As a merchant, you’re bound by a long range of rules and regulations that enable you to accept and process credit and debit card payments. The credit card companies you work with have very detailed and established rules and processes that you must be familiar with. In this article, we dig into Visa’s chargeback rules and highlight some of the key areas that you should be aware of.
The Visa Chargeback
Each credit card company and bank has its own definition for a chargeback, slightly different from others. Visa clearly states early in its guide, titled Chargeback Management Guidelines for Visa Merchants, that a chargeback “provides an issuer with a way to return a disputed transaction.”
As you know, there are many reasons for a chargeback, and Visa highlights three key reasons for chargebacks:
- Merchant did not get authorization for the transaction
- Merchant did not collect a card imprint for electronic or manual sales
- Merchant accepted an expired credit card
As part of being a Visa merchant, it would be helpful for you to have a quick refresher on the Visa chargeback dispute process. We recommend that you review this process in detail in your Visa documentation, and if you have any questions, do contact Visa.
1. The customer contacts their card issuer to dispute the transaction.
2. The issuer asks the customer to provide details on the transaction, and this data is sent to the acquirer using VisaNet.
3. The acquirer next can decide to resolve the chargeback or to forward the information to you, the merchant.
4. If you are notified of the chargeback, you can choose to accept or dispute the chargeback. If you decide to dispute the chargeback, you must provide details to the acquirer to defend the transaction.
5. The acquirer reviews your information and decides how to proceed. Depending on the decisions made by you and your acquirer, the chargeback may be represented or closed.
Refunds, Returns, and Cancellations
As a merchant, you know that you must have clearly defined refund, return, and cancellation rules available to your customers. Typically, customers will dispute a transaction due to confusion over your refund, return, and cancellation rules––this can be both an honest misunderstanding or an instance of chargeback fraud. To protect and defend yourself in these chargeback claims, you need to be able to clearly demonstrate that your policies are easily accessible to all customers, for both card-not-present and card-present transactions.
To reiterate the importance of making these policies available throughout the transaction, Visa states in its merchant guide: “Visa will support your policies, provided they are clearly disclosed to cardholders.”
For card-present merchants, Visa supports the communication of your policies when you do the following:
- Clearly detailed policy The policy is clearly printed on the front of the credit card transaction receipt close to the signature field or is in an obvious location on the receipt.
- Signature or initials When displayed on the back of the receipt or on another document, there must be space for the cardholder’s signature or initials.
For card-not-present merchants, Visa expects you to do the following to clearly communicate your return, refund, and cancellation policies:
- Communicate clearly For phone orders, you must email, mail, or text the policy to the cardholder and receive proof of acknowledgement of this information.
- Clearly documented during the transaction For Internet sales, your policies must be displayed during the final stages of the online transaction or on the checkout screen. In both instances, there must be a way to validate that the customer has read or reviewed your policies, either with an accept or submit button.
Transaction Receipt Best Practices
During the chargeback process, your acquirer will likely expect you to provide a copy of the Visa transaction receipt. This receipt with the information disclosed on it is reviewed by your acquirer when determining to accept the chargeback or to represent. As part of its chargeback rules, Visa has detailed, annotated images in Chargeback Management Guidelines for Visa Merchants of the Visa requirements for transaction receipts. We recommend you review these images and compare your transaction receipts to them.
Whenever there is any doubt or question over the validity of the cardholder’s chargeback claim, your acquirer will want a copy of the transaction receipt. Visa recommends that you do the following to minimize copy requests:
- Customer can recognize your name Make sure your customers can clearly recognize your company name on their Visa statement.
- Informed sales staff Ensure your sales personnel understand and follow the Visa best practices for transactions. This includes providing the cardholder a copy of their signed receipt.
- Avoid illegible receipts Your transaction receipts must be easy to read and clearly printed. Make sure your point-of-sale hardware is up to date and well maintained.
- Copy request ratio Visa recommends that you track the number of transaction receipt requests you receive. If this ratio to your sales reaches 0.5 per cent, Visa wants you to review and improve your procedures.
Working with Visa
There is much more to working with Visa and complying with Visa chargeback rules than what can be covered in just one article. We recommend that you read the merchant guide and stay up to date with any notices you receive from Visa.
The Chargeback Management Guidelines for Visa Merchants is a very detailed guide, and we want to make sure you pay close attention to the following areas:
- Monitoring This section details Visa’s three chargeback monitoring programs.
- Reason Codes This section details every aspect of the Visa chargeback reason codes. (Note, every credit card company has its own list of chargeback reason codes.)
- Compelling Evidence This section details the evidence requirements and your rights as a merchant.
Ultimately, we want you to know that working with Visa is not an onerous relationship. The more you know, the easier it will be and the more likely you’ll be to reduce your Visa chargebacks. To learn more about working with Visa, read and review the content in our Knowledge Base.