VCR: Dispute Timeframes and the Need for Speed
by Mike Pullen
Previously, I gave you the lowdown on changes to ‘Dispute Conditions’ (formerly known as ‘Reason Codes’) under Visa Claims Resolution (VCR) – explaining how the recategorized codes are designed to streamline the chargeback claims process for merchants and other members of the payments ecosystem.
This time, I want to look at VCR’s updated dispute timeframes and get to the bottom of what they mean for you and your business.
The window has shrunk to 30 days
Under the old Visa chargeback system, merchants had 45 days to respond to a dispute. The compounding impact of this lengthy window of time on the overall process meant it could take up to 150 days to resolve a chargeback – a long time for any business to be wrangling with customers over money.
With VCR, the timeframe for a response has shrunk to 30 days. This will shrink further to 20 days in April of 2019 once merchants have had chance to streamline their internal operations for dealing with claims.
The reason for the shortened timelines is simple: Speed up the claims resolution process for everyone involved. It’s expected that these changes will cut the entire resolution process from an average of 150 days, down to 31-70 days for fraud and authorization claims, or 31-100 days for processing errors and customer disputes.
A faster chargeback resolution process is good news for merchants and their customers (as well as issuers, acquirers, etc.) The sooner money tied up in the dispute is free, the better for all parties involved.
Time to look at your internal processes
Although Visa provides a 30-day timeframe, most merchants will actually have less time to react. This is because most acquirers set their own internal response timeframes – which are necessary to properly manage and work the responses received.
Prior to the introduction of VCR this timeframe averaged 30-35 days. Post VCR, most are hovering around 18-20-days – with some acquirers having even shorter times. In response to the reduction to 20-day response timeframes in April of 2019, acquirers will likely follow suit and end up allowing approximately 12-14 days for true responses timeframes.
For merchants, the largest impact is to your labor force and results from the pressure to respond at a quickening pace. The new deadlines mean that changes will have to be made to the way your business handles and investigates disputes, or risk suffering the consequences. As we spoke about in the last blog, Visa has a tiered approach for the pricing of responses received and charges monetary fees for not responding to chargebacks. If you have not updated your processes by now, you may be in trouble when you get a dispute claim. If you’re unable to meet the deadline, you may find you lose a lot of cash.
To find out about the other changes ushered in by VCR, watch our webinar, “What You Don’t Know About Chargebacks Can Hurt You”.