Chargebacks are inevitable for merchants. Even if you follow all the necessary protection policies, there’s always a slight chance you'll have to face chargeback claims from customers.
These reimbursements of funds occur when a customer disputes a credit card purchase. In many cases, the charge is due to fraudulent activity, but there are also instances in which consumers challenge a purchase they knowingly made, or question one they can't remember—chargeback fraud and friendly fraud, respectively.
While there is a typical chargeback process, Visa recently announced a new, more time-efficient and less-costly strategy for those involved.
Called the Visa Claims Resolution (VCR), this initiative will help the credit card issuer focus on “automating and simplifying the dispute-resolution process while also keeping pace with the needs of the payment industry,” it states.
With this new strategy also come new Visa chargeback rules.
The dispute process will be altered slightly to reduce illegitimate disputes by “leveraging existing data,” explains Visa, to turn its attention to valid chargeback claims.
“VCR provides a foundation to implement enhanced dispute rules, streamline the process with reduced timeframes and offer enhanced tools for proactive resolution,” according to the company.
“Today, disputes take approximately 46 days to resolve, with the more contentious issues taking more than 100 days,” it continues.
New policies and protocols incorporated into the VCR attempt to shorten this amount of time, by a full 15 days.
“Our new expedited resolution process is expected to reduce the time and resources it takes merchants to respond to disputes," explains Visa. "We expect most disputes to be resolved within 31 days or less, a significant reduction to the time it takes today, which will benefit merchants, cardholders and clients.”
Furthermore, consumers will be required to complete a detailed “Dispute Questionnaire,” so Visa can streamline this process and obtain all necessary information about the claim. Those that do not meet the right criteria can be more easily “identified and blocked,” it states.
Visa also examined the 22 legacy reason codes for chargebacks, combining and organizing them into “four dispute categories.”
- Processing Errors
- Consumer Disputes
Once VCR is officially established, other standards will chart the course forward, as well. For example, there will be a limit on how many “card-absent fraud disputes” a consumer can make on an account number—specifically, no more than 35 disputes in 120 days. The person making the claim will also have the option to close his or her account. Failing to do so will prevent he or she from being able to report any more disputes on the account in the future.
Lastly, Visa states: “If certain conditions apply, merchants may 'bundle' their response where multiple transactions occurred on a single account and merchant.”
These are just some of the new Visa chargeback rules that will be put into place by the VCR. To learn more, click here.
Find out how to prevent chargebacks at your place of business.