Understanding Visa Chargeback Reason Code 10.2: EMV Liability Shift Non-Counterfeit Fraud
Visa Chargeback Reason Code 10.2 covers card-present transactions where the cardholder says they never authorised the purchase. Because the payment did not comply with Visa’s EMV rules, liability shifts from the issuer to the merchant. Knowing how the code works helps retailers protect revenue, resolve disputes on time, and stop repeat fraud cases.
Key Takeaways
What it means: A card-present purchase on a lost, stolen, or not-yet-received chip card where EMV rules were skipped.
Causes: Out-of-date terminals. Manual key entry. PIN-preferring cards processed without a PIN. Missing chip data.
How to respond: Act within 30 days, show the sale used an EMV-compliant device, or prove you have already refunded the customer.
How to prevent: Use chip-and-PIN hardware. Collect full authorisation data, train staff, and try out chargeback alerts.
What is a Visa Reason Code 10.2 Chargeback?
Visa created Reason Code 10.2 to deal with fraud that happens in face-to-face environments after the EMV liability shift. The rule applies when a chip card marked “PIN-preferring” is swiped, keyed, or otherwise processed without the correct chip and PIN routine. The cardholder then tells the bank that the transaction is unauthorised.
Because the merchant bypassed EMV safeguards, the cost of the chargeback shifts from the issuer to the merchant. Internet, phone, and mail orders are excluded, as only card-present activity fits this code. To fight the claim, the retailer must show the purchase ran through an EMV-compliant path or that the cardholder has already been credited. Otherwise, the debit stands.
Primary Causes for a Code 10.2 Chargeback
Most 10.2 claims spring from three overlapping factors. First, the card itself may have been lost or stolen. A fraudster presents it at the till and asks for a swipe or manual entry to avoid using the chip reader, leaving no PIN trail. Second, the terminal might lack chip capability, or it might be configured to fall back to magnetic-stripe processing.
This technical gap voids Visa’s protection and places the risk on the merchant. Third, staff may unknowingly skip the proper Cardholder Verification Method. Even when the chip is inserted, if the device cannot accept a PIN and the customer signs instead, the transaction may still fail EMV standards. Any of these gaps let criminals or fraudsters file a dispute and shift the cost to the retailer.
Time Limit for Disputing a Visa Reason Code 10.2 Chargeback
Deadlines are in place to decide who pays. Issuers normally have up to 120 days from the transaction date, or from the date they learned of the problem, to file a 10.2 dispute. Once the acquirer passes the notice to the merchant, the countdown changes. Retailers are generally allowed only 30 calendar days to supply evidence or accept the chargeback. Missing that window means the loss is final, even if the sale was valid.
After the merchant responds, the acquirer forwards the documents to the issuer, and the case follows Visa’s usual dispute path. If extra information is requested, new deadlines can be applied, so keeping clear internal reminders is crucial. Quick action reduces the odds of automatic liability and improves the chance of recovering the funds.
What 10.2 Means for Consumers & Issuers
For cardholders, Reason Code 10.2 is a crucial safety net. If someone steals their chip card or intercepts it in the post, the issuer can reverse fraudulent point-of-sale purchases. The claim also encourages cardholders to report lost cards fast. From the issuer’s side, the code limits financial exposure.
By shifting liability to merchants that skip EMV rules, the bank avoids refunding unauthorised spending out of its own pocket. Issuers still need to confirm the cardholder’s story, check that the PIN-preferring flag applies, and verify that chip data was missing. Once these items match, the chargeback proceeds with little operational effort.
What 10.2 Means for Merchants
For retailers, 10.2 is a warning that failing to follow correct procedures can carry a price. Swiping a chip card or typing the numbers might feel faster, yet each shortcut hands the issuer a ready-made reason for dispute. When a 10.2 chargeback arrives, fees, lost goods, and extra labour all erode profit. High ratios can also push your business into Visa’s fraud monitoring programmes, potentially raising costs even more.
On the positive side, merchants have a lot of control. Adopting EMV-ready devices and following chip-and-PIN prompts correctly effectively eliminates nearly all risk associated with this code. Staff awareness is also key; a simple refusal to key in a chip card can prevent a fraudulent transaction from occurring in the first place.
How to Respond to a Code 10.2 Chargeback
Step one is to read the dispute packet from the acquirer. If the transaction did flow through an EMV PIN-compliant terminal, gather the terminal log, the application transaction counter, and the authorisation response. Add the sales receipt showing the card was chip-read and PIN verified. If you have already issued a refund or reversal, include the credit memo and processing record.
In cases where the cardholder has withdrawn the complaint, attach their email or letter. Send the full set of documents back within the 30-day window. Avoid partial replies as missing chip data will weaken your case. If none of the valid defences apply, accept the chargeback quickly to limit extra fees and shift your focus to prevention.
Proactive Prevention: The Ultimate Defence
Most 10.2 disputes can be prevented with three key elements in place. Ensure every till is EMV-ready, and train staff to refuse fallback options, requesting an alternative payment method rather than forcing the transaction on a declined card. Performing regular checks in-house can identify terminals that are still set to fall back to swipe mode. Clear signage at points of sale is useful for reminding shoppers to insert their cards and enter their PINs. Try out chargeback alerts to protect your revenue. These services flag risky sales earlier, which gives retailers a chance to process a refund before a chargeback lands.
