Reason Code P03 — Credit Processed as Charge

How to Handle Amex Reason Code P03 Chargebacks

American Express breaks down the acceptable causes for a customer to dispute a credit card transaction in their dispute guidelines. This is done for the sake of simplicity and standardization. 

Each chargeback trigger has a designated “reason code.” Amex can then assign the appropriate code to each case to show the given reason for the chargeback.

Learn more about Amex reason codes

Today, we’re looking at one reason code in particular — P03 — and exploring the causes, timeframes, fees, and other specifics. We’ll also explore what you can do to prevent these chargebacks from happening.

What is American Express Reason Code P03?

American Express chargeback reason code P03 is “Credit Processed as Charge.”

This reason code is used to explain that your customer expected to receive a credit to their account. For example, maybe they returned an item, and expected a refund.

However, you ended up charging the cardholder for the amount in question, rather than crediting their account. In effect, you did the opposite of what was expected.

What Caused This Dispute?

Amex Chargeback Reason Code P03 is primarily issued when a merchant was expected to give a credit to a buyer. However, the merchant ended up charging the cardholder’s account instead.

 To demonstrate, this scenario can arise if:

How to Respond to Amex Reason Code P03 Chargebacks

So, what happens if you can prove that you issued a credit to your customer, as expected?

Naturally, if you receive an Amex P03 chargeback, you’ll want to resolve the issue right away. If you feel that the chargeback was filed in error, you should file a dispute response. This is done through a process called representment.

Representment is the process through which you’ll challenge a chargeback. You provide evidence to the card issuer (in this case, American Express) that all aspects of the transaction were legitimate and in accordance with the card issuer's policies. This can involve several key pieces of evidence.

Also, remember that there’s a strict time limit to consider. You have just 20 days in which to submit your response to American Express. However, this time frame also includes the time it took for your acquirer to provide you with a dispute notification, as well as time spent by the acquirer reviewing and submitting your case. In practical terms, you’ll often have five days or less in which to prepare and submit your response.

Acceptable Evidence for Amex Reason Code P03 Responses

You can re-represent these charges under the condition that you have compelling evidence.

For American Express reason code P03 chargebacks, you’ll need to provide proof that the charge was submitted correctly. This can include:

• record of a credit provided to the buyer, including date on which the credit was issued.
• a copy of your refund policy, outlining the time frame in which credits will be issued.
• proof that the buyer agreed to your terms at conditions before making an initial purchase.

The success of representment depends on the thoroughness and relevance of the evidence provided. Maintaining detailed records of transactions and communications with customers is vital to effectively counteract all chargebacks, including those under reason code P03.

How to Prevent Amex Reason Code P03 Chargebacks

As the old adage goes, “an ounce of prevention is worth a pound of cure.”

You may never be able to stop chargebacks entirely. But, you can limit your exposure to risk and keep your chargeback ratio in good standing by adopting a few best practices. Generally speaking, you’ll want to:

#1  |  Verify Charge & Credit Amounts

Ensure that the amount you submit for processing is accurate when either charging a customer’s card or issuing a credit. It should reflect the correct amount associated with the transaction in question.

#2  |  Move Quickly to Correct Errors

Process credits as soon as possible. Credits and refunds should always be issued within seven days of detecting or being notified of a billing error.

#3  |  Be Clear & Concise

Make sure your refund and cancellation policies are easy to understand. Make sure they clearly state the time frames in which credits and refunds will be issued.

#4  |  Be Adaptable

Outline the circumstances under which you’re willing to issue credits and refunds… but don’t be afraid to bend the rules when appropriate. Being lenient with customers will create more positive customer experiences and help stop chargebacks at the same time.

Take a Wider View

You can dispute invalid chargebacks from Amex reason code P03. However, it’s much more efficient to take a proactive stance. The same is true of the other chargeback reason codes, as well. A truly effective chargeback management strategy must encompass prevention as well as disputing cases of friendly fraud.

Chargebacks911® can help your business manage all aspects of chargeback reason codes, with proprietary technologies and experience-based expertise. Contact us today for a free ROI analysis to learn how much more you could save.