VCR: Chargeback Codes Have Changed - What Does this Mean for You?
by Mike Pullen
In my last blog, I put the retirement of Reason Code 75 (better known as ‘Transaction Not Recognized’) under the microscope – explaining how it affects your business. But this is just one of the changes to reason codes (now known as ‘Dispute Conditions’) brought about by Visa Claims Resolution (VCR). There has been a wider restructuring of the whole code system to bring it up-to-date and ensure merchants can easily understand why their customers are making a dispute.
Let’s take a few moments to explore some of these changes.
Consolidation: New ‘Dispute Condition’ categories
Instead of a long, complicated list of codes for merchants to read through every time they receive a claim, Visa has split the traditional reason codes into four new ‘Dispute Condition’ categories. These new categories are:
- 10. Fraud
- 11. Authorization
- 12. Processing Errors
- 13. Consumer Disputes
Now, all merchants need to do is look at the condition number (10, 11, 12, 13) and they can see straightaway whether the claim is for potential identity theft, or issues with the way the payment was processed, or due to a problem with the delivery of goods or services.
Updated ‘Dispute Conditions’
Visa has done some rejigging of the dispute conditions as well – redefining disputes and adding in a few new conditions.
In the ‘Fraud’ category, the old reason codes 57 and 62 have been replaced with “EMV Liability Shift Counterfeit Fraud” and “EMV Liability Shift Non-Counterfeit Fraud” – to keep up with the fast-growing use of ‘Chip and PIN’ cards, particularly in the United States.
Conditions in the ‘Processing Errors’ category have also been refined to reflect evolution in payment processing technology.
These changes aim to make it even easier for claims to be correctly classified. As a result, merchants should find it more straightforward than ever to investigate claims and get to the bottom of any disputes.
For reference, here’s a quick table that includes the new dispute categories and conditions:
What does all this mean?
Merchants who use reason codes for chargeback reporting and creating rules-based responses for representments should all be using the new dispute condition codes at this point. Merchants who use an API-based system will be in the same position and should take time to confirm that everything has been coded correctly.
Merchants must ensure that all staff responsible for responding to disputes have been thoroughly trained on the new codes, how VCR works within the ‘Allocation’ and ‘Collaboration’ workflows, and in understanding what compelling information is required to effectively fight the disputes.
Please note: Prior to VCR, merchants were not required to respond to chargebacks. Now, all chargebacks must be addressed, or tiered fines will be levied by Visa. Make sure you and your staff understand the true response timeframes set by your acquirer to stop this from happening.
Keeping up with the times
Disputes (or “chargebacks”, if you’re still using the old terminology) are bad news for merchants – it’s not just the money being disputed that merchants stand to lose, claims take up precious time to resolve, which could be better spent improving the service they offer consumers.
Whether you’re a large or small merchant, it doesn’t matter how many disputes you receive. Be informed! Look internally at how your legacy chargeback system was running and validate that all updates are in place to keep you compliant. This is your revenue – protect it!
As always, if you want to investigate the changes to the dispute conditions – or any other aspect of VCR – in greater detail, take a look at our webinar, “What You Don’t Know About Chargebacks Can Hurt You”. You can also talk to our experts to get some customized, personal support.
Alternatively, you can get in touch for a free chargeback assessment for your business and get in-depth advice on how to optimize your dispute processes.