In April of 2018, Visa introduced the Visa Claims Resolution (VCR) in order to streamline the chargeback dispute process and reduce errors. While the new process is beneficial for businesses overall, it’s important that Merchants familiarize themselves with the changes to avoid any fees or issues. In this blog post, we’ll review several ways in which Visa has changed their chargeback dispute process and how you can prepare accordingly.
What Are The Main Changes?
1. Quicker Turnaround Time for Dispute Resolution
In order to speed up the dispute process for merchants and other involved parties, Visa reduced the timeframe to respond to chargebacks. Under the new rules, Merchants have 30 days, rather than 45, to respond to chargebacks. Visa expects that with this new time frame, the average time to resolve a dispute will go down to 31 days from 46 days. The quicker turnaround time will be sure to improve efficiency for merchants.
2. Greater Use of Internal Data to Proactively Block Invalid Disputes
Visa will examine all available data to determine if there’s any evidence that could render the dispute invalid (such as proof that the card was swiped, or that the package was delivered). This will greatly reduce the number of invalid chargebacks assigned to merchants.
If liability for the dispute is assigned to the merchant, the merchant will only be able to respond in certain circumstances. This underscores how important it is for merchants to keep track of all necessary transaction documentation, since such evidence will affect the final decision.
In the case of processing error disputes in which the decision cannot be automated, all parties (issuers, merchants, and acquirers) will need to interact—similar to Visa’s prior chargeback process.
3. Consolidation of Reason Codes
All 22 chargeback reason codes are now divided into 4 categories so that the dispute can be handled as efficiently as possible. The categories are:
- Fraud (includes counterfeit, card-present, and card-not-present fraud)
- Authorization (includes declined authorizations and no authorizations)
- Processing errors (i.e. invalid data, duplicate processing, etc.)
- Consumer Disputes (i.e. goods not received, canceled services, etc.)
4. Compelling Evidence is Needed for Certain Chargeback Responses
Visa introduced stricter requirements for ‘fraudulent’ or ‘product not received’ chargeback evidence. Merchants will only be able to win such disputes if they submit all compelling evidence. This includes delivery receipts, cardholder-provided identification, cardholder signatures, and more.
What Should Merchants Do to Prepare?
1. Review Compelling Evidence Requirements and Carefully Maintain Documentation
Since compelling evidence is necessary for certain chargeback types under the new rules, it’s more important than ever for Merchants to keep track of evidence in case they will later need it. In order to do so, Merchants should be sure to read the Providing Compelling Evidence section of Visa’s Dispute Management Guidelines.
2. Respond to Chargebacks as Quickly as Possible
Since the timeframe for responding to chargebacks has been reduced to 30 days, Merchants will need to make sure that they are receiving and responding to chargebacks as quickly as possible.
To help with this, Fidelity has launched its Chargeback Alerts System. Available to Merchants who process on First Data’s platforms, and who are currently enrolled in our chargeback management portal (EIDS), the system alerts Merchants of any new chargebacks or retrievals that were posted to their account the day before.
3. Learn the New Chargeback Categories and Reason Codes
Visa has added new chargeback reason codes and has organized them into four categories. Merchants should review the new list of reason codes so they can be proactive in preventing fraud and be better equipped to respond to any chargebacks. For the full list of reason codes, take a look at the Dispute Conditions section in Visa’s Dispute Management Guidelines.
The Fidelity team is here to answer any questions you may have about chargebacks and the dispute process. Please reach out to our customer service team for assistance.