With the number of credit card transaction disputes rising and processing costs and time increasing, Visa introduced the Visa Claims Resolution (VCR) initiative. Effective April 2018, all disputes will be processed through this new global dispute resolution process. By automating and simplifying the dispute-resolution process, Visa hopes to improve the efficiency of handling disputes.
Get to Know the Changes
Visa’s new process aims to reduce the overall number of disputes, cut down the number of invalid disputes, and save merchants time and money. Here are the highlights:
1. Issuer must provide upfront information. This new process aims to help merchants understand the reason for a dispute, so issuers will be required to fill out a dispute questionnaire with all of the necessary information before the dispute is initiated. Then, the questionnaire will be provided to all of the involved parties.
2. Reduced response times. The time merchants have to respond to a Visa chargeback will shorten from 45 days to 30 days.
3. Chargeback reason codes have changed – Visa’s 22 chargeback reason codes will be consolidated into four codes – fraud, authorization, processing errors, and customer disputes. Depending on the category, a merchant will have a streamlined way to provide evidence supporting the claim.
4. Visa will use customer and merchant information to toss out fake claims – Under the current process, all customer disputes were automatically entertained.
With the VCR, all disputes will fall into one of two categories. Fraud and authorization disputes will be assigned the Allocation workflow. Once in this workflow, Visa does automated checks on the dispute to determine if the fraud dispute was on 3D secure authorized transactions, if the cardholder disputed the charge before the deadline, and if the transactions was already refunded. If Visa proves any of these factors, the dispute will be blocked and not become a chargeback. If not, the merchant will be found liable. With the VCR, merchants will need to respond to disputes based on what’s specifically stated in Visa’s rules and regulations. Processing error and consumer disputes will be assigned the Collaboration workflow. This workflow works the same way as the current dispute process, so there will still be some communicating between the acquirers, merchants, and issuers.
How to Prepare
With the VCR process just around the corner, there are several steps merchants can take to prepare.
Keep Detailed Records
Since you will need to submit detailed evidence to support your claim, you need to have extensive record at your fingertips. With the dispute process being shrunk to about 31 days, you will need to be able to access the information quickly. This means you will be generating chargeback responses faster than you ever had to in the past. Additionally, the responses must have compelling evidence that follow Visa’s strict rules and regulations concerning fraud and authorization disputes.
Prepare to Look Closer at Chargebacks
Visa will be weeding out invalid chargebacks, so be prepared to handle more real disputes. To ensure the best possible outcome, you need to make time to deal with chargeback disputes. This means treating every chargeback seriously and taking action immediately. Someone at your business should be responsible for collecting and storing data that can be found as soon as it is needed.
Another invaluable way to get acclimated to the system is to enroll in Visa’s VCR overview. Sign up for Visa Online and then enroll in VCR course with Visa Business School.
Use a Chargeback Mitigation System
Real and friendly fraud are rampant, especially with customer-not-present transactions. Merchants that want to stay ahead need to have chargeback protection solutions in place. Merchants that fail to take chargeback protection seriously will face cost increases, revenue losses, and crippled business reputations.
Benefits of the VCR
The goal of VCR is to cut down on invalid disputes while meeting the needs of the payment industry. Additional benefits include:
A Lower Dispute Volume: Through Visa’s automatic checks, VCR will reduce dispute volume by blocking fake disputes entered into the system.
A Proactive Resolution Process: Through a series of new products and services, VCR allows merchants to take a proactive approach to resolve disputes. Through the Visa Merchant Purchase Inquiry, merchants can identify remediating transactions, such as credits, reversals, and adjustments through associated transactions.
Track and Monitor Disputes: Indices provide Visa a mechanism to proactively identify training opportunities or abuse, resulting in quicker troubleshooting and resolutions.
Improved Customer Service: Quicker timelines provide a better customer experience and faster resolutions. Visa discovered that, on average, it takes between 46 and 100 days to resolve a dispute. VCR is expected to cut the time down to 31 days.
Providing quick, comprehensive chargeback responses isn’t simple to do unless you have strong knowledge of Visa’s rules and regulations. By consolidating your ecommerce store, payment gateway, and processor into one centralized location, you can simplify dispute management.
If you are interested in centralizing your business, consider eMerchantBroker.com (EMB), which specializes in high-risk merchant accounts and tailors payment processing solutions to each business. EMB also offers chargeback protection tools, a PCI-compliant payment gateway, and fraud filters.