As of April 15, 2018, Visa Claims Resolution (VCR) was introduced with enhanced dispute rules and a new workflow and process. VCR is intended to decrease the time needed to resolve claims, and offers the following benefits to acquirers, merchants, and issuers:
- Reduction in dispute volume
- Proactive dispute resolution
- Identifying, tracking and monitoring abuse
- Providing a better customer experience
Visa has seen a continued increase in disputes and wants to streamline and automate the process for resolving them. According to Visa, the average dispute takes 46 days to resolve with some lasting over 100 days. The goal is to resolve most disputes in 31 days or less – and there’s more good news for merchants: VCR will reduce dispute volume by invalidating many more chargeback requests; for example, in cases where a request is initiated after the time limit has expired, or fails to meet the necessary criteria for the selected dispute category.
VCR includes the Visa Merchant Purchase Inquiry, a new tool allowing merchants to proactively resolve disputes. Visa has added new data elements to their system-to-system interface that assist in decision making and ensure acquirers have the information they need pre-dispute to help merchants prevent disputes from becoming chargebacks.
Additionally, Visa has begun utilizing Associated Transaction functionality to help render disputes invalid by identifying credits, reversals and adjustments associated with a disputed transaction, and requiring the issuer to verify those related to the dispute in question.
As a part of VCR, Visa is now using indices to monitor all parties in the credit card processing value chain. Merchants, Acquirers, Issuers and Cardholders will all be assigned a score that reflects their dispute activity, allowing Visa to more closely monitor abuse and misuse, and more rapidly identify and remedy the root causes of issues.
Visa has introduced two new processes to streamline dispute resolution: first, removing one of the 30-day cycles from the existing fraud and authorization process while proactively providing automated dispute decisions; and second, requiring issuers to complete a Dispute Questionnaire capturing all required data before a dispute is initiated.
Visa will require issuers to evaluate and address data and information provided by merchants, either by countering the merchant response or accepting liability for the dispute. If an Issuer does not respond to the merchant within 30 days, the Issuer accepts liability and closure of the dispute.
With VCR now in place, Visa is enforcing the following new rules:
- Maximum Fraud per Account – Visa will place a limit of 35 card-absent fraud disputes that can be processed on a single account within 120 days.
- Block Future Fraud If Account Not Closed – Failure to close an account on which fraud was previously reported prevents the issuer from initiating new fraud disputes on that account, across all merchants.
- Bundling – If certain conditions apply, merchants may “bundle” a response where multiple transactions occurred on a single account and merchant. A single response questionnaire is used to reply to multiple disputes at once.
To further simplify and protect merchants, VCR consolidates 22 legacy reason codes into four dispute categories, reducing the complexity of the process and making it easier for merchants to understand.
Overall, we like the direction Visa is headed with VCR and are happy to see them taking more steps to protect merchants from dispute abuse. We tried to summarize the key aspects of VCR here but encourage all merchants, issuers, acquirers and even consumers to research the new rules in more detail.