Understanding Visa Chargeback Reason Code 10.3: Other Fraud: Card-Present Environment/Condition
Visa Chargeback Reason Code 10.3 is raised when a card-present purchase is later disputed as unauthorised. It usually involves key-entered sales or self-service terminals where the card was not read by chip or stripe. Merchants need clear evidence; otherwise, they may lose the funds and fees associated with the sale.
Key Takeaways
What it means: The issuer believes a face-to-face or unattended transaction was fraudulent.
Causes: Manual key entry, faulty or non-EMV terminals, or genuine theft of the card.
How to respond: Show chip or swipe authorisation, manual imprint, or proof of a refund or cardholder retraction.
How to prevent: Use EMV-ready hardware, avoid manual entry, train staff, and try out chargeback alerts.
What is a Visa Reason Code 10.3 Chargeback?
Visa groups chargebacks that point to fraud in a card-present setting under Condition 10.3. The code applies when a cardholder states they did not approve a payment that, on paper, required their physical participation. This includes transactions completed at staffed tills, vending machines, fuel pumps or self-checkouts.
The dispute is not limited to counterfeit cards; the issuer claims that the right verification steps were skipped or failed. If the merchant cannot prove the card was properly read or verified, liability shifts to the merchant. As chip cards and contactless wearables have become standard, Visa expects merchants to adopt terminals that read the secure chip or token. When that does not happen, the network assumes a higher risk of fraud and gives issuers the ability to reclaim the funds through Reason Code 10.3.
Primary Causes for a Code 10.3 Chargeback
Several situations can trigger this fraud claim. The most common is a key-entered sale where staff typed the account number because the chip or stripe would not read. Without a manual card imprint or a fallback approval code, the sale lacks proof that the card was on site. Unattended terminals create another issue. If the equipment is old, lacks PIN capability or stores data insecurely, a criminal can use a stolen card before the owner notices.
A third pathway stems from poor transaction labelling. If a sale really took place online or by phone but was sent to the processor as card-present, the issuer may file a 10.3 dispute once the cardholder objects. Friendly fraud also appears under this code when shoppers forget, regret, or deny a genuine purchase. In each scenario, the issuer alleges that standard Visa acceptance rules (chip read, PIN, signature, CVM capture or manual imprint) were not followed, leaving the merchant exposed.
Time Limit for Disputing a Visa Reason Code 10.3 Chargeback
Issuers normally have 120 calendar days from the Central Processing Date (CPD) to send a 10.3 dispute. If the transaction posts later than normal, the clock starts when the posting occurs. In rare cases where the fraud is uncovered long after the sale, the ultimate cut-off is 540 days. Merchants, however, get far less time.
Your acquirer must receive a full response within 30 days of the dispute notification, or the network will treat the case as conceded. When you plan your response , set internal targets that beat the 30-day window by at least a week. Late evidence, no matter how solid, is ignored by the issuer once the timer runs out. Keeping accurate date stamps for authorisations, receipts and refunds helps you comply.
What 10.3 Means for Consumers & Issuers
For cardholders, Reason Code 10.3 offers significant protection. If their wallet is stolen or a staff member manually keys in the wrong digits, they can contact the bank and expect swift restitution. The bank benefits too. By shifting liability to merchants that bypass chip technology, issuers cut fraud losses and uphold network rules.
The investigation is more straightforward than in service-quality disputes. Once a cardholder signs an affidavit, the issuer can debit the acquirer and credit the customer. If merchants present compelling evidence, the issuer must review it. However, because the code falls under the fraud umbrella, banks will normally side with the cardholder. The exception is if your documentation proves full compliance with EMV and Visa acceptance procedures.
What 10.3 Means for Merchants
From a merchant’s point of view, Code 10.3 has both financial and operational costs. The disputed amount is withdrawn immediately, affecting cash flow. You will also be liable for chargeback fees. If a pattern of chargebacks persists, you may be added to Visa’s Fraud Monitoring Program. This can mean higher processing rates and even account termination.
To protect revenue, merchants need reliable point-of-sale hardware, clear in-store policies and fast access to receipts. Investing in EMV-ready devices pays off because it shifts many fraud liabilities back to the issuer. Training staff to decline a sale rather than bypass a malfunctioning reader also reduces risk. The cost of one lost customer is far lower than the cost of repeated 10.3 chargebacks.
How to Respond to a Code 10.3 Chargeback
Start by matching the dispute notice to your own transaction log. If you already refunded the cardholder, provide evidence of the credit, amount, date and approval code, to close the case. If the customer has since confirmed the purchase was legitimate, attach their written or emailed statement. For sales that did go through chip or stripe, send the authorisation record showing a successful EMV or magnetic-stripe read.
If you had to key in the data, a manual imprint bearing the raised card numbers plus a signature can be useful evidence. Add any CCTV stills or customer ID copies if local law permits. Build a single PDF package, label each item and forward it to your acquirer within the 30-day limit. Avoid emotional explanations; stick to dates, amounts and copy records. If you lack any of the above, accepting the chargeback may be cheaper than further fees and arbitration.
Proactive Prevention: The Ultimate Defence
Stopping 10.3 disputes before they start is simpler than fighting them later. Keep every till, kiosk and fuel pump EMV-enabled and PIN-ready. Faulty readers should be taken offline, not bypassed. Discourage manual entry unless all electronic options fail, and capture a manual imprint plus signature when it does. Separate card-present and card-absent transactions in your POS software to avoid coding errors. Train staff to request an alternative payment method if the card appears damaged or is unreadable. You can also try out Chargeback.io to get early warnings of disputes. You can then refund them before they convert into chargebacks, saving fees and protecting revenue.
