Customer credit disputes are becoming more painful, costly and frequent than ever before. By 2020, chargeback losses will surpass $31 billion. Visa is taking note, and aiming to simplify dispute processing with its new Visa Claims Resolution (VCR) initiative.

The new initiative will go into effect in April 2018 and represents a fundamental shift in how disputes are processed. Instead of the current litigation-based model, VCR is based on a liability-assessment model. Visa’s goals with the new initiative include proactively eliminating invalid disputes, promoting automated liability assignment and reducing the resolution time frame. Here’s how it’ll do that.

 

1. Eliminating Invalid Disputes

Visa plans on leveraging existing data within Visa Resolve Online (VROL) as well as a new Dispute Questionnaire, which issuers are required to complete to identify and block disputes that do not meet the necessary criteria for the chosen dispute category.

For instance, when a cardholder raises a fraud dispute on a newly authorized transaction after a fraud dispute or report has already been associated with their account, the new process will prevent this dispute from escalating any further.

 

2. Promoting Automated Liability Assignment

In order to promote automated liability assignment for disputes, all disputes will be sent through either an allocation or collaboration workflow.

Allocation: The allocation workflow will process most fraud and authorization disputes. VROL performs a series of automated checks and determines an initial liability assignment. These automated checks ensure that the dispute falls within specific regulated time frames. In addition, VROL will automatically check to see if a refund has already been issued for the disputed transaction. Should Visa detect anything that makes the dispute invalid, they’ll block the dispute from becoming a chargeback.

On the other hand, disputes that pass through the allocation workflow’s automated checks without incident are considered to be the merchant’s liability. Merchants and acquirers may only respond under certain conditions, including instances where compelling evidence is present, data was invalid or a credit has been issued.

Collaboration: Not all disputes will be resolved through an automated process. The disputes that aren’t sent through allocation will instead be sent through the collaboration workflow where issuers, merchants and acquirers all must interact to resolve the issue. This workflow follows the existing Visa chargeback process.

 

Reducing The Resolution Timeframe

Visa estimates its new enhanced dispute process will reduce dispute resolution timeframes from 46 days to less than 31 days. This will be achieved through efficient processing and a reduced need for extensive back-and-forth between merchant, acquirer and issuer to exchange documentation.

 

*Original Article: https://www.forbes.com/sites/forbescommunicationscouncil/2017/09/13/how-to-prepare-for-visa-chargeback-rules-coming-april-2018/#1070f8f82480

No more signatures.

Visa said Jan. 12 in a blog post that it is making the signature an option — and no longer a requirement — for EMV chip-enabled merchants across North America. That shift, for contact or contactless chip card payments, goes into effect in April 2018.

At the same time, Visa said in its posting that it will continue to invest in initiatives tied to advanced analytics and biometrics. Those investments and focus, the company said, will help “define the future of payments security.”

Over the last seven years, as chip technology has entered the market, Visa has deployed more than 460 million chip cards and readers at more than 2.5 million U.S. locations, according to the post.

Dan Sanford, the company’s VP of product initiatives, said that “Visa is committed to delivering secure, fast and convenient payments at the point of sale. Our focus is on continually evolving the market toward dynamic authentication methods, such as EMV chip, as well as investing in emerging capabilities that leverage advanced analytics and biometrics. We believe making the signature requirement optional for EMV chip-enabled merchants is the responsible next step to enhance security and convenience at the point of sale.”

In news previously related to the waiving of signatures, Mastercard, Discover and Amex also had done away with the requirement across all cards, including magnetic stripe and chip.

Visa chip technology inspires confidence in a smarter world: Every time a chip credit card is used, a unique code is created for an additional layer of security.

The Visa announcement differs slightly from what the other networks have announced, since signature-as-an-option will only be offered on transactions made using chip cards. As has been previously reported, in the two years since EMV chip cards launched in the United States, fraud at the physical point of sale has declined by 66 percent. This is attributed to the deployment of EMV technology at the in-store point of sale and consumers’ use of chip cards. The option for the merchant to eliminate signatures as an added measure of authentication is unlikely to create risk for chip card transactions.

What remains to be seen is how consumers will react to not having to sign at the point of sale, particularly with certain types of transactions. For most, signatures at the point of sale have been relegated to the type of penmanship that would make first-grade teachers reel in horror, thus doing little to “authenticate” a customer making a transaction. Consumers may also find it time-consuming to sign, particularly when they are asked to sign for a $5.00 cup of coffee and a muffin when all they want to do is grab their breakfast (or lunch) and go.

Yet signatures are still regarded as ritual, especially for larger purchases, as representing an acknowledgement and commitment to making a purchase of importance. It may be the case – though it remains to be seen – that even with signature options, consumers may still want to put pen to paper (or digital screen) when some sort of psychological importance is attached to the event or price tag underlying the commerce at hand. If so, merchants may preserve that option, at least for a while.

If e-commerce had seven dirty words, chargeback (a demand by a credit-card provider for a retailer to make good the loss on a fraudulent or disputed transaction) would definitely be one of them. A chargeback is what happens when a credit card customer disputes a and your e-commerce store is forced to refund the transaction.

In cases of fraud, this means you could wind up repaying the amount of the disputed transaction—in addition to related shipping costs and chargeback fines—as well as losing your merchandise to the fraudster. It’s enough to make any merchant reconsider accepting credit cards in the first place. This is why Verified by Visa, and MasterCard SecureCode were created to prevent e-commerce chargebacks.

