in the dispute response. (The issuer can only change the reason code if the original chargeback was valid.)
• If your dispute response included a claim that the cardholder no longer wants to dispute the transaction, the issuer must prove that the cardholder does, in fact, want to continue the dispute.
• If you provided the required supporting documents and disputed the cardholder’s claim, the issuer must review the evidence with the cardholder and provide an explanation of why the cardholder continues to dispute the transaction.
• If you refunded the cardholder after the chargeback was filed, but the issuer suffered a financial loss because of the exchange rate, the issuer can advance the case to pre-arbitration.

There is a stipulation specifically for reason code 12.3:

• For a DCC transaction, the pre-arbitration amount is limited to the difference between the original amount and the amount the cardholder should have been charged.

PREVENT

How can I avoid chargebacks like this in the future?

Here are tips on how to effectively manage currencies and avoid 12.3 chargebacks.

• Have systems in place to manage multiple currencies. Make sure staff are trained on procedures.
• Work with your merchant account provider to make sure the user experience is compliant with Visa’s requirements.
• Don’t automatically apply Dynamic Currency Conversion (DCC) to transactions. Give customers the option to select the service if they are interested, but don’t require its use.
• Make sure you include these details on the ATM screen or website checkout page: The purchase or withdrawal amount in both the local and cardholder’s currencies with currency symbols for each, the exchange rate used for the conversion, and any additional fees or markups.
• Don’t use language or other features (smaller font size, for example) to pressure the cardholder to choose one currency over the other.

To learn more about preventing chargebacks, visit our detailed guide.