VCR: Importance of Merchant-Issuer Collaboration

The changes introduced by the Visa Claims Resolution (VCR) program are right around the corner. With VCR coming into effect in April, merchants and issuers need to rethink how they currently manage and respond to chargebacks.
The VCR program is designed with the intent of streamlining the transaction dispute process, thereby easing the burden on merchants and issuers. However, with the consolidation of reason codes and the subsequent removal of reason code 75, “Transaction Not Recognized,” questions arise on how merchants and issuers can best respond to what has been a common friendly fraud chargeback claim.
This new rule in the process will place demands on issuers’ customer service agents and does not include a customer self-resolve option. This adds pressure on both issuers and merchants to spend time, resources, and energy in a new system that effectively changes the way they investigate and ultimately dispute this very common dispute claim.
Retired: Reason Code 75
The official chargeback condition from Visa for this soon to be defunct reason code is: The Cardholder does not recognize the Transaction and additional information beyond the data required in the Clearing Record is needed to assist the Cardholder in identifying the Transaction.
In other words, the merchant will be expected to provide additional supporting information to prove that the cardholder did authorize the charge. Because this new process does not include capabilities for customers to self-investigate and self-resolve their concerns, issuers and merchants are forced to devote extra resources on resolving these friendly fraud claims.
In this case, Visa will allow issuers to leverage data from the Visa portal and research a transaction for more information. This transaction inquiry function allows issuers to search Visa databases to verify authorization and settlement transactions to assist their customers in recognizing the disputed transaction. However, this resource-draining activity will likely impede issuers’ efforts to resolve disputes in a timely and cost-effective manner.
In addition, VCR removes the restriction requiring the addition of cards to the TC40 file if a fraud dispute is submitted. In the case of a known fraudulent transaction that results from a data breach, Visa’s reimbursement program requires the card to be on the TC40 list. This leads to a decision dilemma: Visa issuers will need to decide if placing the card on the TC40 file is worth having the option of reimbursement.
If the issuer decides to submit the transaction as fraud and add the card to the TC40 file, merchants must understand that using the TC40 file to stop chargebacks will not be as effective – as this will likely result in an increase in false positives from the disputes previously submitted as “Transaction Not Recognized.”
Enabling Better Merchant-Issuer Collaboration
The ultimate goal for both merchants and issuers is to spend less time dealing with chargeback and friendly fraud claims. This can be a costly experience and often result in frustration, errors, and dissatisfied cardholders.
This reinforces the need for true merchant-issuer collaboration. Imagine if this process was refocused to enable merchants and issuers to communicate easily and share data when a cardholder makes a claim. Merchants and issuers can share transaction information and quickly communicate with the cardholder regarding the claim. In most cases, supporting documentation can reveal that the charge is valid with no further action required. The cardholder is satisfied and no time or resources are wasted by merchants and issuers.
Contact us to learn more these new processes and how to respond to disputes and manage chargebacks.