Ever get blindsided by a fraud chargeback even though your checkout process seems locked down? If you’ve been flagged for Visa Reason Code 10.4, you’re not alone and you’re not necessarily doing anything wrong. But here’s the twist: you might be missing a few critical steps specific to the card absent environment, and that gap is all fraudsters need to slip through.
Whether you’re running an e-commerce shop, handling recurring payments, or dealing with virtual terminal orders, understanding how fraud claims work in a no-card-present situation is key to stopping revenue losses. Let’s dig into what Visa 10.4 is, why it happens, and how to protect your business without turning your checkout into a fortress.
What is a Card Absent Environment?
A card absent environment (CAE) refers to any transaction where the physical payment card isn’t used. This includes:
- Online payments
- Phone orders (MOTO)
- Recurring subscriptions
- In-app purchases
- Virtual terminals or email-based invoicing
Because the card isn't swiped, dipped, or tapped, you’re relying on digital credentials—name, number, CVV, billing address—to verify the buyer. The problem? That same data is exactly what fraudsters steal and use.
Card absent transactions are fast and convenient, but they come with increased fraud risk and reduced issuer confidence, which is why Visa flags suspicious activity under Reason Code 10.4.
What is Visa Chargeback Reason Code 10.4?
Reason Code 10.4 is Visa’s way of categorizing fraud-related chargebacks that happen in card-not-present transactions. It means the cardholder reported the transaction as unauthorized, and the merchant didn’t provide enough evidence to prove otherwise.
Visa uses 10.4 for:
- Purchases made with stolen credentials
- Family fraud (child or spouse used the card without permission)
- Synthetic identity fraud (fake identities)
- Merchant errors (sending goods before full authentication)
It falls under Visa’s “Fraud” category, which automatically puts the burden of proof on the merchant unless you qualify for certain protection programs.
Why This Chargeback Is a Big Deal
Unlike many other chargebacks, Reason Code 10.4 can directly impact your risk profile with Visa. Repeated offenses can place you into Visa’s Fraud Monitoring Program (VFMP), which means:
- Higher interchange fees
- Fines or penalties
- Forced rollout of fraud controls
- Potential account termination
Even if you’re using a gateway or platform, you’re still responsible for how payments are authenticated, especially in a CAE.
Key Triggers for 10.4 in the Card Absent Environment
Here’s what typically causes these chargebacks:
1. No CVV Check
Skipping CVV validation removes one of the few card-present-like defenses you have.
2. Weak 3-D Secure Implementation
If you’re not using Visa Secure (Visa’s 3DS solution) or if you’re using frictionless 3DS without liability shift, you’re vulnerable.
3. Stale or Outdated Tokens
In recurring billing setups, tokenized credentials can expire or become compromised.
4. Manual Order Entry Errors
Virtual terminals rely heavily on operator input. One digit off, and you’ve got a mismatch—and a red flag.
5. Lack of Device or IP Intelligence
Without a basic fraud stack (device fingerprinting, velocity checks), you miss obvious warning signs.
How to Prevent Visa 10.4 Chargebacks
- Use 3-D Secure (Visa Secure)
- Visa Secure helps shift fraud liability from you to the issuer if authentication succeeds.
- Collect CVV, AVS, and Device Data
- The more datapoints you validate, the stronger your case when responding to a dispute.
- Monitor High-Risk Orders
- Use fraud tools to flag mismatched IP locations, fast order attempts, and suspicious behavior.
- Keep Logs and Receipts
- For MOTO and virtual terminal transactions, store voice recordings, email trails, and shipping records.
- Submit Compelling Evidence Fast
- Visa deadlines are tight. If you get hit with a 10.4, respond within the chargeback window and include:
- 3DS authentication proof
- IP address and device ID
- Timestamped communications
- Proof of digital delivery
The Misunderstood Truth About “Friendly Fraud”
A surprising number of 10.4 chargebacks are actually friendly fraud, where the cardholder did authorize the purchase but later denies it to avoid paying. It’s common in:
- Digital goods (no shipping proof)
- Gaming or adult content
- Subscription renewals
The chargeback system wasn’t built to catch this type of abuse, which is why chargeback alerts and fraud analytics tools are essential to filter genuine fraud from buyer’s remorse.
FAQ: Visa 10.4 and the Card Absent Environment
What’s the difference between 10.4 and 83?
Visa Reason Code 83 is for in-person transactions or stolen card use; 10.4 is strictly for card-not-present environments.
Does 3-D Secure always protect me from 10.4?
Not always. If 3DS is bypassed or fails authentication, you're still liable. But if liability shift applies, you're protected.
Can I win a 10.4 chargeback?
Yes, but only if you can provide compelling evidence like authentication results, order confirmations, and delivery logs.
Is recurring billing riskier?
Yes. If customers forget they signed up or don’t recognize your descriptor, they’re more likely to dispute the charge.
Conclusion: Don't Wait for a Fraud Spike to Act
Visa 10.4 chargebacks are preventable, but they require more than just good intentions. They need a layered strategy: authentication, smart tools, and evidence readiness.
If you’re relying on outdated payment systems or skipping key fraud checks, you’re painting a target on your back.
The card absent environment isn’t going away—it’s only growing. The best time to rethink your chargeback defense is before that next Reason Code 10.4 hits your inbox.
Stop Fraud Before It Starts with Chargeblast
If you’re starting to feel the weight of card-not-present chargebacks or creeping into Visa’s risk thresholds, it may be time to upgrade your fraud and payment response systems. Chargeblast gives you tools to prevent disputes at the source—real-time alerts, intelligent fraud detection, and evidence automation.
Whether you're facing 10.4 or dealing with high refund rates, we help you respond faster, smarter, and with fewer surprises.
Want to see how proactive defense can change your workflow? Request a demo today or jump in and explore what smarter chargeback prevention looks like.
