Understanding Visa Chargeback Reason Code 10.4: Other Fraud: Card-Absent Environment
Visa Reason Code 10.4 covers card-absent payments (web, phone, or mail orders) when the cardholder later says they never approved the charge. The code sits in the fraud category and is triggered if the issuer cannot use another fraud rule to dispute the sale. Merchants need clear processes to protect revenue and keep friendly and criminal fraud at bay.
Key Takeaways
What it means: A card-absent sale is disputed because the cardholder denies authorising it.
Causes: Criminal fraud, friendly fraud, or merchant errors during authorisation.
How to respond: Provide proof of strong customer authentication, refunds already given, or withdrawal of the claim.
How to prevent: Apply Visa Secure, AVS, CVV2, staff training, and try out chargeback alerts.
What is a Visa Reason Code 10.4 Chargeback?
A Visa Reason Code 10.4 chargeback relates to “Other Fraud – Card-Absent Environment”. This covers sales where the card data is keyed rather than read from the chip or magnetic stripe. Examples include e-commerce checkouts, recurring billing platforms and telephone or mail orders . The issuer files the dispute after the cardholder claims they never made or approved the purchase.
Because the payment was card-absent, the liability shifts to the merchant unless the transaction was protected through programmes such as Visa Secure. Code 10.4 is used when no other, more specific fraud condition (for example, EMV counterfeit or Visa Fraud Monitoring Programme) applies. The dispute falls under the fraud category, so the burden of proof lies with the merchant. To overturn the claim, you must show that the customer, or an authorised party, approved the payment or that you already reversed it.
Primary Causes for a Code 10.4 Chargeback
There are three main causes. The first is where criminals gain access to valid card data and complete an online checkout that passes basic checks. The genuine cardholder spots the charge later and alerts the issuer. The second is friendly fraud. The cardholder (or a family member) made the purchase but later doesn't recognise the transaction. Studies show that unclear merchant descriptions often lead to such misunderstandings.
The third is merchant error. If you skip authorisation, label the transaction type wrongly, or neglect tools like CVV2 or AVS, you raise the risk of a dispute. Mistakes such as charging after cancellation or using an outdated card number also fall into this category. Each scenario leads the issuer to doubt that genuine consent existed. This prompts a 10.4 filing and shifts financial liability to the merchant until proven otherwise.
Time Limit for Disputing a Visa Reason Code 10.4 Chargeback
Issuers must normally send a 10.4 dispute within 120 calendar days of the transaction processing date. In exceptional circumstances, this extends to 540 days. Merchants receive the message through their acquirer, often within a few days once the issuer acts. After receipt, the acquirer normally grants the merchant 30 calendar days to build and submit a response package. Missing this merchant deadline results in automatic acceptance of liability.
Always log the processing date and any subsequent refund dates. The 120-day rule also applies to each cycle of a recurring agreement. For example, a recent bill can be disputed even if earlier bills passed inspection. Knowing the time limits helps merchants organise logs, retrieve order data, and reply in time.
What 10.4 Means for Consumers & Issuers
For the consumer, Code 10.4 serves as protection when card data is stolen or when a family member misuses the card. It lets the cardholder flag the transaction without first going to the merchant. Issuers rely on this rule to keep fraud losses low and uphold network confidence.
The cardholder often receives provisional credit during the investigation. If evidence later proves the transaction was legitimate, the issuer will debit the account again. From the issuer’s view, choosing the right reason code matters for clean reporting and for avoiding penalty fees in the dispute system. Code 10.4 is used when counterfeit or chip liability-shift rules are not relevant and when the merchant’s fraud ratio is below Visa Fraud Monitoring thresholds.
What 10.4 Means for Merchants
Merchants accepting web, phone, or mail payments are at higher risk than chip-and-PIN retailers. A single 10.4 case can mean refunding the sale value, shipping costs, and any fulfilment fees. Frequent 10.4 disputes can also push a business toward Visa’s Fraud Monitoring Programme. This means extra assessments and compulsory remediation plans.
A growing queue of unresolved 10.4 claims may also cause the acquirer to raise reserve levels or terminate the account. However, merchants who adopt strong customer authentication can shift much of this fraud loss back to the issuer. Keeping clean logs (IP address, device fingerprint, delivery proof) helps here.
How to Respond to a Code 10.4 Chargeback
Begin by reading the chargeback memo from your acquirer. This shows the transaction ID, dispute date, and documents the issuer supplied. Next, gather proof. If Visa Secure or 3-D Secure authenticated the shopper, export the verification log and the liability shift flag. Add AVS and CVV2 match results, the authorisation code, and any device or IP information. For digital goods, include server logs showing download or login activity tied to the customer. For physical goods, attach signed delivery receipts, courier tracking scans, or pick-up ID copies.
If you have already issued a refund, present the credit memo with date and amount. Friendly fraud cases sometimes end when the cardholder contacts you directly. If they have retracted the claim, include their email or chat record. Compile the file, sign the rebuttal letter, and submit it within your acquirer’s window. A clear, chronological layout helps the reviewer see that consent existed, so the issuer should reverse the 10.4 dispute.
Proactive Prevention: The Ultimate Defence
Preventing 10.4 claims is far cheaper than fighting them later. Always request authorisation on every card-absent sale, including recurring cycles. Route transactions through Visa Secure wherever possible. Pair that with AVS, CVV2, and risk scoring to screen high-risk orders. Train staff to separate card-present and card-absent transactions. Ensure they record the correct transaction indicators. Use recognisable billing descriptors, so customers spot your name instantly on statements. Finally, try out chargeback alerts. If a cardholder complains to the issuer, you'll be notified within hours. You can then refund the transaction before the dispute hits the network.
