I’m glad you’re here, as we something urgent to share with merchants. Visa recently introduced its new global dispute resolution process: Visa Claims Resolution (VCR). In April 2018, all disputes will be processed through VCR. This means stakeholders have just a handful of months to prepare before the switch happens. Here are the upcoming changes, what to expect when they go into effect, and how the VCR will affect your business.
The New Process in a Nutshell
Visa found that it takes takes 46 days, on average, to resolve a chargeback. More complex cases can take over 100 days to resolve. From a merchant’s standpoint, that’s over three painful months worrying about the same dispute. VCR was created to cut down on time, cost, and the number of overall chargebacks a merchant receives.
So, what are the opportunities with VCR? For starters, this new system will eliminate invalid chargebacks whenever possible. This means if a customer tries to initiate a chargeback when it is past the time limit or does not meet the minimum criteria, Visa will block the dispute from becoming a chargeback. Requiring this extra information from the get-go will reduce unnecessary chargebacks, help merchants understand exactly why the chargeback occurred, and save time for everyone involved. This will definitely improve your team’s performance while they use the Chargeback App.
Time Limit Changes
Currently, merchants have 45 days to respond to a Visa chargeback. VCR reduces the time frame to 30 days. Visa anticipates the new process’ required up-front information will do away with the back-and-forth between the merchant, acquirer, and issuer. Resulting in quicker chargeback resolution, with expectations from Visa indicating resolution within 31 days.
Visa will be reducing the whole process involved in dispute resolution by having all dispute follow one of two new workflows: Allocation and Collaboration.
Disputes Assigned to this Workflow: Fraud and Authorization
All fraud and authorization chargebacks will go through the Allocation workflow. Here, Visa performs a series of automated checks on the dispute. These automated checks will tell Visa a few things:
- If the fraud dispute is on 3D secure authorized transactions.
- If the cardholder disputed the purchase after the allotted timeframe.
- If the disputed transaction has already been refunded.
If Visa detects any of the above items, the dispute will be blocked and it won’t become a chargeback. The Allocation workflow will result in less invalid chargebacks that merchants will have to deal with.
However, if the dispute passes through the automated workflow without triggering any invalid sensors, Visa will assign liability to the merchant. Defending against the chargeback will only be possible in specific circumstances. Essentially, responses will only be allowed if the merchant can definitively prove the chargeback is invalid.
How is this different than the current process? Currently, merchants can submit responses to all fraud chargebacks, regardless of the strength of the rebuttal and/or the evidence provided. This new system means that merchants need to respond based on what’s specifically stated in Visa’s rules and regulations.
Disputes Assigned to this Workflow: Processing Error and Consumer Disputes
Visa explains that the majority of disputes will flow through the Allocation workflow, but a portion will still require interaction between merchants, acquirers, and issuers. The Collaboration workflow is essentially the same as today’s chargeback process. Its goal is to simplify communication between each party and reduce the overall chargeback timeframe.
New Reason Codes
VCR is all about simplifying the process of chargeback resolution. The existing Visa chargeback reason codes are below.
Visa’s new process introduces four dispute categories and associated numerical labels (Fraud – 10, Authorization – 11, Processing Errors – 12, Consumer Disputes – 13) under which the new, renamed reason codes will be placed. Visa chargeback reason code 75 ‘Transaction not Recognized’ is being retired.
|VCR Dispute Reason Codes|
|Fraud (10)||Authorization (11)||Processing Errors (12)||Consumer Disputes (13)|
|10.1 – EMV Liability Shift Counterfeit Fraud||11.1 – Card Recovery Bulletin||12.1 – Late Presentment||13.1 – Merchandise/Services Not Received|
|10.2 – EMV Liability Shift Non-Counterfeit Fraud||11.2 – Declined Authorization||12.2 – Incorrect Transaction Code||13.2 – Cancelled Recurring|
|10.3 – Other Fraud – Card Present Environment||11.3 – No Authorization||12.3 – Incorrect Currency||13.3 – Not As Described or Defective Merchandise/Services|
|10.4 – Other Fraud – Card Absent Environment||12.4 – Incorrect Account Number||13.4 – Counterfeit Merchandise|
|10.5 – Visa Fraud Monitoring Program||12.5 – Incorrect Amount||13.5 – Misrepresentation|
|12.6 – Duplicate Processing/Paid by Other means||13.6 – Credit Not Processed|
|12.7 – Invalid Data||13.7 – Cancelled Merchandise/Services|
|13.8 – Original Credit Transaction Not Accepted|
|13.9 – Non-Receipt of Cash or Load Transaction Value|
Even with these simplified categories, Visa assures that they will continue to provide the same level of data — and in some cases even more — to merchants. Again, their end goal is to help merchants understand the reason for the dispute. Issuers will also be required to fill out a Dispute Questionnaire to provide all parties with the information needed before the dispute is initiated.
