What Visa reason code 10.3 means for merchants

Visa reason code 10.3 is the fraud claim an issuer files when a cardholder says a sale was not theirs. The card was there at the counter. The full name is Other Fraud: Card-Present Environment. If you got a notice with this code, the sale was made in person, and the cardholder is now denying it. Here is what that means and what you can do about it.

What is Visa reason code 10.3?

A Visa dispute is how a card issuer sends a contested transaction back. Code 10.3 sits in the fraud group, which Visa calls category 10. Under 10.3, the cardholder denies making a purchase that was keyed in by hand while the card was present.

That last part is the key. The card was physically there, but the terminal did not read its chip or stripe. Someone typed the number in by hand instead. The cardholder later tells their bank the sale was fraud.

If a Visa dispute is valid, the acquirer takes the disputed amount from the merchant account and tells the merchant. You then have two choices. A merchant can accept a Visa dispute, or reject it by sending supporting documents to its card processor.

When does 10.3 apply?

An issuer reaches for 10.3 when three things line up. The sale happened in person. The card was handed over or presented at the terminal. And the card data was keyed in by hand rather than read from the chip or magnetic stripe.

Common examples help make this clear. A store clerk types the number in because a damaged card will not swipe. A restaurant terminal is down, so the server writes the number down and enters it later. A card is worn out and the reader keeps failing, so someone gives up and keys it in.

Each of those sales is a keyed transaction with the card present. If the cardholder then calls their bank and says they never made the purchase, the issuer can file 10.3.

How 10.3 differs from 10.1 and 10.2

All three codes live in the fraud category, but they point at different problems.

Code 10.1 is EMV Liability Shift Counterfeit Fraud. It applies when a fake card, made from stolen data, is used at a terminal that did not read the chip. The card looks real but is a copy.

Code 10.2 is EMV Liability Shift Non-Counterfeit Fraud. It covers a real card used by someone who should not have it, again at a terminal that did not read the chip. The card itself is genuine.

Code 10.3 is the leftover bucket. The card was present, the sale was keyed by hand, and the claim is fraud. But the dispute does not fit the chip liability rules of 10.1 or 10.2. So the issuer files 10.3 instead.

How to fight a 10.3 chargeback

Start by checking what your terminal actually did. For a card present fraud dispute, send the authorization record showing the magnetic stripe or chip was read. If that record exists, the dispute may be wrong from the start, and this proof can end it.

If the sale was keyed, build your case around proof that the cardholder took part. A signed receipt with a matching signature helps. So does a delivery record, a loyalty account in the cardholder's name, or past purchases from the same card at your store.

Each step of a Visa dispute has a set time limit, so a late answer can lose the case. Move as soon as the notice arrives. If you are not sure what the notice is telling you, start with how to read a chargeback notice.

Visa dispute evidence must be easy to read and in English, or come with an English translation. A blurry photo of a receipt will not help you. Send clear copies.

Using Compelling Evidence for 10.3

Compelling Evidence is proof from the merchant that the cardholder took part in, received, or benefited from the transaction. It is a strong tool, and Visa lets merchants send Compelling Evidence for conditions 10.1, 10.3 and 10.4.

For a 10.3 case, good Compelling Evidence shows a pattern. Two or more past purchases by the same cardholder, with matching details, suggest the person knew your store and came back. Add proof that ties this sale to that person, like a signature, an email address, or a delivery to their home.

The goal is simple. Show that the person who filed the fraud claim is the same person who made the purchase. When the record makes that clear, the issuer has to reckon with it.

When a 10.3 dispute is invalid

Some 10.3 claims should never have been filed. A 10.3 dispute is invalid when the sale was approved on a card the issuer had already reported for fraud. If the issuer knew the card was bad and still approved the charge, the fault is not yours.

The dispute is also weak if your records show the chip or stripe was read. A keyed transaction is part of what defines 10.3. An authorization record that shows a full read undercuts the whole claim.

If you spot either problem, say so in your response and attach the proof. An acquirer may respond only once to the original Visa dispute, so make that one reply count.

What happens next

Your response is not the end of the road. The issuer reads it and can drop the case or push it further. To see the rounds that can follow, read what happens after you answer a chargeback.

Sources

• usa.visa.com
• usa.visa.com