Visa has some very interesting news for our many high-risk clients. In order to address the increasing number of chargeback disputes along with the processing time and costs associated with them, Visa is introducing its new global dispute resolution process: Visa Claims Resolution (VCR). This initiative is meant to automate and simplify the dispute-resolution process, thus increasing the efficiency of handling disputes.
VCR New Dispute Process
The Visa Claims Resolution is designed to simplify the dispute resolution process by leveraging existing data to proactively eliminate many invalid disputes. This dispute resolution program will simplify the whole process with enhanced decision-making tools and reduced timeframes. Certainly, this is potentially great news for many high-risk businesses, and we’ll explain a few elements that come with the VCR.
Visa Merchant Purchase Inquiry
This is an easy-to-use plugin that allows merchants to avoid disputes through a system-to-system interface. If the issuer confirms that the transaction is fraud, then the merchant can react accordingly. The real-time fraud notification API between the issuer and merchant allows the possibility to eliminate a potential dispute from becoming an actual dispute. As a result, this will significantly help in saving costs for both the high-risk merchant and the issuer. We expect this to be rolled out over time as it is only suggested by Visa, not required.
Any action, like a credit reversal or an adjustment, that can make a dispute invalid will be an associated transaction. With the new VCR, the issuer must verify whether or not the action taken relates to the dispute in question. After this, no further inquiry into the transaction will take place.
Streamlining the Process by Changing the Time Limit for Dispute Resolution
The new dispute process will reduce the time from 46 days to 31 days for merchants to respond to a Visa chargeback. While this can be seen as adding some time pressure on high-risk merchants, Visa anticipates that the new process is efficient enough and requires less than previous processes. For example, there will be less exchange of information and documentation required, which will ultimately reduce the time and resources needed to resolve a dispute.
Through fraud and authorization, information collection, and stopping invalid disputes, Visa expects the VCR to become highly efficient in dispute resolution. We will explain what these processes mean for high-risk merchants and chargeback dispute resolution below.
Fraud and Authorization
Visa will proactively provide an automated dispute decision for fraud and authorization disputes based on the Visa rules. This will help streamline the process and get to the resolution quickly, while simultaneously giving the merchants and issuers the ability to respond under certain conditions.
The issuer will fill out a detailed dispute questionnaire to further assist in resolving any disputes as accurately as possible. As a result, this will help capture all the necessary information required to resolve the dispute quickly and with precision. Consequently, this will ultimately reduce risk even for high-risk business types.
Stop Invalid Disputes
The new and enhanced processes identify and block invalid disputes (those that do not meet the Visa rules and requirements) from entering the system. In other words, fewer fraudulent chargeback disputes will come through the system, draining time and resources on the merchant’s side.
Timely Response From the Issuers
The VCR program requires issuers to acknowledge the information provided to them by the merchants within a certain time frame. Failure to do so will mean that the issuers accept the liability, closing the dispute. What this means for our high-risk business clients is that the process will be more streamlined for the convenience of all parties involved.
Simplified Reason Codes
In addition to timeframe and workflow changes, Visa is also making some updates to its legacy codes to regulate disputes. These updates will reduce the complexity of the current dispute process and will also provide better protection for merchants. As part of the VCR initiative, the existing reason codes will be grouped into four dispute categories:
- Processing errors
- Consumer disputes
How VCR Will Benefit All Stakeholders
The new VCR is designed to provide all stakeholders, including high-risk merchants, with four primary benefits:
- Reduction in the volume of disputes with the implementation of enforced rules
- Proactive dispute resolution
- Identify training opportunities and monitor abuses
- Better customer experience