4870

What Mastercard Reason Code 4870 Means for Merchants

A 4870 chargeback says a fake chip card was used at a terminal that could not read chips. Here is when it applies and how to fight it.

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A 4870 notice says the cardholder never made the sale. It also says a chip card was used at a terminal that could not read chips. That combination moves the loss to the merchant. Here is how the code works and how to answer it. If you are new to these notices, start with how to read a chargeback notice.

What is Mastercard reason code 4870?

Mastercard reason code 4870 is Chip Liability Shift. Mastercard lists it as a fraud-related chargeback. It covers fraud where a counterfeit card was used at a POS or ATM terminal that was not a hybrid chip terminal.

The claim has two parts. The cardholder must say they did not authorize the charge, and that they still had all their valid cards. If the card was never lost or stolen, a thief must have copied it. A copied card only works at a terminal that cannot read chips.

Why does Chip Liability Shift exist?

Chip cards are hard to copy. A magnetic stripe card is easy to clone, but a chip card creates a unique code for each sale. That is why Mastercard pushed merchants to accept chips.

The rule is a trade. If a merchant takes a chip card on a magnetic stripe because its terminal cannot read chips, the merchant eats the fraud loss. If the terminal reads the chip, the loss stays with the issuer. The code moves money to the side that skipped the safer technology.

Visa has a matching pair of codes. See Visa 10.1 EMV Liability Shift Counterfeit Fraud and Visa 10.2 EMV Liability Shift Non-Counterfeit Fraud.

When does reason code 4870 apply?

The code fits a narrow set of facts. All of these must be true.

  • The card was a valid chip card.
  • The sale ran on a terminal that was not a hybrid chip terminal, so it read the stripe or a fallback.
  • The cardholder says they did not authorize the charge.
  • The cardholder still had all their valid cards.

The last point matters. A lost or stolen card is a different dispute. This code is for a copied card, used while the real one sat in the cardholder's wallet.

When is a 4870 chargeback invalid?

Two facts kill a 4870 claim. The chargeback is invalid if the card was not a valid chip card. It is also invalid if the sale was a technical fallback, meaning the terminal tried the chip first and could not read it.

A fallback is not the same as a terminal with no chip reader. If your terminal has a chip slot and the chip failed, that sale may not qualify. Ask your processor for the terminal data before you answer.

How to defend against a 4870 chargeback

Your defense depends on the facts of the sale. Pick the one that fits.

  • The card was not a chip card. Send proof, such as the card data from the authorization, showing the card had no chip.
  • The sale was a technical fallback. Send the terminal logs or the transaction detail showing the chip was tried first.
  • The cardholder did make the sale. Send proof of delivery, the order, or other records tying the cardholder to the purchase.

Label each document so the reader knows what it shows. A pile of papers with no guide does not help you.

How 4870 fits into the Mastercard chargeback process

Mastercard chargebacks fall into four categories: Authorization, Cardholder disputes, Fraud, and Point-of-Interaction Error. Code 4870 sits in the Fraud group.

An issuer may start a chargeback when the transaction meets the requirements of a chargeback reason code. An issuer gets only one chargeback for each presented transaction amount.

Your reply is a second presentment. The acquirer may second present when the chargeback did not meet the reason code rules, or it can answer the original dispute. If the cardholder got both a chargeback credit and a merchant refund, the acquirer must second present showing the refund.

After the chargeback cycles, the issuer may continue the dispute through pre-arbitration and arbitration case filing. For ATM and Maestro transactions, pre-arbitration is optional, and the issuer may go straight to an arbitration case. For all other disputes, an issuer that wants to continue must first file a pre-arbitration case.

If the acquirer takes no action on a pre-arbitration case, it accepts financial responsibility for the transaction. The acquirer may reject a pre-arbitration case with a rebuttal and any relevant documents. Mastercard ignores second presentment documents received once a pre-arbitration or arbitration case has been filed. When the issuer and acquirer cannot resolve an arbitration case, Mastercard decides who is responsible.

For what each round looks like after you send your papers, see what happens after you answer a chargeback.

If 4870 notices keep arriving, the fix is at the counter. Get a terminal that reads chips and stop taking chip cards on the stripe. That closes the door this code walks through.

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