Visa’s New Network Rules: How it Will Impact Fraudulent Chargebacks and Your Business

In the ever-changing landscape of online shopping, e-payments, and electronic money transfers, new security issues and new ways to commit fraud continue to grow with the system.

Cyber criminals are having a field day as the instances of fraudulent chargebacks continue to increase.

And, at the rate things are going, sizable losses for merchants may be inevitable.

In fact, The Nilson Report predicts that worldwide financial losses from credit card fraud could reach US$31 billion by 2020.

As a result, Visa is taking a proactive stance, but businesses may need some time to adjust to this new set of network rules.

At the end of 2017, Visa changed its rules in hopes of simplifying the dispute resolution process.

Additionally, these new rules will attempt to identify fraudulent chargebacks more quickly and accurately, including friendly fraud and unfamiliar coding on customer statements.

The Visa Claims Resolution (VCR) rule change, went into effect this month (April, 2018) and here’s what you need to know.


How will the new VCR rules impact your business?

As with any major changes in the credit card industry and dispute resolution process, it’s going to take some time for everyone to adjust.

There’s good news and bad news — merchant benefits, and of course, merchant challenges, too.


Let’s start with the good news, like a shorter dispute resolution process.

One of the benefits of Visa’s new rules means that the dispute resolution process is more streamlined; so, disputes won’t drag on up to 100 days as they previously could have, especially if they were more complicated in nature.

Now, disputes will be settled in just 20 days.


Processing errors and consumer disputes go into a “collaboration” workflow system.

With this in place, the merchant and consumer can settle disputes on their own, or submit their dispute to Visa’s arbitration process.


The re-presentment process is streamlined.

Under these new terms, merchants get just one chance to re-submit data that proves the legitimacy of a transaction.

Merchants have 30 days to respond to a Visa chargeback instead of 45 days as was the previous time frame.


Visa’s new process seeks to eliminate chargebacks ASAP.

The automated workflow for disputes will determine if chargebacks meet the following criteria:

  • Did the credit card holder dispute the purchase after the allotted time frame?
  • Has a refund already taken place?

By eliminating disputes from the system that don’t qualify, the charges that are truly fraudulent can be identified more accurately.

At least, that’s the projected plan.

But, any new process is not without challenges.

Some of the challenges merchants face with Visa’s new rules include:


Fewer chargeback reason codes.

Instead of being able to select one of nearly two dozen reasons for a chargeback, consumers can now only select from just a handful of codes that cover fraud, processing errors, and authorization.

With fewer specific reasons for disputes, merchants have less information when a customer requests a refund.

Since liability automatically falls on the merchant whenever there’s a complaint, this could put businesses in a difficult spot.

The “do not recognize” code (Code 75) has been removed as a “reason for the dispute.”

Instead, it becomes an outright claim of fraud.

So, if your standard merchant 22-character description of a charge is confusing, you run the risk of a legitimate charge being marked “fraudulent” rather than “in question,” and you must refund the purchase amount to the cardholder.

Visa’s new focus is to offer solutions that provide issuers and cardholders the information they need to be able sort out their statements – and dispute only the charges that meet fraudulent criteria.

Hopefully, through this streamlined dispute process, only legitimate claims become part of the system, therefore improving the efficiency in which they’re resolved.

Since the dispute resolution process for chargebacks with all your credit card processors are subject to change, just like Visa’s, it’s hard to keep track of everything when you’re trying to run a business.

The last thing you want to do is spend your day figuring out new procedures, responding to chargebacks, and keeping your customers’ card data secure.

When you partner with the financial experts at MyWatchmen, you won’t have to figure it out yourself.

With more than 10 years of experience resolving chargeback issues and managing account security, we are an asset to any small business.

We can assist you with each credit card processor, make sure your accounts are PCI compliant, and act on your behalf to settle all your disputes.

The experts at MyWatchmen make it our mission to negotiate with credit card companies to protect your business from fraud, refunds, and unnecessary processing fees associated with chargebacks.

We’re so confident we can increase your bottom line, you pay nothing for our services if we don’t.

Save time and money and protect your business against fraud.

Find out how. Request more information here.

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