VCR: Getting Your Head Around the Workflow Split
by Mike Pullen
We’ve covered a lot of ground when it comes to Visa Claims Resolution (VCR). This includes:
- What are the key things I need to know?
- What terminology has changed?
- What happened to ‘transaction not recognized’?
- Where are the reason codes?
- How much time do I have to respond?
But, in many ways we’ve only just begun to scratch the surface. Now I want to turn our spotlight on the latest ‘dispute’ (aka. chargeback) workflows, explain what they entail, and outline how they’ll impact your business.
Before the switchover, all chargebacks went through the same workflow – requiring interaction between merchants, acquirers and issuers to resolve the issue. Merchants could submit responses to all chargebacks categorized as “fraud”, regardless of the strength of the rebuttal or the evidence provided. Issuers, meanwhile, could file pre-arbitration two times.
Under VCR, there are two distinct workflows, each designed to deal with different chargeback categories.
The ‘Allocation’ workflow
All ‘Fraud’ and ‘Authorization’ chargebacks now must go through the ‘Allocation’ workflow. This is an automated process that involves Visa checking each chargeback for the following criteria:
- Is the dispute 3D Secure authorized?
- Is the disputed transaction already refunded?
- Is the dispute on a new authorized transaction after the first fraud reported date?
- Is the dispute after the allotted timeframe?
If the answer to any of these questions is “yes”, Visa will block the dispute, shifting liability back to the issuer. If “no”, liability is shifted to the merchant.
- As a merchant, you might consider implementing 3D Secure for additional fraud protection when authenticating your customers. This strengthens deflecting liability on the forefront of the chargeback process.
- Be sure to set expectations for your customers regarding the timeliness of upcoming refunds to avoid additional calls to the issuer.
- Are you an Ethoca Alerts customer? If not, perhaps you should reconsider. It allows you to provide a refund prior to receiving a chargeback – eliminating the need for it in the first place.
Remember: as a merchant, you have only one opportunity to provide ALL compelling information to refute the dispute on the initial response back to the issuer. The only option available after this would be for the acquirer to file an ‘Arbitration’. For merchants selling low-cost items or services, this would not be cost effective.
The ‘Collaboration’ workflow
This workflow has been designed to manage chargebacks that fall under the ‘Processing Errors’ and ‘Consumer Disputes’ categories.
It works much the same way as the old process – requiring interaction between merchants, acquirers and issuers, and for all parties to complete an in-depth questionnaire relating to the chargeback. However, this questionnaire is much more detailed than previous versions and must be accompanied by documentation and compelling evidence supporting each party’s claim.
The compelling information response for the ‘Collaboration’ workflow is much the same as it is for ‘Allocation’, where all the information should be sent at first response. There is an additional pre-arbitration cycle in this process. However, the ability to submit “new” compelling information is very limited. The issuer also files the arbitration for this category and you risk an additional fine by not resolving within the first two cycles.
Why the change?
By creating the two workflows, Visa wants to make the dispute/chargeback process run faster and more smoothly.
‘Fraud’ and ‘Authorization’ chargebacks are more straightforward to investigate, needing less human attention than ‘Processing Errors’ and ‘Consumer Disputes’. It makes sense, then, to process the first two categories through an automated workflow, as it leaves Visa’s human managers more time to devote to the second two dispute types.
With this change, your business should save time handling disputes, and should see them resolved much more quickly than before.
Staying up to date
VCR has brought in a lot of changes to the dispute process. It’s crucial that you fully understand everything about the program to ensure your business is ready for any dispute claim.