Visa is one of the most widely accepted credit card brands, so they play a big role in payment regulation. Any rules that Visa issues could affect your business, so you want to be aware of them and stay within their boundaries.
Visa’s 2018 regulations are aimed at security, both for you and your customers. The emphasis is on chargeback, and this matters to you, a lot. Why? When a customer reverses a payment, your bank will generally refund them first and ask questions later. Even if it later turns out that their refund request was unfounded and you get a refund of the refund, the transaction is still included in your chargeback total. And if you get too many chargebacks, your business could get blacklisted, both by your bank and your payment processor.
A different kind of VCR
The bulk of new regulation is centered on Visa Claims Resolution, which is the entity that deals with reversals and refund requests. The new rules aim to curb fraudulent and/or erroneous refund requests. There are now only four categories for refund requests, which makes the process easier, faster, and more transparent. The four groupings are fraud, processing errors, authorization, and consumer disputes. The perpetually frustrating ‘transaction not recognized’ no longer applies.
In the past, merchants had 45 days to rebut a chargeback. Now they only have 30 days, and by 2019, the window will be down to 20 days. In the past, Visa’s arbitration of these disputes could take 150 days. Now it takes a minimum of 31 days. Authorization and fraud errors can take 70 days to correct, while consumer disputes will be resolved in a maximum of 100 days. Consumers need to be careful about merchant-related errors, because they can only file 35 complaints in a 120-day period. After that, any transaction error stays. Furthermore, serial complainers will be limited in their access to the arbitration system.
One of the most frustrating aspects of a chargeback is not knowing the exact reason. Is the customer unhappy with your product or service? Did their package get lost in the mail? Are they hiding expenses from their spouse or parent who reviewed their statement and requested the reversal on their behalf? The new system makes it clearer because the 4 resolution categories are further broken down into 24 reasons.
These reasons are far more transparent, which can help to ease merchant anxiety. They include reasons like ‘incorrect amount’ or ‘cancelled recurring’ when the customer actively stops automated billing. Other reasons are ‘counterfeit merchandise’ or ‘incorrect account number.’ There’s also ‘not as described or defective’ which could point to problems with the business’s delivery system.
For more information on Visa’s chargeback rules, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.