Visa recently announced that they will be revising their chargeback/dispute process. Visa Claims Resolution (VCR) is a new global program that will be implemented in April 2018, in an effort to resolve chargebacks faster on Visa’s side and preventing invalid disputes from entering the system.
The new program will simplify the dispute process, moving from a litigation-based workflow to a liability assignment model. VCR is designed to provide a more efficient process with simplified rules and user-guided workflows, reducing resolution time limits, proactively streamlining disputes and automatically assigning liability.
All merchants, acquirers, and issuers worldwide that process Visa transactions and Visa disputes will be required to implement the VCR program.
What is Visa Claims Resolution?
Visa Claims Resolution (VCR), is Visa’s new global dispute resolution program designed to help simplify credit card disputes, chargebacks, and improve the restitution process.
How will VCR work?
With the introduction of VCR, a dispute resolution will be grouped into one of four categories:
- Processing Errors
- Consumer Disputes
Disputes from each group will be routed to one of two different workflows, Allocation or Collaboration, each with their own lifecycle and process. Fraud and authorization disputes will be routed to the Allocation workflow; processing errors and consumer disputes will be routed to the Collaboration workflow
When does it go into effect?
April 14, 2018 for all regions.
What about disputes received before and April 13?
Disputes received after April 13 will be under the VCR lifecycle. All chargebacks received PRIOR to 4/13 will flow under the current process. There will be an overlap time of a couple months where you will be seeing both the “old way” chargebacks and VCR disputes the “new way”.
Is VCR a mandatory program?
Yes. VCR is a mandated program for issuers, acquirers and merchants. All segments must be ready to comply by the April launch date.
How does this impact other card types (Mastercard, Discover, American Express)?
There is no impact to disputes on the other card brands. This is VISA ONLY.
Is the program currently live?
Yes. In 2017, the VCR program was introduced for domestic disputes in Hong Kong and New Zealand. As of April 2018, VCR will apply to all merchants in all regions receiving Visa chargebacks or what will now be known as disputes.
Will the new VCR program require procedural and technical changes in order to comply?
Yes. The VCR program will have both procedural and technical changes that merchants and issuing banks need to be aware of. The money will move differently now with an Allocation dispute. If a merchant provides a valid rebuttal, they will not receive a credit (previously known as representment) when the dispute is passed back to the Cardholder’s bank. The Cardholder’s bank has the opportunity to review the rebuttal documentation, now known as a Pre-Arbitration Request, and determine if they are willing to accept the documentation, before money is moved. And with the VCR program, merchants will only have one opportunity to provide thorough and complete rebuttal documentation on or before the response date. The new VCR lifecycle processes will NOT allow for any additional documentation to be added at later time.
What about processing errors and consumer disputes?
Processing errors and consumer disputes, which will be routed through the Collaboration workflow, will continue to be processed as it has in the past with the exception of reduced defense time frames and new reason codes.
What are the reduced defense time frames?
Visa has reduced overall response timeframes from 45 days to 30 days, and the customer area defense time will be 18 days, but TSYS will be working to help meet this new time frame on your behalf to ensure a quicker resolution. This will not affect your Respond by Date on a dispute advice letter, or the website. However, any responses received after the Respond by Date MAY not be eligible to continue the dispute lifecycle.
How will the reason codes be affected?
The existing 22 reason codes will be replaced by 24 reason codes. All new VCR reason codes have the following format: [category].[code]. The dot separating the category and the code indicates that the dispute follows the VCR flow. Disputes following the old (current) flow only have a two-digit reason code.
What codes are being affected?
As of April 14, 2018, Visa will block chargebacks with a fraudulent reason code (VCR reason code 10.4) for card-absent (e-commerce) transactions if the issuing bank approved the transaction with a Card Verification Value 2 (CVV2) mismatch.
Can I still use the previous reason code “75: cardholder does not recognize transaction”?
No. That code will be retired and can no longer be used as of April 14, 2018. Instead, Visa will require issuers to use existing data in the Visa portal to help assist cardholders to either recognize the transaction or determine fraud. Merchants can exercise a ‘Request for Information’ (RFI) if a question arises.
Are there any changes to Notifications of Fraud (TC40)?
VCR is not introducing any changes to Notifications of Fraud (TC40).
Does VCR support the Request for Information (RFI)?
Yes, there will be no changes for issuers, acquirers and merchants regarding the RFI process.
Should I still use CVV2 as part of my fraud prevention process?
Yes. Visa encourages merchants to use CVV2 as part of their fraud prevention process.
How many disputes/chargebacks will Visa allow on one account?
Visa will allow a maximum of 35 fraudulent chargebacks on the same account number, within a timeframe of 120 days for Card Not Present (e-commerce) transactions.
Are all incoming VCR chargebacks defendable?
Yes, the merchant can defend disputes/chargebacks for both Allocation and Collaboration disputes.
Are the assessment fees changing?
Yes. Currently Visa assess a $500 fee if the case is ruled or will assess a $250 fee if the case is withdrawn. With VCR the $500 fee is assessed if the case is ruled or withdrawn by either party.
What if I have more questions on VCR and disputes?
You can always contact a A&B PAYMENT SOLUTIONS Business Representative who will be happy to help you, or you can go to Visa.com, and search for Chargeback Management Guidelines for Merchants. This will provide you tips and tools on responding to disputes.