Visa changed the dispute process for chargebacks in 2017, due to the high volume of chargebacks they encounter. Visa’s overall goal is to resolve disputes before they happen, or at least soon after. Their chargeback resolution process consists of five steps, and it is intended to streamline the process, save time, and cut down on invalid disputes.
- Pre-Dispute
- Visa Merchant Purchase Inquiry: Share dispute details before dispute is initiated
- Associated Transactions: VROL proactively clarifies Associated Transactions and requires issuers to verify
- Dispute Submission
- Streamlined Processing: Reduced timeframes result in quicker resolution
- Dispute Rights Identification/Edits: VCR automates CB Rights identification
- Dispute Response/Pre-Arbitration
- Response Certificatio: Issuers must respond to acquirer/merchants or accept liability
- Governance
- Index: Health score to monitor ecosystem usage
- Rules
- Rules Changes: Modernize rules to protect ecosystem
Pre-Dispute
The Pre-Dispute stage has two parts: Visa Merchant Purchase Inquiry and Associated Transactions. The Visa Merchant Purchase Inquiry is a program within Visa’s dispute platform, VROL (Visa Resolve Online). It consists of the following nine points:
- Issuer identifies transaction within VROL and requests more information.
- Visa confirms merchant participation in Visa Merchant Purchase Inquiry solution.
- Visa sends a request to the merchant for additional data.
- Merchant runs internal rules to determine the best response.
- Merchant sends one of the following responses:
- Respond with additional data – provides transaction-specific data such as a description of goods purchased or device used.
- Respond with customer credit – allows you to credit the cardholder in recognition of the transaction.
- Respond with additional data and a credit.
- The Response is forwarded to the issuer who can assist cardholder in recognition of the transaction.
- If Issuer confirms a transaction(s) as fraud, Visa Merchant Purchase Inquiry can notify merchants, via the same API pipe that fraud has been reported on the account.
- Merchant can react accordingly by suspending the account, stopping a shipment to prevent further loss and/or contact the cardholder.
- Merchants have the options to respond to the API Fraud Notification with their intended action.
The Associated Transactions part of the Pre-Dispute step is aimed to prevent the escalation of the chargeback if action has already been taken. For example, if a merchant has already credited a customer back for the disputed amount, then Visa will consider the dispute resolved.
Dispute Submission
The next step of the dispute process is Dispute Submission. The first part of Dispute Submission is Streamlined Processing: determining whether the chargeback is the result of Fraud and Authorization or Consumer and Processing Errors and acting accordingly.
Fraud & Authorization: Visa will determine whether or not a charge was fraudulent. Under certain conditions, acquirers and merchants can respond to the ruling. Those conditions are:
- Cardholder no longer wishes to dispute
- Compelling evidence
- Credit processed
- Invalid dispute
Consumer & Processing Errors: Issuer banks will be required to fill out an enhanced Dispute Questionnaire so that Visa can obtain all necessary information and move on to the next step, Dispute Response/Pre-Arbitration.
The second part of Dispute Submission is Dispute Rights Identification/Edits. Visa collects as much information about a disputed transaction as possible with the goal being to make the final decision themselves. However, if all information is collected and Visa still does not know how to decide, the dispute moves on to the next step.
Dispute Response/Pre-Arbitration
There is only one part to this step, called Response Certification. Issuing banks must read the responses that merchants have sent, and either support what the merchant is saying and accept liability for the amount of the chargeback or counter the response and let Visa decide. Failure to do so within 30 days will result in the issuing bank automatically accepting the liability.
Governance
There is only one part to this step, called Response Certification. Issuing banks must read the responses that merchants have sent, and either support what the merchant is saying and accept liability for the amount of the chargeback or counter the response and let Visa decide. Failure to do so within 30 days will result in the issuing bank automatically accepting the liability.
Rules
Please see our article on Visa’s Reason Codes.
Fraud Rules/Process:
Visa will apply new rules to the dispute process to target both card-present and card-not-present fraud:
- Maximum Fraud per Account: Visa will place a limit (35) on the number of card-absent fraud disputes that can be processed on a single account number within a 120 day time period.
- Block Feature Fraud If Account Not Closed: With VCR, it will be up to the issuer to decide if they wish to close an account once fraud is reported. However, failure to close an account prevents the issuer from initiating fraud disputes on any new transactions on that account, across all merchants.
- Bundling: If certain conditions apply, merchants may “bundle” their response where multiple transactions occurred on a single account and merchant. A single reponse questionnaire is used to reply to multiple disputes at once.
