Visa Claims Resolution
Small and large business owners take note: In April of 2017, Visa launched Visa Claims Resolution (VCR), a new global dispute process for credit card chargebacks. With this process, Visa’s objective is to reduce timelines and bring simplification to the chargeback dispute process. The previous system was a litigation-based model, whereas the new process is based on a liability assignment model.
Visa made this change because its process hadn’t seen an update since the 1970s, and much has changed in the merchant processing and credit card processing world since then. VCR now reflects these changes, including those relating to the eCommerce market of modern retail.
With a focus on simplification, the new process is radically different to the process before. This could have an effect on your business, specifically your policies, procedures, and revenue. Let’s take a look at this in more detail.
Streamlining Credit Card Processing
VCR introduced five major changes to streamline the chargeback dispute process:
1. The timeframe for merchant response is now 30 days, decreased from the previous 45 days.
2. A segment of specific invalid chargebacks is automatically rejected before processing.
3. Depending on the type of dispute, cases will go through one of two workflows.
4. Reason codes have been consolidated down from 22 to four.
5. “Compelling evidence” must be available for a merchant to challenge fraud and authorization chargebacks.
Credit Card Chargeback Terminology Changes
Some vocabulary used often in the dispute process has changed under VCR, including:
· ‘Chargeback’ is now ‘Dispute’
· ‘Representment’ is now ‘Dispute Response’/’Pre-Arbitration’
· ‘Chargeback Reversal’ is now ‘Dispute Reversal’
· ‘Representment Rev/Adjustment’ is now ‘Dispute Response Reversal’
The biggest change here is replacing ‘chargeback’ with ‘dispute’, which may cause confusion as the word ‘dispute’ is used throughout the process, not always referring to ‘chargeback.’
Reason Code Changes for Visa
The previous dispute system had 22 reason codes, which was overly complex. Now these have been consolidated to four dispute categories.
Credit Card Fraud
· EMV Liability Shift Counterfeit Fraud
· EMV Liability Shift Noncounterfeit Fraud
· Other Fraud-Card Present Environment
· Other Fraud-Card Absent Environment
· Visa Fraud Monitoring Program
Authorization
· Card Recovery Bulletin
· Declined Authorization
· No Authorization
Processing Errors
· Late Presentment
· Incorrect Transaction Code
· Incorrect Currency
· Incorrect Account Number
· Incorrect Amount
· Duplicate Processing
· Paid by Other Means
· Invalid Data
Consumer Disputes and Credit Card Chargebacks
· Merchandise/Services Not Received
· Cancelled Recurring
· Not as Described or Defective Merchandise/ Services
· Counterfeit Merchandise
· Misrepresentation
· Credit Not Processed
· Cancelled Merchandise/Services
· Original Credit Transaction Not Accepted
· Non-Receipt of Cash or Load Transaction Value
The chargeback reason code 75 known as “Unrecognized Transaction” is also no longer valid.
Dispute Workflows
There are now two dispute workflows to streamline the process: Allocation and Collaboration.
Allocation Workflow
This workflow is assigned for fraud and authorization disputes. All fraud and authorization chargebacks will follow the Allocation workflow after Visa first performs several automated checks. These checks should answer these questions:
· Was the fraud dispute related to 3D secure authorized transactions?
· Did the cardholder dispute the transaction after the allotted timeframe?
· Did the cardholder already receive a refund from the disputed charge?
Should Visa identify that any of these criteria occurred, the dispute will be blocked so it never becomes a chargeback. This will result in fewer invalid chargebacks. Should the dispute make it through the automated checks, it will be assigned liability to the merchant. Merchants, however, do have the ability to defend the dispute under special circumstances, which includes the need for “compelling evidence.” This new workflow significantly reduces the amount of chargebacks that need a response, allowing you to focus only on legitimate ones.
Collaboration Workflow
Disputes will follow this workflow if the issues are related to a processing error or a consumer disagreement. The collaboration workflow is not very different from the previous chargeback process and is designed only to simplify communication between all parties: merchants, acquirers, and issuers as well as reduce the overall timeframe.
VCR, although greatly simplified compared to its predecessor, is still a new process, for which most merchants will need guidance if they are to navigate it successfully. Pinpoint Payments is here to help. Our sophisticated platform connects you with real-time updates regarding disputes, helping you fight fraud and chargebacks to recover revenue.
Learn more about our system by requesting a free demo.
Credit Card Payment Processing for Online Business
Staying up-to-date on credit card chargeback policies is incredibly important for all types of businesses. Pinpoint Payments offer credit card processing solutions for a multitude of industries. From chargeback management and fraud prevention, to staying on top of credit card and bank policy changes, we help grow your business by avoiding common penalties and fees. Call us toll-free at 866.256.4574 for more information.