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
