It’s been just over six months since VISA mandated it’s latest rule changes for chargebacks — pardon, “disputes”. If you haven’t yet, read our no-nonsense primer on the “Visa Claims Resolution Initiative”. Though the dust has yet to settle on these changes, some clear winning strategies for merchants are emerging. Whether you’re into following rules or not, there are some best practices which will insulate your business from the problems posed by fraud, chargebacks, and by the whims of the corporate overlords at VISA.
Compelling Evidence: Still a thing
Regardless of any rule changes, compelling evidence remains your go-to ammo for fighting chargebacks and friendly fraud. Now more than ever, you need to capture copious transaction data for your compelling evidence arsenal. The best compelling evidence confirms the cardholder made the purchase and received or interacted with the products or services in dispute.
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The Blame Game: From litigation to liability
In VISA’s attempt to shorten dispute timelines, dispute resolutions have shifted from a litigation model to a liability assignment model. There’s no more back and forth between merchant, issuer and acquirer. Everyone puts their cards on the table up front, and then VISA determines if the dispute is valid and who is liable. The merchant gets only one shot at submitting compelling evidence in a dispute. Keep your transaction data in an easily accessible and organized database.
In God We Trust, All Others Authenticate
Now more than ever, merchants must ensure their gateways are PCI-compliant. In other words, their transactions must provide sufficient cardholder authentication. That means having CVV2 fields, AVS, and 3DSecure authentication. If a merchant does their diligence in authenticating transactions, the liability assignment will land in their favor more often.
Disputes Decline, Fraud Rises
Fraud disputes will now go through an “allocation workflow” where VISA checks for that merchant due diligence. If proper authentication was used, or if the merchant had preemptively refunded the transaction, then the dispute is invalidated or the issuer is liable. Our partner Ethoca expects up to a 15% reduction in valid disputes as a result.
However, VISA has done away with the ubiquitous “transaction not recognized” reason code. So more often than not, when a cardholder does not recognize a descriptor, that dispute gets assigned a reason code for fraud. So as much as the new VISA rules may promise a decline in disputes, we’ll certainly see a rise in fraud as a result. So merchants need rock-solid descriptors to head off a possible spike in fraud.
To Solve, Evolve
Everybody gripes about when things change and the new VISA rules are par for the course. However, change is merely an opportunity for the well-prepared. If anything, the VISA rules are a call for merchants to get their processing houses in order and adhere to some best practices. Here are some key steps you can take to evolve and prosper under the new VISA chargeback rules: