New Chargeback Resolution Policy By Visa
Visa Claims Resolution (VCR) – In a bid to expedite resolution of chargeback disputes, a new process by Visa to significantly the reduce cost and seemingly long winded process associated with resolving disputes will take effect in April 2018. This comes in just handy considering the fact that current regulations have been in place for quite some time. A lack of update consequently made neutralizing attendant concerns such as chargebacks, a nightmare. Combine this with increased financial transactions, users and merchants and you have the perfect recipe to scare away people from online transactions. However, a lot of this hassles are likely to be resolved with Visa’s new chargeback regulation changes. So what changes are in the offing and how will they affect merchants, acquirers and payment processors involved in financial transactions? Here’s a perfect read on these and more.
About Visa’s New Changes ( VCR )
Since the goal is to fast-track chargeback processes, 4 dispute categories have been created for the existing 22 reason codes. They have been geared towards giving more effective and accurate information to merchants while simplifying the process of dispute resolution or chargebacks. A reduction in timeframe is another change expected to be implemented with Visa’s new regulation. Disputes will now be responded to in as short as 30 days, as against the initial 45 days. This is further anticipated to be cut even shorter to 20 days in 2019. But there’s even more, presently, the arbitration process of resolutions can take a staggering 150 days. This can be frustrating and complicate the process for merchants and users alike. However, a 31 to 70 day waiting period will be needed for Fraud and Authorization categories, while Processing Errors and Customer Disputes will be resolved between 31 and 100 days with the new regulation. Initially, it took 47 days on average, according to Visa, to resolve chargeback disputes. So the new VCR becomes important in removing invalid disputes and significantly reducing the days required by merchants to resolve chargebacks.
These new categories will be include:
- Consumer Disputes
A new limit has also been placed on e-commerce transactions, making issuers to only be able to make 35 transaction disputes within a timeframe of 120 days. Thus, additional requests will consequently be declined for processing by Visa. With the new dispute categories, the popular “Transaction Not Recognised” reason code will also be deleted. But there should be little or no concerns as savvy measures have been put in place to thwart any glitches that may occur. In addition to these changes, Visa has also introduced two dispute workflows which have been set since the goal is to drastically streamline the chargeback process. So all dispute categories will essentially go through the Collaboration or Allocation workflow in a bid to allow easier automation. The Allocation workflow works for authorization and fraud disputes while merchants, issuers and acquirers work in synergy to leverage the Collaboration workflow in Visa’s new chargeback regulation.
Here’s more on each of the newly introduced processes:
A whole series of automated checks have been put in place under the allocation process. These checks inform whether a transaction has been refunded, if 3D Secure verification was done and whether or not the dispute was made within the time frame of the purchase. If any of the above checks is detected, Visa holds the discretion to block such disputes. Reducing valid chargebacks is the ultimate purpose of the newly introduced allocation workflow by Visa. And passing through an automated workflow, merchants bear the liability of disputes and are only able to make valid contributions when they have a clear proof stating the invalidity of an authorization or fraud chargeback.
The Allocation Process is not a one size fits all solution to all disputes, even though most chargeback issues will take this route, according to Visa. However, in other cases, it may become necessary to have contributions from acquirers, merchants, and issuers, to resolve a chargeback. This is where the collaboration workflow comes in.
The Collaboration Process is much like what we have in today’s chargeback resolution process. However, there a few changes to this workflow. Here, issuers are required to fill a more comprehensive form than the one presently in operation. The collaboration workflow will therefore not only be crucial in cutting short the resolution timeframe for chargebacks but also enhance communication between concerned parties in the resolution. This will ultimately expedite the process and ensure increased accuracy. Therefore, this workflow will have an impact on all parties –Payment processors, merchants, issuers and acquirers. For a clearer understanding of what Visa has in stock, here are major updates and things to note on the new regulation changes and how they will affect merchants.
- These new rules are set to be enacted in April 2018.
- Merchants now have a reduced timing to give a response.
- Responses shall not exceed 30 days.
- “Transaction Not Recognised” reason code 75 will be discarded.
- Four new categories of reason codes will be created.
A number of platforms have aligned with the changes, so merchants and users should expect these measures to be in full swing as from April. Visa has been an incredibly strong financial system, powering the activities of many users worldwide. The new regulations are therefore more likely going to be a win-win for everybody. And with more robust financial platforms springing up, chargeback worries can only become a more seamless and hassle-free process.
If you are having chargeback issues and want more information on how the Visa Claims Resolution Changes will effect your business, please give us a call today. We look forward to assisting you with minimizing the impact of these changes and maximize them to your advantage. If you want more information on minimizing chargebacks and maximizing reversals, download our white papers on the topic.
About The Author
Angela De Steffano
Staff writer at High Risk Merchant Account LLC
Angela is a merchant account specialist and heads the marketing team at HRMA-LLC.
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