Here’s the Top 4 Things You Need to Know About Visa Claims Resolution
When you think of April 15, the first thing that comes to mind is probably taxes, right? Well this year, that day means a lot more than rushing to get your forms in the mail by midnight.
Visa’s new dispute process, known as Visa Claims Resolution, is live as of April 15, 2018. This new model tosses 45 years of industry protocol out the window, completely rebuilding the company’s dispute management process from the ground-up.
What is Visa Claims Resolution? Why is the company doing this? Will it make life easier for merchants? We’ve got the answers to these and more questions right here!
#1. What is Visa Claims Resolution?
Visa Claims Resolution—also known as VCR—is the new global chargeback model for the Visa card network. The fundamental difference between the new dispute rules and how chargebacks were traditionally handled is in the idea of litigation versus liability.
The goal is to smooth out processes, reduce the overload of cases on banks, and produce faster dispute resolution. VCR automates certain parts of the chargeback model, instantly assigning liability to the party at fault in as many cases as possible. The older litigation-based representment process is reserved for complex cases that require evidence and closer examination.
#2. Why Did Visa Introduce VCR?
The VCR rollout is a long-overdue change. Existing chargeback policy in the industry is inadequate, unresponsive, and doesn’t account for the complex needs of contemporary commerce. After all, how can merchants resolve an eCommerce dispute fairly if they’re relying on rules and procedures developed before the internet even existed?
Under the old rules, chargebacks became more of a tool to commit fraud rather than protect against it. As payments industry expert Gary Cardone explains, friendly fraud is now “a pandemic across the entire retail industry.”
Visa hopes that VCR will filter many of those unjustified chargebacks out of the system through the automated process, and that all disputes will be resolved in no more than 31 days.
#3. How Does the Process Change?
Two of the biggest changes introduced by Visa Claims Resolution are in the Visa Resolve Online (VROL) system, and the Visa chargeback reason codes.
VCR describes the entire Visa chargeback ecosystem, while VROL is the actual network through which disputes are filed and resolved. The VROL system has existed for more than a decade as the main means of communication between merchants, issuers, acquirers, and Visa. It takes on a much bigger role under VCR, though, because dozens of Visa reason codes are being condensed down into four main dispute categories: fraud, authorization error, processing error, and consumer dispute.
All disputes will be submitted through VROL. Those filed because of criminal fraud or improper authorization will go through the Allocation workflow, and liability will be assigned automatically by the system. Processing errors and consumer disputes, though, will go through the collaboration workflow, which is like the existing chargeback representment process.
The Merchant Purchase Inquiry plugin for VROL will let merchants issue a credit if the dispute is valid, or upload evidence to support their case if they want to dispute it.
#4. Will VCR Make the Process Better?
Visa Claims Resolution is a bit of a mixed bag. The system will enable faster resolution, simplicity, and more accurate results, but it’s far from perfect.
For example, more complicated cases will still require representment, or even arbitration by Visa. Even under the new rules, representment and arbitration are still expensive, difficult, and time-consuming processes. Given that most chargebacks are friendly fraud in disguise…VCR’s real ability to affect change could be pretty limited.
At the end of the day, VCR is a positive step forward for the industry. It acknowledges that a change is necessary, and that things couldn’t go on as they had been. Still, it’s not the end-all answer for the payment industry’s problems. We’re going to need to do a lot more before friendly fraud and other chargeback triggers are even close to contained.