Almost a year after Visa Inc. altered the chargeback-resolution process, merchants are reaping some of the benefit. A survey of 500 Chargeback Gurus merchants found that 78% have fewer chargebacks under the Visa Claims Resolution program.
“The first goal was to streamline the dispute process,” Suresh Dakshina, Chargeback Gurus president, told attendees at the Northeast Acquirers Association annual conference in Newark, N.J., last week. “They wanted to reduce and prevent invalid dispute claims and improve the timely resolution of disputes.”
Visa launched in 2018 its new chargeback-resolution program, which includes shortened timeframes, streamlined reason codes, and online management for merchants and issuers.
Among the many changes for managing Visa chargebacks is the requirement to acknowledge them, Dakshina said. Only 12% of merchants were aware of the requirement, with 78% unaware. Ten percent did not respond to the question. Merchants can dispute or accept a chargeback.
The lack of awareness carries a price, too. Dakshina said merchants are charged between 75 cents and $2.50 per unacknowledged chargeback, and some processors may mark up that fee. Most merchants—84%—were not aware of this fee.
Acquirers can help merchants in this regard. “If you can take the time to inform your merchants, that can actually help the ecosystem and your merchants,” Dakshina said.
Merchants using Chargeback Gurus to help manage their chargebacks have experienced a 15% to 18% reduction in their chargeback volume and a 13% reduction in bogus fraud-claim disputes, Dakshina said. The resolution cycle now takes 30 days or less compared to up to 60 days previously. The Visa program also consolidated the 22 reason codes into four categories, which Dakshina said improved efficiency.
On the negative side, a merchant’s initial response to a chargeback now takes up to 40 minutes instead of 20 minutes, Dakshina said. That’s because the process changed. “Now, a sequence must be followed by answering a series of questions,” he said. While following the protocol aids the decision-making process, merchants are asked for more information upfront.
Other detrimental impacts include the acknowledgement requirement, the inability to dispute transactions with no address verification or card-verification value match. Others include issuers not following Visa’s protocol when making decisions, and, in the instance of a merchant-adverse decision, issuers not providing a reason. “This doesn’t give the merchant an opportunity to fix it on their end,” Dakshina said.
Acquirers and merchants should expect more changes to chargeback programs this year, he said. For Visa, this means more emphasis on negative-option billing practices, which is the practice of booking a sale unless the consumer explicitly indicates “no.” Visa also is expected to emphasize its Visa Merchant Purchase Inquiry tool, which enables merchants to provide transaction data prior to the issuer deciding about a chargeback.
Mastercard Inc. also is expected to issue new rules for chargebacks with its cards through this year and next, Dakshina said. Elements affected by this include stored payment credentials, negative-option billing, changes to the dispute resolution process, and new rules for authorizing refunds.