The changes are here. With a deadline of April 2018, Visa’s dispute platform Visa Claims Resolution (VCR) is now in effect. What is VCR? If you haven’t heard of it yet, the aim of VCR is to simplify the dispute resolution process and improve the efficiency of the chargeback process. According to Visa, the new program was created in response to the ever-increasing number of disputes taking place, which have led to a spike in processing time and costs.
Visa shared the three main objectives of the program: (1) to make better use of Visa’s existing internal data; (2) to introduce automation where possible; and (3) to streamline existing processes and timeframes in the cases when issuers and acquirers still need to interact. Ultimately, the hope is that the VCR initiative will shift the dispute process from a litigation-based approach to a liability assignment process, while also speeding up the cycle time for disputed transactions. Currently, these claims require 45 days, on average, to process.
What Did Visa Claims Resolution Change?
The complete overhaul of the dispute process, thanks to VCR, will radically change the way merchants, acquirers and issues interact. These changes can be broken down into four key components:
1. Response Styles. VCR changes the way the payments ecosystem manages chargebacks and disputes. It will now have two workflows: allocation disputes and collaboration disputes. Allocation disputes include fraud- and authorization-related chargebacks and will be automatically processed by Visa. Collaboration is associated with non-fraud related dispute reason codes, and still requires interaction between merchants, processors and issuing banks.
2. Terminology. Visa has also phased out the term “chargeback” and has replaced it with “dispute”. Other terms have also been changed like “representments”, which is now “dispute responses”. As a merchant, you will have to spend some time acquainting yourself with the new terminology.
3. Dispute Timelines. As stated above, one of the big goals of VCR is to reduce resolution time frames. The new timeframe for dispute response is now 30 days of the dispute processing date; before the timeframe was 45 days. Likewise, the timeframe for arbitration was within 60 days of the representment processing date, now it is within 10 days.
4. Reason Codes. Along with the many other changes, reason codes have also been updated. The previous 22 reason codes have been updated and replaced with 24 dispute conditions.
How VCR Will Impact Your Business
- Your business could now be held liable and lose the ability to challenge the dispute.
- You might breach the fraud-to-sales ratio threshold.
- It is now possible to refund a transaction and still get a dispute.
How Your Business Can Benefit from VCR
- VCR is expected to considerably reduce the chargeback dispute volume.
- You will have a more efficient and proactive dispute resolution process.
- You can more easily identify, track and monitor reporting issues.
- VCR will create a better customer experience for all involved (issuers, acquirers, merchants and cardholders).
Where to Find the Best Merchant Services Provider
The key is to find the best chargeback insurance providers and then decide which provider is the best fit for your business. Fraud and disputes will only increase as ecommerce grows. You will want a provider that specializes in working with the many challenges ecommerce businesses experience. eMerchantBroker.com has years of experience in offering the very best in merchant services, including: chargeback protection and prevention programs, payment gateways, merchant accounts and business funding.
If you need to secure services to handle the new changes involved with VCR, consider the team at EMB. The application process takes just minutes to complete. Your account can be setup in as little as 24 hours, so your business has access to the programs and tools it needs to operate smoothly.
*Chargeback Shield is not an insurance service. EMB does not sell insurance and Chargeback Shield is not insurance, it is an alert system.