Understanding Discover Chargeback Reason Code AP: Cancelled Recurring Transaction

Reason Code AP appears when a cardholder disputes a subscription or other repeating charge that they say they cancelled. The code alerts all parties that something went wrong with the authorisation of an ongoing payment agreement. Knowing why it happens and acting quickly helps merchants protect revenue.

Key Takeaways

• What it means: The cardholder says a recurring payment was charged after they cancelled the agreement.
• Causes: Late or missed cancellation processing, policy confusion, pricing changes, or friendly fraud.
• How to respond: Provide proof of valid authorisation, clear terms, service usage, or prior refund.
• How to prevent: Publish simple cancellation steps. Send reminders. Approve promptly. Try out Chargeback alerts.

What is a Discover Reason Code AP Chargeback?

Discover Reason Code AP marks a “Cancelled Recurring Transaction”. It occurs when a cardholder complains they were billed again after cancelling a service, membership or other subscription. The cardholder does not dispute that they made an original purchase. Instead, they argue that continuing charges were no longer authorised.

 In practice, AP is a signal that something went wrong in the cycle of recurring billing. Maybe the cancellation never reached the merchant. Maybe it was logged too late. Perhaps the customer misunderstood the policy. Whatever the root, the result is that Discover pulls the payment back from the merchant’s bank while the matter is investigated.

Primary Causes for a Code AP Chargeback

Most Code AP cases trace back to a misunderstanding in how and when a subscription may be stopped. They most commonly arise when a merchant receives a cancellation message but fails to update the billing system before the next billing date. Time zone differences, weekend processing or staff oversight can all lead to a late debit. Another cause is cardholders sending cancellation requests through the incorrect channel. For example, they may reply to a “no-reply” email address. 

The payment then posts, surprising the customer and prompting a dispute. Policy confusion can also fuel AP claims – if cancellation terms are unclear or hidden in long T&C documents. Finally, friendly fraud plays a part. Some consumers intentionally claim they cancelled when they simply changed their mind. Their hope is that the issuer will refund them without question. 

Time Limit for Disputing a Discover Reason Code AP Chargeback

For code AP, Discover sets limited windows for both sides. Issuers must send the chargeback to the acquirer within 120 days of the original transaction date. Or, send it within 30 days of a document retrieval case closing, whichever is later. This gives customers time to spot unwanted debits on their next statement. Merchants have 20 calendar days to give an initial reply, then 30 days to lodge a full representment package if they choose. 

It's advisable to set diarised reminders as soon as a notification arrives. Weekends and bank holidays count toward the total, so aim to submit evidence early. Meeting the timetable not only gives you the chance of a reversal. It also shows the issuer that your business takes chargebacks seriously, which can help in future cases.

What AP Means for Consumers & Issuers

For cardholders, Code AP is a safety net. It signals that the network will step in if a merchant keeps taking money after permission has been withdrawn. From the issuer’s viewpoint, the code also acts as a customer retention tool. By accepting the dispute and crediting the account swiftly, the bank shows it is ready to defend account holders. 

This strengthens customer trust and reduces the temptation to switch cards. Nevertheless, every claim carries financial implications. The issuer advances funds at once and absorbs operational costs. Plus, they must later justify the action if the merchant produces solid evidence. Excessive AP disputes can raise red flags during compliance reviews. Repeated abuse strains resources and may increase future transaction scrutiny.

What AP Means for Merchants

Recurring revenue models depend on predictability. When Code AP hits, that predictability is disrupted and refund costs rise. Each AP chargeback immediately withdraws the transaction amount plus a processing fee. This leaves the merchant to reconcile accounts and possibly lose the customer for good. High volumes also threaten standing with the acquirer. If ratios breach programme thresholds, higher reserve requirements or even account termination can follow. 

Beyond direct cost, there is brand impact. Negative word of mouth spreads quickly when subscribers feel trapped in a contract. On the positive side, an AP alert exposes procedural weaknesses early. Cancellation links may be too hard to find. Customer service hours may be too short. Billing software might require updates. Merchants who treat AP claims as a learning opportunity can protect revenue more effectively. They also free staff from repeated work on disputes.

How to Respond to a Code AP Chargeback

A calm, evidence-based reply gives the best chance of reversal. Start by reading the dispute memo line by line to understand exactly what the cardholder claims. Gather the signed subscription agreement, timestamped cancellation logs, service-usage records, and any messages exchanged. If the request arrived after the cut-off date outlined in your terms, highlight that clause and provide proof of acceptance at signup. If you have already issued a credit, attach the refund confirmation. 

Organise documents in chronological order. Mark key passages. Draft a short cover letter that connects each exhibit to the claim. Submit everything within the 20-day window through your acquirer’s portal. Avoid emotive language; stick to facts that show the payment was authorised or remedied. Should evidence favour the customer, accept the chargeback quickly to cap fees and preserve goodwill. In all cases, record lessons learned and update policies so that the same scenario does not recur. 

Proactive Prevention: The Ultimate Defence

Stopping AP disputes before they form is simpler and cheaper than fighting them later. Publish subscription terms near the payment button, and display the cancellation window clearly. Provide one-click cancellation inside account settings. Send an automated email confirming each request. Schedule reminder messages three days before renewal so customers have time to act. When prices change, ask for fresh consent rather than relying on silence. Monitor outbound messages to be sure they reach customers. 

For deeper protection, integrate real-time chargeback alerts into your workflow. These alerts warn you as soon as an issuer receives a complaint, giving you a chance to refund voluntarily and avoid a formal chargeback. Try out Chargeback.io to add this safety net.