New VCR Study

Beyond VCR: Study Reveals the Good, the Bad & the Ugly of New Visa Rules

Have you been keeping up with Visa’s chargeback rules? Did you know that the new Visa Claims Resolution policy tosses out five decades of precedent, totally flipping the script on the chargeback process?

If the answer to both is “no” …you’re not alone.

Visa Claims Resolution, or VCR, was introduced back in April 2018. The policy redesigned Visa’s method of filing and resolving disputes. We’ve talked about how this will impact merchants quite a bit over the last few months. Now that some time has passed, though, we wanted to learn about the actual affects VCR was having on businesses, straight from the merchants themselves.

Our new study, Beyond VCR: Surveying the Impact of Visa Claims Resolution looks at merchant feedback about their own experience with VCR implementation. We surveyed merchants in different verticals to get their first-hand experiences with the rollout. The results were interesting, if we do say so ourselves.

We also felt the results provided a relevant glimpse of the future, which is why we're providing readers with a quick preview of the data revealed in the report, as well as some analysis of what it means for eCommerce businesses.

Let’s start things off with the good news: according to the survey, roughly 4 out of 5 merchants who saw a decline in chargebacks said that it was a sustained drop, not just a temporary dip. 

VCR clearly helped some merchants reduce their overall chargeback burden. Some respondents to the survey saw a measurable drop in their chargeback rates right after Visa Claims Resolution went into effect. Of those lucky ones, 79% say the improvement has been sustained, or even increased with time.

It would take more individualized research to learn why each merchant’s chargeback situation improved, and how significant a role VCR played. One possible factor is Visa Order Insights (previously known as Visa Merchant Purchase Inquiry, or VMPI). Through Order Insights, merchants working with a Visa facilitator can filter-out certain complaints before a chargeback is actually filed. Reducing disputes saves time, money, and manpower for merchants like you.

Yes, Visa Claims Resolution adoption benefitted some merchants. That said, our survey respondents were split on whether VCR has been a positive or negative development.

Roughly 1 in 3 businesses saw a decline in overall chargebacks after VCR went into effect. However, a nearly-identical portion saw an increase in chargebacks in the same period. The obvious conclusion is that Visa Claims Resolution has helped some business, but hurt others.

That’s not overly surprising, to be honest. eCommerce is a very dynamic environment; there’s a lot of diversity in business models, billing structures, and more. Trying to launch broad, comprehensive reforms that will benefit everyone is incredibly hard.

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So, we established that Visa Claims Resolution affected each business’s bottom line in a different way. Regardless, most participants surveyed came to a consensus: VCR hasn’t really helped much. 

Fewer than 1 in 4 merchants said that VCR implementation made the chargeback process better overall. In fact, 38% said that the new regulations made things worse in their experience so far. That probably has a lot to do with the new non-response fee. If merchants don’t respond to a request for transaction information in a timely manner, they may automatically be found liable for the dispute, and be forced to pay an added fee.

To say that’s not ideal would be an understatement: existing chargeback policies were notoriously weighted against merchants. So, what does it mean that nearly 4 in 10 merchants say the new rules are even worse than they were before?

The Key Takeaway…

Here’s what it all really boils down to: Visa Claims Resolution is, at best, a mixed bag.

VCR has improved on some parts of the chargeback process. For example, Visa Order Insights makes it possible to eliminate some friendly fraud and cyber shoplifting cases. The result is fewer disputes and faster resolutions, which is good news for everyone.

At the same time, the VCR rollout led to a lot of confusion among merchants. Some saw dispute cases increase because they weren’t prepared for the demanding time frames imposed on dispute cases. There are also mandatory non-response fees, which can make Visa chargebacks even more expensive than before the reforms rolled out.

Determining the cost-or-benefit of VCR is going to be on a case-by-case basis. What do you think: has Visa Claims Resolution helped—or hurt—your business so far? Download the full report here for free and see the data first-hand.

Have additional questions? Chargebacks911® can help you make Visa Claims Resolution work for you. We are an official Visa facilitator: we take care of all your VCR concerns, so you don’t have to. Want to learn more? Click below and get started today.