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SEPA/Klarna/Cartes Bancaires chargebacks

SEPA

SEPA (Single Euro Payments Area) Direct Debit is a bank account-based payment method available across the Eurozone, which can be used for both ecommerce and recurring payments.

Unlike cards, SEPA does not have an additional authentication layer, such as a CVC check or 3D Secure. Consequently it is important to have good risk management tools in place to offset the threat of fraud.

A shopper can perform a chargeback online eight weeks after the purchase, with no questions asked. Therefore, no dispute management is available for SEPA. Moreover, SEPA can be charged back by the shopper even if a refund has already been carried out. This is due to the issuing bank, not taking the refund into account. And consequently it is risky to refund a SEPA transaction if there is an ongoing dispute with the customer. In case of receiving a SEPA chargeback, we recommend you to contact the shopper directly to solve the issue.

Chargeback reasons

The following are the most common reason codes that you can receive for SEPA chargebacks. There are more reason codes, however these are rarely used.

Reason Code Reason Description
AC01 Incorrect Account Number Format of the account number specified is not correct.
AC04 Closed Account Number Holder has closed the account.
AC06 Blocked Account Account specified is blocked.
AM04 Insufficient Funds Insufficient funds.
DNOR Debtor bank is not registered Debtor bank is not registered.
MD01 No Mandate Invalid mandate.
MD06 Refund Request By End Customer Refund request by end customer.
MS02 Not Specified Reason Customer Generated Refusal by the Debtor.
MS03 Not Specified Reason Agent Generated This code can replace other reason codes (AC04 and AM04 amongst others) in certain countries for data protection purposes.
SL01 Specific Service offered by Debtor Agent Bank is blocking any Direct Debit which is not pre-approved by the bank account holder.

When a SEPA chargeback occurs, we will notify you by sending a webhook notification. This notification contains:

  • pspReference: Adyen's unique reference associated with the payment request.
  • eventCode: CHARGEBACK.
  • paymentMethod: sepadirectdebit.
  • reason: Reason for the chargeback.
  • success: true.

Here is an example of a notification that a SEPA chargeback occurred because the shopper's account number was incorrect.

SEPA chargeback notification
{
   "live":"true",
   "notificationItems":[
      {
         "NotificationRequestItem":{
            "additionalData":{
               "chargebackReasonCode":"AC01",
               "modificationMerchantReferences":"",
               "chargebackSchemeCode":"sepadirectdebit"
            },
            "amount":{
               "currency":"EUR",
               "value":1000
            },
            "eventCode":"CHARGEBACK",
            "eventDate":"2020-03-23T13:55:31+01:00",
            "merchantAccountCode":"YOUR_MERCHANT_ACCOUNT",
            "merchantReference":"XXXXXXXXXX",
            "originalReference":"9913333333333333",
            "paymentMethod":"sepadirectdebit",
            "pspReference":"9915555555555555",
            "reason":"AC01:IncorrectAccountNumber",
            "success":"true"
         }
      }
   ]
} 

Preventing SEPA chargebacks

Although dispute management is not available for SEPA, precautionary measures can help to prevent SEPA chargebacks.

Precautionary measures against SEPA chargebacks:

  • If you are a retailer, it is recommended to hold shipment for seven days, to avoid making a loss if the payment is unsuccessful.
  • Depending on your business model, consider a maximum transaction value for SEPA. A good indicator could be the average transaction value of your chargebacks.
  • Be sure to state clearly in your return/refund policy that refunds will take a few days. This will reduce the chance of a customer performing a chargeback in the meantime.

Klarna

Klarna is a payment service provider offering a range of payment options, such as Open Invoice (Pay Later), "Slice It" and "Pay Now".

Klarna takes the full fraud risk, so shoppers cannot chargeback for fraud reason codes.

However, Klarna requires a certain set of rules about shipping to be met. Namely, the shopper is entitled to a refund if the delivery of the goods did not happen and goods were sent without using track and trace. If these rules are not followed, Klarna has the right to chargeback the payment.

If there are any inclarities around shipment, Klarna will directly contact you per email to ask for clarification.

Cartes Bancaires

Cartes Bancaires is the most widely used payment method in France, and can also be used to process on international networks.

Be aware that Cartes Bancaires chargebacks with reason code 45 (Fraud -Disputed transaction) are not defendable.

However, Adyen automatically defends Cartes Bancaires chargebacks for the 3 following reasons:

  • Past Chargeback Time Limit (> 400 days).
  • Credit previously issued (transaction needs to be refunded before the chargeback is issued).
  • 3D Secure Fully Authenticated Transaction.