Understanding the Implications of Visa Claims Resolution
Chargebacks are a decades-old process that hasn’t changed much since its inception. However, new policies and procedures associated with Visa Claims Resolution are set to revolutionize the way financial institutions and merchants process cardholder disputes.
What is VCR?
VCR is Visa’s new system to help reduce timelines and simplify dispute resolution for issuers and acquirers. This is a mandatory change for all issuers and acquirers.
When is VCR Happening?
The implementation of procedures associated with VRC depends on the global location.
The timeline for Europe’s compliance has yet to be confirmed. However, Hong Kong and New Zealand migrate April 2017, with all other non-European countries following in October 2017.
How Will Visa Claims Resolution Change the Dispute Process?
Several changes will be made to streamline the process, including the following:
Consolidating Reason Codes
Visa will consolidate 22 chargeback reason codes into 4 dispute groups.
|Fraud||Authorisation||Processing Errors||Consumer Disputes|
|62 – Counterfeit Transactions||70 – Card Recovery Bulletin or Exception File||74 – Late Presentment||41 – Cancelled Recurring Transactions|
|57 – Fraudulent Multiple Transactions||71 – Declined Authorisation||76 – Incorrect Currency or Transaction Code or Domestic Transaction Processing Violation||53 – Not as Described or Defective Merchandise|
|81 – Fraud – Card-Present Environment||72 – No Authorisation||77 – Non-Matching Account Number||85 – Credit Not Processed|
|83 – Fraud – Card-Absent Environment||73 – Expired Card||80 – Incorrect Transaction Amount or Account Number||30 – Services Not Provided or Merchandise Not Received|
|93 – Merchant Fraud Performance Programme||78 – Service Code Violation||82 – Duplicate Processing||90 – Non-Receipt of Cash or Load Transaction Value at ATM|
|86 – Paid by other Means|
Resolving Confusion with Merchant Process Inquiry
Reason code 75, unrecognised transaction, will be retired.
To help cardholders recognise any queried transactions, a new process called Merchant Process Inquiry has been introduced where immediate transaction information is provided. Data provided will include the purchase information, digital receipt, and order details which list individual items purchased.
Changing from Litigation to Liability
Visa is changing the dispute process from ‘litigation-based’ to ‘liability-assignment’. This means there are two avenues within VCR to explore:
- Allocation – This tactic is aimed at fraud and authorisation type disputes. Visa will determine in real time who is liable for the dispute, based on the data available. VCR theoretically has built-in edits to stop invalid chargebacks of this type being submitted.
- Collaboration – This procedure is for customer disputes and processing error disputes. Issuers, acquirers and merchants will have the opportunity to collaborate and provide evidence where required.
The resolution timeline will be significantly reduced. The process currently takes an average of 46-105 days, depending on the complexity of the case
With VCR, industry members can expect:
- 31-70 days for fraud and authorisation chargebacks
- 31-100 days for customer disputes and processing error chargebacks
Increasing Dependence on VROL
VROL will play an increasing role with VCR.
- Before a dispute can be initiated, a Transaction Inquiry must be requested on VROL.
- Issuers and acquirers will no longer be required to initiate financial messages through an existing provider, as this can now be processed through VROL.
- There is an option for issuers and acquirers to use the existing systems and connections to submit fraud report via VROL.
What Benefits Will VCR Bring?
The benefits of Visa Claims Resolution will be numerous.
- The platform will simplify the dispute process by collapsing 22 chargeback reason codes to only 4 dispute groups.
- The dispute timeframes will be reduced to provide a quicker resolution, meaning resources will be in limbo for a shorter period of time.
- The Merchant Process Inquiry will be beneficial, as the cardholder will receive details of the transaction at the first point of contact. This will reduce the amount of first-cycle chargebacks submitted and representments received.
- Financial institutions will be able to eliminate invalid disputes using existing data and applying automatic, real-time liability assignment.
- There will be less opportunity for error through prepopulated transaction data, increasing ‘right first time’ ratios.
- A reduction of rejects through the VCR real-time editing and liability decision-making will allow for better use of staff resource.
- Processes will be streamlined by the ability to initiate financial messages via VROL and use existing systems for fraud report submissions.
Are You Ready for What’s Ahead?
The VCR process drastically changes the way transaction disputes are handled. Any industry member not prepared for the upcoming policy changes will quickly fall behind—and non-compliance will lead to significant revenue loss.
Are you prepared? Are you confident if your organization’s policies and procedures to the point that these upcoming changes won’t impact operations?
Contact Global Risk Technologies today. Our chargeback experts are leaders in the dynamic, global payments industry. We can pinpoint and resolve the specific challenges your business will face.