Visa’s New Chargeback Rules: What You Need to Know

As technology changes and criminals find new ways of conducting the fraudulent activity, the rules for fighting disputes are also changing.

In April 2018, in an effort to streamline the dispute resolution process and minimize the high cost of chargebacks for all involved parties, Visa changed their rules.

Here’s what you need to know regarding your merchant accounts with Visa and how disputes will be handled going forward.


Why the changes?

The main goals of the new rules are to streamline and standardize the dispute resolution process and minimize fraudulent chargebacks.

Prompted by the high cost of chargebacks, Visa implemented the new Visa Claims Resolution process or VCR, which took effect on April 15, 2018.

With the new system in place, merchants should experience an overall shorter resolution process and a simplified system.


Highlights of the new system include:

1. Fewer chargeback reason codes. 
This may be one of the biggest adjustments for merchants.
Now, instead of 22 reason codes for chargebacks, you must choose from only four:

  1. Fraud
  2. Authorization
  3. Processing Error
  4. Consumer Dispute

And, perhaps an even bigger adjustment you’ll have to make, is that Reason Code 75 “Transaction Not Recognized” is no longer an option.

This was one of the most widely used codes prior to the new VCR process.

Today, you need a more specific reason to file a dispute.

As a merchant, you will also need to adjust your chargeback codes to match Visa’s new ones.


2. Reduced resolution time frame.

Prior to April, the old dispute resolution system could take up to 150 days before the liability of a chargeback was determined.

Under the new VCR process, fraudulent cases are resolved in just 31-70 days and processing errors and customer disputes can be resolved in 31-100 days.

And, Visa plans to reduce resolution time even further next year.


3. Limit on e-commerce disputes.

Under the new rules, there’s a limit to the number of e-commerce transactions that can be disputed during a four-month period.

Issuers can only dispute a maximum of 35 e-commerce transactions within a 120-day window, on confirmed fraudulent accounts.

If the limit is reached, Visa blocks the account from further disputes.


Overall, with the new system in place and a streamlined workflow, Visa anticipates a 13-15% reduction invalid disputes.

One more way merchants may feel the impact of this new system is in maintaining accurate records.

You get one chance to submit supporting documents regarding a disputed transaction, and Visa makes the final decision on the outcome.

You won’t have the chance to provide additional supporting evidence at a later date.

This means you need a strong verification system to validate transactions and collect data should dispute arise.


Whenever the guidelines from credit card issuers change, it’s a lot to consider.

The financial professionals at MyWatchmen understand that you may not have the time and energy to run a business, make sure your data verification systems are optimized, and keep copious records should a chargeback be filed against your company.

We make it easy to partner with us, so you can focus on your business while we focus on managing your chargebacks, reducing your fees, and ultimately increasing your bottom line.

Learn more about partnering with the experts at MyWatchmen.

We’ll take care of all your credit card processing systems, update your security, and make sure you are PCI compliant.

Get in touch with us today.

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