Understanding Visa Chargeback Reason Code 12.3: Incorrect Currency

Visa Reason Code 12.3 flags processing errors when the currency stated in a transaction does not match the currency that was actually routed through Visa or was applied without the cardholder’s clear consent. The dispute sits in the “Processing Errors” category and is usually triggered by merchant mistakes or customer confusion.

Key Takeaways

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• What it means: A mismatch between the submitted currency and the one processed. Unwanted Dynamic Currency Conversion.
• Causes: Wrong currency code. Mismatch in Visa clearing. DCC applied without consent.
• How to respond: Prove the correct currency was used. Prove the cardholder opted in to DCC. Otherwise, accept liability.
• How to prevent: Train staff, verify currency codes and gain explicit consent for DCC. Spot incoming disputes with chargeback alerts.

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What is a Visa Reason Code 12.3 Chargeback?

Visa categorises disputes in the 12 series as processing errors. Each code identifies a specific mistake that happened before settlement. Code 12.3 focuses on currency. It is raised when the issuer believes the transaction specified one currency, but Visa received another. It is also used if Dynamic Currency Conversion (DCC) was applied without the shopper’s agreement. Although it replaced legacy code 76 under the Visa Claims Resolution programme, its scope is narrower. Other transaction-code mistakes moved to Reason Code 12.2.

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For cardholders, chargeback claims arise when the amount in their statement differs from what they expected. For merchants, it signals that something went wrong at the point of sale, in the gateway, or in the clearing file that reached Visa’s system. Because the problem arises before settlement, it is usually entirely within the merchant’s power to fix, or to avoid in the first place.

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Primary Causes for a Code 12.3 Chargeback

The most common trigger is human error. Staff may key the wrong ISO currency code, especially when serving international shoppers in a busy environment. The till might label the sale in pounds, yet the payment file is tagged as euros and clears incorrectly. Another source of friction comes from DCC. When a customer’s card is recognised as foreign, some terminals automatically offer conversion to the cardholder’s home currency. 

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If that option is applied by default without consumer consent, they may contest the result once they read their statement. Gateway configuration faults can also mis-map currency fields during batch submission. This may produce a mismatch between the amount shown on the receipt and the sum that reaches the issuer. Finally, friendly fraud can occur. A consumer may have approved DCC but later claims not to have done so to avoid fees.

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Time Limit for Disputing a Visa Reason Code 12.3 Chargeback

Visa rules give issuers up to 120 calendar days from the original processing date to raise a Code 12.3 dispute against the acquirer. Once the chargeback is filed, the acquirer forwards it to the merchant. The merchant then has 30 days to send a response package or accept liability, whichever happens first. 

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Missing the 30-day merchant window leads to automatic loss, even if the sale was correct. Merchants should monitor dispute notices daily. This ensures evidence collection—receipts, terminal logs, shopper communications—can start immediately. Where chargeback alerts or early-warning tools are active, they often shave valuable days off the timeline. This gives merchants more time to locate records and refund proactively if a genuine error is spotted.

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What 12.3 Means for Consumers & Issuers

For consumers, the code promises swift redress if they are billed in a currency they did not expect, or if high DCC margins inflate the final cost. The chargeback grants a temporary credit while the issuer investigates. Issuers view Code 12.3 as low-risk to process. Hard evidence, such as a receipt in pounds paired with a clearing record in euros, quickly shows whether the merchant or shopper is at fault. 

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However, issuers must still review each claim, confirm the time limit has not expired, and verify that no refund was already processed. The incentive is to protect cardholder confidence without encouraging misuse. Excessive 12.3 disputes against a single merchant may signal configuration issues at the merchant’s point of sale. This can prompt issuer monitoring or increased network scrutiny.

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What 12.3 Means for Merchants

Every code 12.3 case costs the face value of the sale, a chargeback fee, and operational hours spent gathering documents. Repeated currency errors create tension with acquirers. If the number of disputes breaches Visa's monitoring thresholds, this can also lead to sanctions. Merchants can face higher processing costs or even account termination.

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On a more positive note, 12.3 chargebacks are easy to prevent. Merchants can eliminate most occurrences and reduce dispute ratios by tightening up internal processes. This also improves customer trust. Cardholders who feel tricked into higher conversion rates are less likely to return. Simple changes can have a significant impact. These include clear pricing displays, transparent DCC prompts, and informed consent for charges.

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How to Respond to a Code 12.3 Chargeback

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The first step is to read the dispute message in your acquirer portal and extract the reason code, transaction date, and amount. Pull the original sales receipt and terminal logs. If the receipt and clearing record show the same currency, assemble evidence confirming this. This usually includes a merchant copy of the receipt, POS screen-capture and gateway batch report.

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If DCC was offered, include the signed or electronically captured DCC disclosure showing the shopper agreed. Also provide the exchange rate, margin, and final amount accepted at checkout. If the file reveals that the wrong currency code was sent, you should accept liability quickly. This refunds the cardholder promptly and avoids secondary fees. If a reversal or credit has already been issued, attach the credit memo, including date, amount, and authorisation code. Submit all materials within the 30-day time limit and retain them for future reference.

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Proactive Prevention: The Ultimate Defence

Staff training is the strongest protection against code 12.3 chargebacks. Run refresher sessions on ISO currency codes and terminal prompts. Configure your POS so that DCC is opt-in, never default. Check for mismatches between the receipt currency and the clearing currency before closing files. Finally, try out chargeback alerts to spot incoming disputes in real time and act before they become chargebacks.

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