In April of 2018, Visa introduced its Visa Claims Resolution (or VCR) initiative. The new global system for disputing chargebacks is mandatory for all merchants, issuing banks, and payment processors (aka acquirers) who deal with Visa card transactions—which means by now most merchants have had a chance to get acquainted with VCR.
The goals of the Visa Claims Resolution process are pretty straightforward: eliminate invalid chargebacks (which are now called “disputes”), streamline the dispute process, and save time and money for all parties involved. There is no denying these are worthy goals, especially considering chargeback claims have continued to be on the rise. If you have yet to become acquainted with this process, Merchant Broker is here to help you navigate that curve with ease when it comes to figuring out how VCR will impact your business and your bottom line.
Here are 3 common questions we’ve been hearing:
1. What has changed with the reason codes?
Though very similar to the old codes, they are now called “dispute conditions” and have been consolidated into one of four main dispute categories: Fraud, Authorization, Processing Errors and Consumer Disputes. The idea is to simplify the dispute process with the help of automation and make it easier to funnel individual claims into one of two workflow paths—Allocation or Collaboration.
One previous code you will no longer see is 75 (Transaction Not Recognized). This code is now expired, with the thought process being there should be enough information provided through the online portal to either identify a valid transaction or pinpoint fraudulent activity.
2. How do the Allocation and Collaboration workflow paths differ?
One of the biggest changes under VCR comes in the form of the two new workflow paths we mentioned. Disputes that fall under the Fraud or Authorization dispute condition categories will follow the Allocation path, while those that fall under Processing Errors or Consumer Disputes will follow the Collaboration path.
The Allocation path is meant to prevent invalid disputes from ever becoming chargebacks in the first place. This is essentially the crux of the VCR system and a driving reason behind its implementation. An automated process is used to assess the claim before it is filed and ensure the dispute is valid and that no fraud is detected.
The Collaboration path follows the previous process used before the Visa Claims Resolution was implemented, wherein chargeback claims that are determined valid are filed through the Visa Resolve Online (VROL) program.
3. What Is the Visa Merchant Purchase Inquiry (VMPI)?
This one is a game-changer. Part of the new VCR initiative, the VMPI is a plug-in (an added software component) for the VROL program that lets merchants enter all of the applicable transaction information at the start of the process so they don’t have to jump through hoops and endure months of back-and-forth exchange to prove a dispute is not valid. Or, if a dispute is valid, the merchant can simply issue a credit to the consumer without the process advancing any further.
VCR represents dispute processing for the modern payments industry. With the introduction of its VCR initiative, Visa is moving from a litigation-based dispute model to one focused on liability in order to better handle the sheer volume of chargebacks inundating the payments industry today. What does that mean?
In a nutshell, instead of all chargeback claims going through the complicated dispute process as was the case previously, Visa hopes to weed out the more easily resolvable claims by ensuring all relevant data is provided upfront and within a specified (and shorter) timeframe. The result, in theory, will be faster overall dispute resolution.
How does VCR impact your business?
The Visa Claims Resolution initiative forces merchants to be even more diligent about maintaining accurate records and having a strong verification system in place to validate transactions should a dispute arise. Under the new system, merchants are only allowed to dispute chargebacks if they can provide “compelling evidence” the claim is invalid, which puts greater pressure on business owners to keep meticulous records. Also, if the dispute is accepted and not dismissed right away, merchants now have only 30 days (instead of the previous 45) to respond to a chargeback—and you only get one chance to submit your supporting documentation before Visa makes its decision.
Fraudulent chargebacks can cripple your bottom line. Merchant Broker can help. At Merchant Broker, we stay on top of the latest advancements in dispute resolution to help you avoid losing money to fraudulent chargebacks.
Contact us today so we can review your current record-keeping and transaction verification protocols and make sure your business is protected from fraud now and in the future.