The launch of Visa Claims Resolution (VCR) is quickly approaching. The new dispute resolution process will take effect globally in April 2018, and it’s important to understand how Visa is redefining dispute resolution and what it means for merchants.
What Is VCR?
VCR is an initiative designed to resolve chargebacks faster by streamlining the dispute process, saving time and costs for everyone involved – cardholders, merchants, issuers and acquirers. Here’s how Visa will do that:
New Dispute Workflows
The goal of VCR is to simplify and shorten the entire process for handling chargebacks, so all disputes will follow one of two new workflows:
- Allocation. Fraud and Authorisation related chargebacks will be routed to the Allocation workflow. For disputes in this category, Visa will perform automated checks at the front end of the process. If Visa detects anything that makes the dispute invalid, it will block the dispute from becoming a chargeback. Blocked disputes include disputes on approved authorisations or refunded transactions, and disputes submitted after the required timeframes.
If the chargeback is valid, Visa will automatically assign liability to the merchant and dispute response is not possible for these cases. A merchant may only respond under certain conditions, including instances where compelling evidence is present, data was invalid, or a credit has been issued. Essentially, responses will only be permitted if the merchant can definitively prove the chargeback is invalid.
- Collaboration. Processing Errors and Consumer Disputes will be forwarded to this workflow. While most disputes will fall under the category of Allocation, a portion will still require interaction between merchants, acquirers, and issuers to resolve the issue. The process for handling disputes related to Processing Errors and Consumer Disputes will remain similar to the current system. The difference is reduced response timeframes and new reason codes.
Reason Code Consolidation and Renaming
To simplify the process even further, the existing 22 chargeback reason codes will be grouped into four dispute categories:
- Processing Errors
- Consumer Disputes
Of note, chargeback reason code 75 for ‘Transaction Not Recognised’, one of the most widely used, will be eliminated. Issuers, therefore, need to rely on the data to assist the cardholder to recognise the transaction.
New Time Limits
Another key change is the dispute response timeframe, which will be reduced from 45 days to 30 days. This time reduction will be achieved through more efficient processing and reduced back-and-forth communications between merchant, acquirer, and issuer to exchange documentation.
What Can Merchants Do to Be VCR-Ready?
While merchants may experience a faster dispute resolution process, VCR could also have unintended consequences for many. With the dispute response time reduced to 30 days (Visa is aiming for 20 days by 2019), merchants will need to generate chargeback responses faster than before. What’s more, they will have to submit compelling evidence to Visa on demand. This relies on maintaining detailed supporting data and having a thorough understanding of Visa’s policies and processes.
Responding to disputes requires time and effort, and the changing rules and reason codes can be complicated. However, merchants should actively engage in representment to prevent losing profits to fraudulent chargebacks.
Preparing fast, robust chargeback responses on demand is challenging in the time allotted to merchants. In addition to careful attention to preparing representment, it’s just as important to implement preventive solutions that help mitigate disputes and reduce the volume of costly chargebacks.
Verifi’s Cardholder Dispute Resolution Network (CDRN) for Merchants is just such a solution. Our service assists in resolving disputes before they escalate into chargebacks, helps protect your profits, and saves you time and valuable internal resources.