The Basics of Visa Claims Resolution

July 18, 2018/ Jarrod Wright /

Get the Rundown on the Visa Claims Resolution (VCR) System

Visa Claims Resolution—often abbreviated to VCR—went live on April 15, 2018. The new policy set is a complete overhaul of the Visa chargeback system that’s intended to move chargebacks from a litigation-based model to a liability-based one.

Today, we’re diving in to what you need to know about the new system, starting with the basics.

What is Visa Claims Resolution?

VCR is a new global chargeback resolution process which applies to any dispute involving a credit or debit card transaction carried out over the Visa network. The policy overhaul is meant to streamline the dispute process and make disputes faster and easier for everyone involved.

There are five fundamental differences between Visa Claims Resolution and the preexisting chargeback model:

1. Timeframe: As a merchant, you now have 30 days to respond to a dispute, rather than the previous 45-day timeframe.
2. Reason Codes: Visa’s reason codes have been condensed into 22 numbers, all of which are grouped into one of four dispute categories.
3. Workflows: Cases are routed through one of two workflows (allocation and collaboration), depending on the dispute category.
4. Auto-Rejects: Some transactions filed under allocation can be eliminated instantly through an automated process.
5. Evidence: Now, you can only fight a chargeback if you have clear, definitive compelling evidence to build a case.

You should also be aware that certain terms associated with disputes have changed under the VCR system; otherwise, you might be confused by the new vocabulary. The most important change to know is that a chargeback is now referred to as a “dispute.” Likewise, a chargeback reversal is now a “dispute reversal.”

Also, the representment process is now called “pre-arbitration,” while the act of submitting a representment is a “dispute response.”

Why Did Visa Do This?

Simply put, a new system like Visa Claims Resolution was long overdue.

Chargebacks were first introduced to the market back in 1974 as a means of consumer protection. At the time, lawmakers and consumer advocates were worried about the threat posed by a new product known as the credit card. They assumed that buying on credit with a simple plastic card could potentially leave consumers on the hook for fraudulent transactions, so chargebacks were meant as a fail safe to give buyers legal recourse if that happened.

Of course, the last four decades brought another major innovation to the payments industry that those lawmakers couldn’t have predicted: the internet. Fast-forward to the present, and chargebacks have become a problem for eCommerce retailers; now, they’re often used as a tool to commit friendly fraud, rather than recover from criminal fraud.

VCR is Visa’s attempt to bring chargeback standards and practices into the 21^st Century. Applying automated tools and new workflows makes it possible to produce faster, more accurate results while trying to filter as many frivolous disputes out of the funnel as possible.

Visa Order Insights

The policy rollout also introduced a new plugin for the Visa Resolve Online platform: Visa Order Insights (previously known as Visa Merchant Purchase Inquiry, or VMPI). This plugin is a great new tool in your arsenal.

Visa Order Insights will apply to any transactions filtered through the VCR allocation workflow (so named because the process simply allocates liability to whichever party is responsible). Before the dispute is filed, Visa can submit a request for transaction information through Visa Order Insights. If the plugin is correctly integrated into your system (or that of your Visa facilitator), it will automatically retrieve the necessary information and transmit it instantly.

With Visa Order Insights, it’s possible to intercept disputes before they’re filed and achieve instantaneous dispute resolution in some cases.

What Will Be the Effect of Visa Claims Resolution?

It’s too early to make any concrete statement about VCR’s effectiveness, but it seems like great progress for the industry. Mastercard has announced plans to make a similar update in 2019, which will go further toward standardizing some of these practices.

That said, updates to individual card schemes’ internal policies are just the first step. What we really needed a is broader, coordinated effort to establish and improve compliance efforts within the industry. Until that happens, no effort by an individual network will be able to solve our existing issues with the payment dispute system.

Last Update: January 6, 2020