New Codes, New Evidence?
While the specific compelling evidence associated with each new reason code won’t be official until Visa releases it’s new rules and regulations, Adyen recently provided insights regarding the changes. After reviewing their list of compelling evidence, it’s clear that there aren’t many changes to what’s currently accepted.
To illustrate, here’s how the compelling evidence for fraud chargebacks of an ecommerce transaction for digital goods changes with VCR:
|Compelling Evidence Comparison|
|81 – Fraud – Card Absent||10.4 – Other Fraud – Card Absent Environment|
|Description of the goods or services successfully downloaded, the date and time such goods or services were downloaded, and two or more of the following:||Description of the services successfully downloaded, the date and time such services successfully downloaded, and two or more of the following:|
|Purchaser’s IP address and the device’s geographical location at the date and time of the transaction.||Purchaser’s IP address and the device geographical location at the date and time of the transaction.|
|Device ID number and name (if available).||Device ID number and the name of device (if available).|
|Purchaser’s name and email address linked to the customer profile on record with the merchant.||Purchaser’s name and email address linked to the customer profile held by the Merchant.|
|Evidence that the profile set up by the purchaser on the merchant’s website or application was accessed by the cardholder and successfully verified by the merchant before the transaction date.||Evidence that the profile set up by the purchaser on the merchant’s website or application was accessed by the purchaser and has been successfully verified by the merchant before the transaction date.|
|Proof that the merchant’s website or application was accessed by the cardholder for goods or services on or after the transaction date.||Proof that the merchant’s website or application was accessed by the cardholder for merchandise or services on or after the transaction date.|
|Evidence that the device and card used in the disputed transaction were the same as in any previous, undisputed transactions.||Evidence that the same device and card used in the disputed transaction were used in any previous transaction that was not disputed.|
Specific copy changes are emphasized by red or blue text. Most of them are small cosmetic changes, such as changing ‘goods’ to ‘merchandise’. It appears that VCR’s evidence remains relatively unchanged to currently permissible compelling evidence.
TL;DR on VCR
The new Visa Claims Resolution is expected to save time and increase efficiencies. Here’s the rundown of changes that merchants should know before the changes go into effect April 2018:
- The timeframe for merchants to submit a response is decreased from 45 days to 30 days.
- Invalid chargebacks are stopped before they reach the merchant through new automated workflows.
- Fraud and authorization chargeback responses are only allowed when the merchant can definitively prove the dispute is invalid.
- Reason codes are getting an organizational makeover, but the compelling evidence remains largely unchanged from what’s currently accepted.
How Merchants Should Prepare for VCR
Visa has already pushed back the effective date of the new VCR processes from October 2017 to April 2018. But, merchants shouldn’t put off preparatory activities. The reduced timeframe means that merchants need to generate chargeback responses faster than ever before. Rigid requirements for fraud and authorization chargeback responses means that merchants need to adhere to Visa’s rules and regulations compelling evidence more strictly than ever before, too.
Generating fast, comprehensive chargeback responses isn’t easy to do on your own. Unless you have a deep knowledge of Visa operating rules and regulations, or time to dedicate to gaining that knowledge before April 2018. But there is a way to simplify dispute management. It starts with consolidating your ecommerce store, payment gateway and processor data into one centralized location.
VCR Strengthens the Chargeback App’s Real-Time Dispute Resolution
It takes a lot of technology to power an ecommerce store. Unfortunately, these numerous, unlinked data sources require time-consuming processes, and even full-time employees, that make generating a compelling response fast nearly impossible. The Chargeback App brings all of your data sources together so you can achieve ROI in your dispute management. Order, customer, transaction, and dispute information is auto-populated into responses based on current card network rules and regulations. No more copy and paste nightmares, no more becoming an expert on network rules. Schedule a demo to find out how to simplify chargeback management and prepare for VCR changes. We’ll also be glad to answer any questions. Just contact us, one of our analysts will be there to help.