As if Visa chargebacks weren’t challenging enough for merchants, issuers, acquirers and processors, new rules from Visa will launch April 15.
The cost of chargebacks for Visa and merchants is rising and managing this growing problem has led to the need for new ways to resolve chargebacks.
New Visa Claims Resolution (VCR)
The new Visa chargebacks resolution model aims to shift from a litigation model to a liability assignment model.
Visa had three goals with the new resolutions program:
- standardization of global disputes and timing for resolution
- encourage automation
- streamline workflows.
As an example, the previous 22 chargeback codes are now consolidated and simplified into four standard “buckets.”
Five key things to know about VCR
An Ethoca/PYMNTS.com webinar with Julie Fergerson, SVP Industry Solutions and Mike Pullen, Representments Specialist with Ethoca highlights five key takeaways you should know about the new dispute resolution program:
- the rules change on April 15, no matter what
- code 75, for “Transaction Not Recognized,” will be removed after being frequently criticized as a catch all bucket for disputes
- 22 chargeback dispute categories will be reduced to four: fraud, authorization, processing error and consumer dispute
- response times for merchants to dispute chargebacks will drop from 45 days to 30 days
- issuers will be limited to disputing a maximum of 35 e-commerce transactions within a 120-day timeframe.
These are important changes to communicate to key employees and implement through your e-commerce systems and in-store transactions.
Dispute resolution program impact?
While the new rules mean some set up and more work for merchants and those affected in the short-term, Ethoca’s experts expect a potential reduction of 13% to 15% in valid disputes.
Merchants will now be required to provide a more detailed evidence package upfront with no chance to provide traditional information before Visa makes its final decision about liability.
KYC (Know Your Customer) best practices will become essential in protecting your business. Educating employees as well as customers will also be important in communicating and managing the changes.
It all adds up to challenging times ahead in managing and resolving chargebacks.
You can watch the full Ethoca webinar at no cost, at your convenience, here.