Visa Reason Code 12.3: Incorrect Currency Explained

Visa reason code 12.3 is Incorrect Currency. It sits in Dispute Category 12, Processing Errors. When it arrives, the cardholder is saying the sale used the wrong currency. Or they may say they never agreed to pay in the currency you used.

What is Visa reason code 12.3?

A Visa dispute is how a card issuer sends a contested transaction back. If the dispute is valid, the acquirer takes the disputed amount from the merchant account. It then tells the merchant.

Code 12.3 fires in two cases. The currency sent through VisaNet was wrong. Or the cardholder did not clearly agree to Dynamic Currency Conversion. Dynamic Currency Conversion, or DCC, charges the card in the merchant's home currency. The card's own currency is not used. The terminal offers it at checkout, often to travelers.

Visa sorts disputes into four categories: 10 Fraud, 11 Authorization, 12 Processing Errors and 13 Consumer Disputes. Code 12.3 is a processing error, not fraud. That matters, because the proof that answers it is different. A fraud code wants proof the real cardholder made the sale. Code 12.3 wants proof about currency.

Common causes of a 12.3 dispute

Most 12.3 disputes trace back to one of two problems.

The first is a terminal or gateway setup error. The currency code attached to the transaction does not match what the cardholder saw or agreed to. This happens when a payment setup is copied between countries. It also happens when a currency field is set to the wrong value.

The second is Dynamic Currency Conversion used the wrong way. DCC is legal, but it has rules. The cardholder must be told the total price in their own currency, and they must choose it. If the terminal defaults to DCC, or the choice is buried in small print, the cardholder can claim they never agreed. A bad exchange rate alone will not win a 12.3 dispute for the cardholder. A missing or unclear choice will.

How to respond to a 12.3 chargeback

A merchant can accept a Visa dispute, or reject it by sending supporting documents to its card processor. Each step of a Visa dispute has a set time limit, so a late answer can lose the case. Check the deadline the day the notice arrives.

Your evidence must fit the claim. For 12.3, that means showing one of two things.

If the currency was right, show the checkout screen or receipt where the cardholder saw the price in that currency. Show the transaction record with the correct currency code. Show that the amount charged matches what was displayed.

If you used DCC, show the cardholder's clear choice. That means a screen, receipt, or signed slip where the cardholder picked to pay in your currency after seeing the price in their own. A record that the terminal offered both options helps.

Visa dispute evidence must be easy to read and in English, or come with an English translation. Label each document so the reader knows what it shows. If you are new to these notices, start with how to read a chargeback notice.

Compelling Evidence does not apply here. That is proof the cardholder took part in, received, or benefited from the sale. Visa lets merchants send Compelling Evidence for conditions 10.1, 10.3 and 10.4. It does not allow it for 12.3. Proof of purchase or delivery will not answer a currency claim.

Preventing 12.3 disputes with clear currency disclosure

Prevention is cheaper than fighting. Do these things.

Check your currency settings. Make sure the currency code your gateway sends matches the currency your prices are shown in. Test a live transaction after any change to your payment setup.

If you offer DCC, make the choice plain. Show the price in the cardholder's currency and in yours, side by side. Let them pick. Never let the terminal pick for them. Print the choice on the receipt.

Train staff who handle the terminal. A common trigger is a clerk selecting DCC for the customer to save time. That single tap can cost you the whole sale later.

What happens if the dispute goes to pre-Arbitration

An acquirer may respond only once to the original Visa dispute. The acquirer may send a Dispute Response unless the merchant already accepted the dispute through Rapid Dispute Resolution.

If the issuer does not accept your response, it can file pre-Arbitration. In pre-Arbitration, the issuer must deal with the evidence the acquirer gave in its Dispute Response. It cannot skip it. After a Dispute Response, the issuer may switch dispute conditions only if the first condition was valid.

There is one limit worth knowing here. In a 12.3 Dynamic Currency Conversion case, pre-Arbitration covers only the gap from what the cardholder should have paid. So even if the case moves on, the fight is only over the gap between the DCC price and the correct price. It is not over the whole sale.

For the steps that follow your reply, see what happens after you answer a chargeback.

Sources

• usa.visa.com
• usa.visa.com