Visa reason code 10.4: what it means and how to respond

What Visa reason code 10.4 means and when it applies

Visa reason code 10.4, “Other Fraud – Card-Absent Environment,” applies when the cardholder denies authorizing or participating in a transaction. The transaction took place in a card-absent environmentThis is a transaction completed without the physical card presented to the merchant, such as an online, telephone, or mail order, or a recurring transaction.. This may happen because someone else used the payment details or because the cardholder did not recognize the merchant name on the statement.

For an issuer to file a 10.4 dispute, all of these requirements must be present:

1. The transaction occurred without the card present. It was completed, for example, through e-commerce, by telephone or mail, or as a recurring transaction.
2. The cardholder denies the transaction. The cardholder states that they neither authorized nor participated in it.
3. The issuer completed the pre-dispute steps. The bank that issued the card reported the Fraud Activity to Visa before filing the case and certified the cardholder’s denial.
4. The issuer met the deadline. It filed the dispute within 120 calendar days of the Transaction Processing Date.

Source for the requirements: Visa Core Rules §11.7.5.1, Table 11-26 (ID# 0030252), §11.7.5.2, Table 11-27 (ID# 0030253), and §11.7.5.5, Table 11-30 (ID# 0030256). Source for the deadline: Visa Core Rules §11.7.5.4, Table 11-29 (ID# 0030255).

Even when those requirements are met, the dispute is invalid if at least one of Visa’s exclusion conditions applies. Examples include authentication that shifts liability to the issuer, a credit or reversal already processed, the cardholder withdrawing the dispute, or the acquirer meeting CE3.0 criteria. These conditions are alternatives; they do not need to occur together.

Source for the invalidity conditions: Visa Core Rules §11.7.5.3, Table 11-28 (ID# 0030254).

In practice, the issuer sends the transaction back to the acquirer and disputes the amount. If the dispute remains valid, the acquirer may pass the loss to the merchant. If Visa permits a defense, the merchant gives the records to the acquirer, which responds on the merchant’s behalf.

If these conditions do not describe the case, check the correct code: 10.1 and 10.2 for fraud subject to the EMV liability shift; 10.3 for card-present fraud; and 10.5 for a transaction identified by Visa’s fraud monitoring program.

Who files the dispute and what happens next

The issuer files the 10.4 dispute in VROLVisa Resolve Online is Visa’s system where the issuer files the dispute and the acquirer submits the response and case documents.. The merchant does not respond directly to Visa.

After filing, the acquirer investigates the case. If it finds a defense path, it collects the merchant’s documents and submits a Pre-Arbitration AttemptThis is the acquirer’s formal request for the issuer to reconsider the dispute before the case goes to Visa for a decision. in VROL. Visa gives the acquirer 30 calendar days from the Dispute Processing Date. A 10.4 dispute has no separate representment step.

The issuer has 30 calendar days to accept financial responsibility or decline the Pre-Arbitration Attempt. If the acquirer supplied Compelling Evidence, a decline requires one of two certifications: the contact information does not match the issuer’s cardholder records; or the issuer contacted the cardholder and explains why the cardholder still disputes the transaction. When the issuer or merchant is in the Europe Region, only the second option is accepted. The issuer must also explain an AVS Y result supplied by the merchant.

After a decline, the acquirer has 10 calendar days to take the case to Visa Arbitration when the rules allow it. This step may involve fees.

Source for the response flow and deadlines: Visa Core Rules §11.2.2, Table 11-1 (ID# 0030212), and §11.7.5.6, Table 11-31 (ID# 0030257). Source for the regional certification rule: Visa Dispute Management Guidelines for Visa Merchants, p. 56.

How to reduce the risk of a Visa 10.4 dispute

Visa recommends three practices for card-absent transactions:

1. Use Visa SecureVisa’s service based on 3-D Secure lets the issuer authenticate the cardholder during an online purchase. The result is recorded in the authorization., CVV2The security code printed on the card that a merchant may request in a card-absent transaction to help verify the payment details provided., and AVSAddress Verification Service compares the address provided in the transaction with the cardholder address held by the issuer.. These tools help authenticate the cardholder and identify fraud signals before approval.
2. Request authorization for every transaction. This applies to online, mail order, telephone order, and recurring transactions, regardless of the amount.
3. Identify the transaction environment correctly. Record a transaction as card absent only when it was actually completed through that channel.

Also retain the order, delivery, access, and device data for each transaction. These records do not prevent fraud on their own, but they may be essential to show cardholder participation or build the history CE3.0 requires.

Source for the prevention measures: Visa Dispute Management Guidelines for Visa Merchants, Condition 10.4, p. 24. Source for the defense records: Visa Compelling Evidence 3.0 Merchant Readiness, p. 1.

Recurring card-absent fraud feeds Visa’s monitoring and, at excessive levels, can place the acquirer under the Visa Acquirer Monitoring Program (VAMP). The thresholds, fees, and effective dates for Brazil are in our guide to VAMP in Brazil.