Changes are coming to how Visa transaction disputes and chargebacks will be processed and managed. With the new Visa Claims Resolution (VCR) program, Visa hopes to reduce the timeframes associated with chargebacks, thereby reducing merchant, issuer and Visa costs, resource drains, and the number of overall transaction disputes.
While promising for merchants, change can be hard to manage and integrate into what is already a confusing dispute resolution process. VCR comes into effect in April 2018, which means merchants have no time to waste learning about VCR and how it can and will impact your business day-to-day.
What Changes Are Coming With VCR?
While the changes coming with VCR may appear daunting and confusing, it’s important to remember that Visa created VCR with the goal of improving the process for all parties involved. For full details on VCR, refer to the Visa Claims Resolution Learning Resources website.
In an effort to streamline the transaction dispute process, the following changes will come into effect in April 2018:
- Consolidated reason codes. VCR consolidates 22 chargeback reason codes into four dispute categories: Fraud, Authorization, Processing Errors, and Consumer Disputes.
- Reason code 75 being replaced. Reason code 75, “unrecognized transaction,” was confusing for merchants and cardholders and is being replaced with a new process – Merchant Process Inquiry. This new process will provide transaction information (purchase information, digital receipt, and order details) to the cardholder, eliminating confusion over unrecognized transactions.
- Dispute process transitions from litigation to liability. VCR supports two methods of investigating disputed transactions: Allocation and Collaboration. Allocation is focused on Fraud and Authorization type disputes and enables Visa to decide in real-time who is responsible for the dispute. Collaboration enables issuers, acquirers, and merchants to collaborate and share chargeback dispute resolution evidence.
- Shorter timeframes. A key VCR objective is to streamline the chargeback dispute resolution process down from an average of 46 – 105 days. Fraud and Authorization chargebacks will be allotted 31 – 70 days. Customer Disputes and Processing Error chargebacks will be given 31 – 100 days.
- Updates to the Visa Resolve Online dispute platform. The Visa Resolve Online (VROL) platform has been updated to support the new VCR dispute rules and process. The ultimate goal is for VROL to be more effective with VCR.
- New VCR terminology. Basic chargeback terms will change. The terminology updates include: chargeback, replaced with dispute; and representment, replaced with dispute response or pre-arbitration.
Refer to the following resources to learn more about these changes coming with VCR:
How Will VCR Benefit Merchants?
Visa expects VCR to provide a range of benefits to merchants, including:
- Reduction in dispute volume. With the use of stricter and more effectively enforced rules, VCR is expected to reduce the chargeback dispute volume by preventing invalid disputes from being entered and processed.
- A proactive dispute resolution process. With the new dispute categories, plus more efficient use of VROL and the implementation of Merchant Process Inquiry, merchants will be able to resolve transaction disputes
- Identify, track, and monitor abuse. With its indexing capabilities, VROL can proactively monitor for reporting issues. This allows faster identification for areas of training and education that can result in fewer chargebacks.
- Better customer experience. Everyone may benefit – including issuers, acquirers, merchants, and cardholders – from streamlined transaction dispute timeframes.
How will VCR impact your current chargeback dispute resolution practices? Do you have access to the support that Verifi’s Chargeback Representment Service provides, ensuring you can respond to chargebacks within the new 30-day time limit? How do you plan to manage the new Allocation and Collaboration automated response requirements? Reason codes are confusing enough, and now with the consolidation of 22 reason codes into four dispute categories, who will you turn to for chargeback guidance and support?