Are you ready for the next level of evolution in dispute resolution processing? When it comes to Visa Claims Resolution (VCR), what you don’t know can hurt you. The best time to make sure you are VCR-ready is before you get hit by a chargeback after 14th April 2018. Taking measures now can help prevent unnecessary pain later.
VCR is focused on resolving chargebacks more efficiently by simplifying the dispute resolution process, saving time, effort, and costs for everyone involved. In addition to shortening the time-frames that govern the process, VCR will reduce 22 chargeback reason codes to just four dispute groups (Fraud, Authorization, Processing Errors, and Consumer Disputes).
“Transaction Not Recognised” Reason Code
An important change is the retirement of chargeback reason code 75 for “Transaction Not Recognised”. Today, it’s one of the most commonly used codes; issuers use it to obtain more information to confirm fraud. The new dispute categories will require issuers to assign a more specific reason for the dispute up front to save processing time further down the line.
On the surface, this move seems logical but the unintended consequence is that customers who truly don’t recognise a charge will have no choice but to declare the nature of their dispute as fraud. In other words, transactions most typically coded as “Transaction Not Recognised” will now find their way into the fraud category, inflating fraud ratio numbers.
The Challenges Merchants and Issuers Face
What does this mean for issuers and merchants in a practical sense? Firstly, with code 75 going away, Visa will rely on issuers to leverage the data from the Visa portal and research a transaction to obtain more information. The transaction inquiry function lets issuers search Visa databases to find authorisation and settlement transactions to help the cardholder recognise the purchase.
But there is a flaw – issuers want to minimise their back-office costs with a tool which is optimised for their customer-facing agents, rather than for their back-office staff.
Secondly, VCR removes the restriction requiring the addition of cards to the TC40 file if a fraud dispute is submitted. However, if a known fraudulent transaction is the result of a data breach, Visa’s reimbursement program requires the card to be on the TC40 list. This leads to a decision point which has yet to be determined: Will Visa issuers need to decide if placing the card on the TC40 file is worth having the option of reimbursement?
For merchants, if a Visa issuer chooses to submit the transaction as fraud and not place the card on the TC40 file, they should be prepared for more dispute responses to prove that it is a legitimate purchase, and that the customer simply did not remember the purchase or recognise the merchant billing descriptor.
Conversely, if a Visa issuer opts to submit the transaction as fraud and add the card to the TC40 file, merchants must understand that using the TC40 file to stop chargebacks will not be as effective. This is due to an increase in false positives from the disputes previously submitted as “Transaction Not Recognised”.
There’s a Solution to Every Problem
In VCR’s new dispute process, transaction inquiry is the first step to creating a dispute. But this step also requires extensive back office operations and support, placing issuers under more financial strain. New technologies such as self-service tools that empower the customer to self-resolve transaction questions are optimal.
Merchant-issuer collaboration platforms providing detailed transaction information to customers, such as Verifi’s Order Insight®, can help customers recognise transactions and stop disputes. This solution allows dispute resolution at the customer level and reduces the need for customers to contact an issuer’s call centre, saving them unnecessary operational costs.
With VCR fast approaching, make the time to know what you don’t know right now and take the steps to be prepared for the upcoming shift.