Chargebacks are one of the few things that really haven’t changed through recent years. The dispute procedure for consumer chargebacks at the start of 2019 was the same as when chargebacks were first introduced more than five years ago. But, that’s all about to change.
Visa’s new Visa Claims Resolution (VCR) carries the chargeback dispute process into modern times. But of course, such a massive overhaul generates loads of questions too. Let’s tackle a few of the most burning questions and investigate if VCR will have a significant impact on your business’ merchant account.
1. What is VCR?
Visa Claims Resolution (or VCR for short) is Visa’s new worldwide chargeback process. VCR overhauls trade disputes from the very basics, going from the present litigation-based procedure into a liability-based one.
VCR is designed to make transaction disputes as painless as possible. Instead of making banks and retailers to take part in time-consuming representment procedures for each circumstance, VCR seeks to assign liability to speed up the overall process. Representment will still be booked for cases that require litigation.
2. Why is Visa changing its chargeback procedures?
This change is long overdue. The original chargeback procedure was created before the advent of the internet and e-commerce and is poorly designed to be effective in these modern times. Apparently, clients often use chargebacks as a tool to commit fraud, which is also known as “friendly fraud,” rather than file valid disputes.
Visa Claims Resolution upgrades the system, filtering for friendly fraud, speeding up settlements and promising rewards for retailers, banks and legitimate clients by simplifying disputes. Visa predicts that its brand new tool will filter most fraudulent chargebacks automatically and that all dispute cases processed through VCR should be resolved within 31 days.
3. How will the present procedure change?
Visa Claims Resolution tosses out the Visa chargeback process and replaces it with an entirely new system. Two of their most immediate modifications from a merchant’s perspective are chargeback reason codes along with the Visa Resolve Online (VROL) system.
VROL functions as the superstructure of VCR. It is the fundamental means of communication between retailers, issuers and acquirers, and will be the main vehicle to submit info for dispute resolution.
At the same time, heaps of existing Visa chargeback reason codes will be condensed down to four primary dispute groups:
• Authorization Error
• Processing Error
• Consumer Dispute
Fraud and authorization error disputes will be processed automatically according to a workflow which summarizes invalid disputes and assigns accountability where appropriate. Errors and consumer disputes, on the flip side, go through a process which is like the present chargeback procedure of Visa.
4. What is the Merchant Purchase Inquiry?
Merchant Purchase Inquiry is a VROL plugin fresh to the Visa Claims Resolution process. This instrument empowers retailers to either upload transaction information and question a dispute or simply issue a charge in the event the dispute is valid.
The introduction of the Merchant Purchase Inquiry plugin is a huge change. Earlier, retailers would have to pick either a lengthy and very complicated dispute process (with no guarantee of success), or simply accept a chargeback. With Merchant Purchase Inquiry, however, evidence can be simply uploaded by merchants and convert the dispute to an automatic process.
5. Will VCR enhance the chargeback procedure?
Both yes and no.
On one side, VCR guarantees faster dispute resolution, simplified procedures and enhanced precision in claims. There are flaws, however; for instance, more complex cases will still require mediation, which is time-consuming complex and pricey. There’s no guarantee that the process will filter out friendly fraud, as this relies on illegitimate disputes passing for valid ones.
VCR might be a positive measure but remember, it’s not the end-all response for this long-lived issue. Retailers will still require long-term help to optimize their risk mitigation efforts and to take charge of chargebacks.