Whether you’re an eCommerce merchant or a brick-and-mortar retailer, Visa chargebacks can negatively impact your bottom line. They can also strain your relationship with your acquiring bank and cause your credit card processing fees to increase.
If you routinely receive a high volume of chargebacks, it can be tempting to resign yourself to the idea that these forced payment reversals are a cost of doing business. After all, accepting Visa cards means greater convenience but also higher costs… right?
No. Not at all.
Visa chargebacks aren’t inevitable, and the card network’s extensive portfolio of dispute prevention tools geared towards merchants is a good reason for that. Visa offers end-to-end dispute management platforms, real-time data sharing tools, sophisticated refund decisioning tools, and even rulesets explicitly developed to help sellers combat card-not-present (CNP) friendly fraud. The world’s largest card network has an expansive suite of tools to help you keep chargebacks at bay.
That was a mouthful, so don’t worry if you’re still confused. I’m about to break it down in much simpler terms.
In this article, we’ll provide you with a rundown on the most important chargeback prevention products in Visa’s ecosystem. Below, we’ll cover what they’re used for, how they work, and whether they might be right for your business.
Not all chargebacks happen for legitimate reasons. Bogus disputes (known as “friendly fraud”) make up an estimated 75% of all filed disputes.
Visa devised the Compelling Evidence 3.0 ruleset to help combat these invalid chargebacks. Under CE3.0, you may be able to shift the liability for the claim back to the card issuer if you can prove that the customer made at least two past undisputed purchases from your business.
Doing so can help you protect your revenue and inventory from fraud losses and disincentivize once-legitimate buyers from filing invalid disputes against genuine transactions.
Read MoreVisa Resolve Online (VROL) is an end-to-end dispute management and resolution platform that helps issuers, acquirers, and merchants prevent and resolve disputes quickly and easily.
The platform can help issuers get clarity about unfamiliar charges. Meanwhile, VROL’s fraud reporting and electronic filing features can allow banks to automate some facets of the dispute process, which reduces manual back-office work.
VROL is similarly convenient for merchants. Sellers can use the platform to respond to retrieval requests, submit evidence, and manage second-cycle chargebacks.
Read MoreIn some instances, cardholders aren’t confused at all. They remember their purchase and recognize your billing descriptor, but still want to file a chargeback. Perhaps you made a genuine error, or maybe the buyer is unsatisfied with your return policy. Either way, you know that a chargeback is likely coming your way.
That’s where Rapid Dispute Resolution comes in. This platform allows you to issue a pre-emptive refund to the buyer, effectively allowing you to neutralize the threat of the imminent chargeback. Doing so can help you avoid chargeback fees, lower your chargeback ratio, and stay in the good graces of your acquirer and payment processor.
Read MoreOrder Insight is a chargeback prevention tool that helps merchants share transaction information in real-time with issuers, who will in turn share details with cardholders.
Merchants can forward information about order totals, delivery statuses, and billing descriptors to the cardholder’s bank. This helps inform and remind cardholders about purchases they made, thereby preventing disputes that stem from forgetfulness or confusion.
Read MoreWhile Visa’s specialized tools offer powerful ways to resolve disputes, the card network’s Dispute Management Guidelines for Merchants emphasize that certain operational best practices can also help prevent chargebacks.
From how your business name appears on a customer’s credit card statement to how you manage recurring subscriptions and process refunds, these habits can help you minimize cardholder confusion, prevent billing errors, and build trust with customers.
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A Visa dispute begins when a cardholder files a complaint with their issuer. The issuing bank will then consult Visa Resolve Online for information about the transaction, which may help avoid a full-fledged dispute. If this is unsuccessful, a formal dispute will be filed. Funds associated with the Visa transaction will be forcibly withdrawn from the merchant’s account and returned to the cardholder.
If you are a merchant, you can potentially win a Visa chargeback by submitting compelling evidence and a rebuttal letter in representment. If the issuer rejects your representment package, you may proceed to pre-arbitration or arbitration, where you’ll have further opportunities to present additional evidence.
The 120-day chargeback rule for Visa transactions, which applies to cardholders, states that buyers have up to 120 days from the date of the original transaction to file a chargeback in most cases. On the other hand, merchants have at most 30 days to respond to a Visa chargeback.
To get Visa to reverse a charge, you’ll need to file a dispute with your issuing bank, rather than with Visa itself. If your bank determines that your dispute is valid, they will reverse the transaction by withdrawing funds from the merchant’s account. You’ll then receive a provisional credit, which will be made permanent if the issuer concludes that your dispute is valid.
Credit card disputes filed by cardholders are usually successful. Specifically, valid disputes filed by buyers are almost always successful, while even invalid (“friendly fraud”) disputes have roughly a 60% chance of succeeding.
