How Tweaks to Visa’s Chargeback Program Are Expected To Speed Up Resolutions

Visa Inc. is altering its chargeback-resolution program to condense the reason codes into four categories, amend the time to resolve a disputed transaction, and make other changes.

According to data on a Chase Paymentech site, the changes are set to go into effect April 15 because the card brand wants to migrate from a “litigation-based model to a liability-assignment model,” the site notes.

The Paymentech site also disclosed that Visa is creating four dispute-reason categories—fraud, authorization, processing errors, and consumer disputes—and will introduce 25 new reason codes for chargebacks. Merchants also will have 30 days to resolve most disputes. The timeframe had been 45 days, according to a document posted by Yale University.

The move is seen as having the potential to improve chargeback processing and reduce some of the fraud related to repudiated transactions, according to Keith Briscoe, chief marketing and product officer at Ethoca Inc., a Toronto-based fraud-prevention services provider. Just last week, Ethoca launched a multipronged service to aid in the battle against fraud for online retailers.

Briscoe says the changes will not eliminate the need for services like Ethoca’s. “Chargebacks will still exist,” Briscoe tells Digital Transactions News. “As long as they exist, merchants still need a solution.”

Paymentech says merchants should see the volume of chargebacks decease because of the new Visa business rules, though it appears merchants’ time to respond will be squeezed.

For collaboration disputes, which are related to processing errors and consumer disputes that are not fraud, merchants must respond by the 24^th day if they want to challenge the dispute. For disputes in the allocation category, which are related to fraud and authorization issues, merchants have 18 days to respond. In either instance, merchants can decline to challenge the chargeback.

Another anticipated change is the nature of compelling evidence, the proof a merchant presents when it challenges a disputed transaction. Braintree, a payments provider owned by PayPal Holdings Inc., says merchants can expect “more rigid requirements in order to properly dispute their cases,” and that more information will be available as the start date nears. Paymentech, however, says there are no changes to the criteria for what is considered necessary compelling evidence.