Chargeback Types
The two most commonly encountered chargebacks stem from instances of Fraudulent Transaction claims and Cardholder Does Not Recognize Transaction complaints. Very simple for consumers to initiate, a cardholder can easily open a claim online, and you will be required to defend the charge—or forfeit the revenue.

Secured Payment Authentication
Verified by Visa (VbV) and MasterCard SecureCode (3DS) require a customer to provide a personal identification number (PIN) in addition to the card number, expiration date, and security code when conducting a transaction.

Known as 3-D Secure systems, their PINs serve as the customer’s digital signature. It’s very difficult for perpetrators of fraud to conduct transactions using pilfered card numbers with this added layer of authentication in place. So much so, if a claim is filed against a 3-D Secure transaction, the card companies shift the burden of proof from the merchant to the bank that issued the card.

In an environment in which 51 percent of people with internet access choose to avoid engaging in online transactions due to privacy and security concerns, next to conducting a careful e-commerce solutions comparison before setting up your store, this can be one of the most important choices you can make for your store.

Protections Afforded
Merchants get the following protections when VbV and 3DS protocols are in place.

· Guaranteed payment of full authentications when a PIN is entered

· Guaranteed payment on attempted authentications when a cardholder is not enrolled on all domestic Visa transactions and all international MasterCard transactions

· Liability is shifted from a secure payment merchant to the cardholder’s issuing bank in instances of fraud

· Heavily reduced fraud-screening costs

U.S. Bank was slapped with a $185 million civil penalty for what the Financial Crimes Enforcement Network (FinCEN), in coordination with the Office of the Comptroller of the Currency (OCC) and the U.S. Department of Justice (DOJ), said were violations of the Bank Secrecy Act.

According to a press release, FinCEN said the obligation will be satisfied by a $70 million payment from U.S. Bank to the U.S. Department of the Treasury, with the remaining amount satisfied by payments from the DOJ’s actions. Since 2011, FinCEN claimed U.S. Bank knowingly breached the Bank Secrecy Act’s reporting requirements by not creating and implementing a good enough anti-money laundering (AML) program. The bank was charged with failing to flag suspicious activity and inadequately reporting currency transactions.

“U.S. Bank is being penalized for willfully violating the Bank Secrecy Act and failing to address and report suspicious activity. U.S. Bank chose to manipulate their software to cap the number of suspicious activity alerts rather than to increase capacity to comply with anti-money laundering laws,” said FinCEN Director Kenneth A. Blanco in the press release. “U.S. Bank’s own anti-money laundering staff warned against the risk of this alerts-capping strategy, but these warnings were ignored by management. U.S. Bank failed in its duty to protect our financial system against money laundering and [to] provide law enforcement with valuable information.”

According to the New York Times, the bank agreed to settle with the Justice Department charges and pay a total of $613M for the various fine and penalties.

Banks in the U.S. are required to engage in risk-based monitoring of payment transactions and to alert the appropriate staff if they notice suspicious activity. FinCEN, the OCC and the DOJ contend that U.S. Bank opted to cap the number of alerts its automated transaction monitoring system would generate so the bank would find only a predetermined number of transactions to investigate, without taking into account legitimate alerts that would be lost because of the cap.

The most crucial innovations and trends across the consumer lifecycle to embrace in 2018 eCommerce strategy are set to improve your conversion rate and customer engagement. As per an eMarketer study, the eCommerce industry will attain double-digit growth by 2020, with the global sales are expected to surpass the $4 trillion mark.

A couple of industries can certainly boast of a bright future in 2018 while making the world of eCommerce even more enticing. So, let’s begin with comprehending the upcoming trends that will bring up new opportunities for eCommerce retailers for effective eCommerce web development in 2018 and beyond.

Quick Shipping and Improved Delivery Logistics: Shipping times and delivery logistics are one of the very few differentiators in the eCommerce market. Amazon, an undisputed king of eCommerce market and delivery, has consistently remained on its throne and will continue to for the foreseeable future. It is notoriously secretive especially when it comes to specific figures: a recent study on eCommerce growth stated that Amazon shipped over 5 billion product around the globe through Amazon Prime’s free one- or two-day shipping last year. Another interesting study reveals the data on Amazon’s fastest logistic deliveries – just eight minutes for a forehead thermometer and about nine minutes for five pints of ice cream.

In the upcoming year, it is safe to expect Amazon and other major eCommerce players step up their logistics delivery game. Currently, more than 8,000 Amazon Prime members are residing in areas where Amazon offers its one-hour(!) delivery service. Amazon further plans to expand this service this year. It has planned to reduce the time between click and delivery in order to become the best on the eCommerce battlefield. In addition, it will unify these services with other emerging technologies such as driverless freight envisioned by automotive organizations such as Mercedes-Benz. This proves that logistical enhancements will drive the eCommerce market forward this year.

Integration of Artificial Intelligence and Machine Learning: Given the demand for machine learning (ML) and artificial intelligence (AI) technologies in various industries, it’s evident that the retail eCommerce industry will continue to be disrupted through the integration of machine learning and artificial intelligence technologies in 2018.

Machine learning has already been adopted by several tech giants and other businesses. From product recommendation engines to enhanced search functionality, machine learning has been integrated into a plethora of eCommerce systems. Having said that, 2018 will witness a dramatic growth in adoption of these technologies, enabling eCommerce merchants to provide customers with exactly what they need in less time with minimum effort.