Implemented in 2018, the Visa Claims Resolution (VSR) program promises to resolve chargebacks faster and avoid invalid disputes by simplifying the dispute process. The program came after Visa discovered the average chargeback takes around 46 days to resolve at a high cost to Visa, merchants, ecommerce platforms, and merchant services providers. The VCR program was created to reduce the time and cost of chargebacks as well as the number of total chargebacks that need to be resolved.
Here’s what you should know about Visa Claims Resolution and how it can help you avoid the stress and expense of chargebacks in payment processing.
What Is Visa Claims Resolution?
VCR is Visa’s new process to resolve chargebacks by shifting chargebacks from the typical litigation-based process to a liability assignment model. The VCR model automatically assigns liability as often as possible and only complex cases that need human oversight will go through the typical litigation-based process in which both sides present evidence. VCR makes five important changes to speed up chargeback resolutions:
- Consolidates 22 reason codes into 4 dispute categories: fraud, authorization, processing errors, and consumer disputes
- Many invalid charges are automatically rejected before they are processed. If a customer attempts to initiate a chargeback after the time limit or if the claim does not meet minimum criteria, it will be blocked automatically.
- Reduces the timeframe for merchant response to 30 days from 45 days
- Disputes are routed through one of just 2 workflow tracks depending on the type of dispute
- Merchants can only challenge fraud and authorization chargebacks with compelling evidence
Who Is Affected by the VCR Program?
Visa made adoption of the VCR program mandatory for all global merchants, issuers, and acquirers who handle Visa transactions, whether they are card-not-present or card-present. Online merchants will see the greatest impact as most chargebacks are made against card-not-present transactions.
Merchants are already familiar with Visa Resolve Online (VROL) but there is a new addition to the platform called the Visa Merchant Purchase Inquiry (VMPI). This tool can stop illegitimate claims before they turn into chargebacks but merchants need to actively enroll to enjoy the benefit.
VCR potentially solves many problems associated with chargebacks. It eliminates much of the back-and-forth communication between the merchant, merchant services provider, and issuer in favor of using upfront information from the beginning. It also automates as much as the dispute process as possible to both speed chargeback resolution and reduce the overall number of chargebacks you need to deal with as a merchant.
While the reception to VCR has been largely positive, some merchants have expressed concerns that less time spent responding to chargebacks may tip the scales in favor of cardholders. If a chargeback goes to arbitration and the merchant loses, the fees can be up to $500 or more and become the merchant’s burden, adding yet another cost to payment processing.
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