Visa Compelling Evidence 3.0: What Small Business Owners Need to Know

May 3, 2023/ Jarrod Wright /

Visa Compelling Evidence 3.0 is a critical update that small business owners need to understand. It has a direct impact on the way disputes and chargebacks are handled, with the goal of creating a fairer and more efficient process for all parties involved.

In this article, we will discuss what Visa Compelling Evidence 3.0 is, the new criteria for dispute evidence, and the benefits it offers.

What is Visa Compelling Evidence 3.0?

Visa Compelling Evidence 3.0 is an updated set of guidelines and requirements that define the evidence merchants need to provide when responding to a chargeback or dispute. This update aims to ensure that merchants have a clearer understanding of the evidence required and that the dispute process is more streamlined and effective.

Visa Compelling Evidence 3.0 took effect in April 2022. Since then, merchants have been required to comply with the new guidelines when responding to chargebacks. It is crucial for small business owners to familiarize themselves with these updated requirements to effectively handle disputes and minimize the impact of chargebacks on their operations.

How Does Visa Compelling Evidence 3.0 Work?

When a customer disputes a transaction with their card-issuing bank, the bank will file a chargeback on behalf of the customer. The merchant is then notified and must respond with evidence to support their case if they believe the transaction was legitimate. With the implementation of Visa Compelling Evidence 3.0, the dispute process has become more transparent and easier to navigate for merchants.

Under the new guidelines, Visa outlines the specific types of evidence that merchants must provide to successfully challenge a chargeback. This evidence must meet certain criteria, which we will discuss later in this article. By doing so, merchants can increase the likelihood of winning a dispute and minimize the impact of chargebacks on their business.

Why is Visa Doing This?

Visa introduced the Compelling Evidence 3.0 update for several reasons:

Streamlining Disputes

The new guidelines aim to simplify the process by clearly outlining the types of evidence that merchants should provide in response to a chargeback. This helps both merchants and card-issuing banks save time and resources.

Reducing Chargeback Rates

With clearer guidelines on what constitutes compelling evidence, merchants can better prepare their cases and improve their chances of successfully disputing a chargeback. This, in turn, can help reduce overall chargeback rates for businesses.

Protecting Consumers & Merchants

The new guidelines ensure that both consumers and merchants are treated fairly in the dispute process. By clarifying what evidence is required, merchants can better protect themselves from fraudulent chargebacks, while consumers can still dispute transactions they believe to be unauthorized or incorrect.

What Criteria Does Dispute Evidence Need to Meet Now?

Under Visa Compelling Evidence 3.0, merchants must provide specific types of evidence based on the reason for a chargeback. By meeting these criteria, merchants can increase their chances of successfully disputing a chargeback and protecting their business from financial losses due to fraudulent or unwarranted disputes.

The evidence must meet the following criteria to be considered compelling:

Directly Relevant

The evidence should directly address the dispute reason and clearly demonstrate that the transaction was legitimate. For example, if a customer claims they never received the purchased product, the merchant should provide proof of delivery, such as a signed delivery confirmation or tracking information.

Comprehensive

The evidence should be thorough and cover all aspects of the disputed transaction. This may include invoices, receipts, order confirmations, email correspondence, and any other documentation related to the sale.

Timely

Merchants should provide their evidence within the required time frame specified by Visa. Failure to meet this deadline can result in the merchant automatically losing the dispute and being unable to challenge the chargeback further.

Clear & Legible

All submitted evidence should be easily readable and comprehensible. This includes ensuring that any scanned or photographed documents are of high quality and that all text is legible.

Authenticated

When applicable, merchants should provide evidence that has been authenticated by a relevant third party. For example, if a dispute involves a signed contract, the merchant should provide a copy of the contract that has been notarized or verified by a legal professional.

Visa Compelling Evidence 3.0 is a Step Forward… But Not a Total Solution

Visa Compelling Evidence 3.0 is a significant advancement in combating fraud and chargebacks, but it isn’t a cure-all. Its more stringent requirements involve matching two factors from two previous orders with the disputed transaction, which can mean additional work for small businesses.

Response timelines remain unchanged, so handling the extra work within the same timeframe is crucial. Implementing efficient methods to store and access transaction records is essential for staying on top of disputes.

Certain merchants will benefit more from the new regulations, such as those using a subscription business model. For these merchants, finding matching transactions will be relatively easy. However, the new guidelines might be less beneficial for businesses that predominantly conduct one-off purchases.

Ultimately, while CE 3.0 is an improvement in the chargeback process, it is only one aspect of a comprehensive solution for effectively preventing and managing chargebacks for small businesses.

Last Update: May 3, 2023