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Visa Chargeback Resources Hub

Visa Chargeback Resources Hub

Here’s the rundown on what you need to know about Visa chargebacks. We cover how Visa chargebacks work, the fees assessed, Visa chargeback time limits, and much more.

How Visa Chargebacks Work: Fees, Time Limits, and More

How Payment Disputes Impact Both Merchants and Consumers

Credit cards are big business. In the US alone, the top four major card networks generated $8.461 trillion in purchase volume in 2021.

Visa is still the top player in the industry, with over 350 million cards in circulation. They also had a net income of $3.65 billion for the second quarter of the company’s 2022 fiscal year. However, numbers that high also create an irresistible target for fraudsters. Anticipating this, the US government created federal mandates to help protect consumers from becoming victims of credit card fraud.

These laws allow each card scheme to set its own specifics for the process. This can lead to confusion, though, as the rules, requirements, and terminology vary by brand. Contesting a Visa dispute, for example, is very different from fighting a Mastercard chargeback.

This guide explores the world of Visa chargeback rules. We’ll explain how Visa disputes work, when and how they should be challenged, and ways merchants can make the process work in their favor.

Common Question

Are disputes and chargebacks the same thing?

Yes and no. Technically, a dispute happens when a cardholder disagrees with a charge, while a chargeback is the process of having that charge reversed. The two things are so intertwined, however, that they might as well be the same.

In fact, Visa now uses the term “dispute” for both the complaint and the process. For the sake of readability, this article uses the terms interchangeably.

Why Do Chargebacks Happen?

The Visa chargeback cycle has some similarities to the processes used by other card brands. It typically starts when a cardholder has a complaint, and contacts the bank that issued the card. If the issuer feels the claim is valid, it will remove the transaction amount from the merchant’s account and return it to the cardholder.

If the business accepts responsibility for the chargeback—or does nothing at all—then the case will end here. This is the easiest option, but it’s also the most costly, with impacts reaching far beyond the original transaction.

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If a merchant feels a dispute is invalid, they should consider challenging the claim and asking the bank to reverse the chargeback. This is a process called “representment,” which we’ll discuss in greater detail in a moment.

That’s a basic look at the overall chargeback process, but the details can be wildly different between card schemes. Even within the network, all claims are not equal. Two separate Visa disputes may require two different representment methods, depending on the cases’ reason code.

How Do Visa Disputes Work?

Most chargebacks start similarly:

  1. First Presentment: This is the original transaction. The charge is literally "presented" to the bank by the merchant after a purchase, and credited to the merchant's account.
  2. Dispute: The cardholder has an issue with the transaction. They might not recognize the charge, or the merchant didn’t deliver what was promised. In response, the buyer calls the bank.

From here, the Visa chargeback process diverges a bit from other card networks.

It’s important to point out that chargebacks were created nearly 50 years ago. The system saw few significant changes over the decades until 2018, when Visa rolled out a new initiative, called Visa Claims Resolution, or VCR. The goal of VCR was to reduce timelines and simplify processes. It also compounded the differences between the Visa chargeback process and those of other card networks, though. This caused confusion for many merchants and financial institutions.

Learn more about Visa Claims Resolution

With VCR now in place, the Visa process goes as follows after the dispute phase:

  1. Bank Investigation: A bank agent investigates the customer’s claim. Typically the bank will request additional transaction data via Visa's proprietary online dispute resolution platform, VROL (Visa Resolve Online). Learn more about Visa Resolve Online
  2. Bank Makes Decision: One of the available plug-ins for VROL is Order Insight. For enrolled merchants, the program can automatically respond to bank queries, transmitting additional transaction data. In many cases, this information—called a transaction inquiry response—can identify whether a complaint is invalid or illegitimate. If invalid, the case is rejected and closed. If the claim has merit, though, the bank will proceed to the next step. Learn more about Visa Order Insight
  3. Bank Designates Workflow & Initiates Chargeback: If the bank feels the claim is valid, the merchant can opt to issue a credit notice through Order Insight. Otherwise, the claim will be escalated to a full dispute. The bank will then send the dispute through one of two workflows: allocation or collaboration.

Visa Workflows & the Visa Dispute Process

Like other networks, Visa has its own set of chargeback reason codes. The issuing bank assigns each dispute a code according to the consumer’s claim. For Visa disputes, the reason code also dictates which workflow the case will take.

Learn more about Visa reason codes

Under Visa Claims Resolution, the Visa dispute process is split into two different tracks, each with its own requirements. The Allocation workflow applies to any chargeback assigned a “Fraud” or “Authorization” reason code. The Collaboration workflow exists for “Customer” and “Processing Error” disputes.

Allocation Workflow - Fraud and Authorization Disputes

Allocation Workflow - Fraud and Authorization Disputes

Based on the reason code and internal data, liability is automatically assigned to either the issuing bank or the merchant in real-time. If an invalid dispute is filed, the issuer will be deemed liable, and the case will be closed.

The dispute can also be resolved if the merchant accepts liability. However, the merchant can still challenge the claim by “re-presenting” it to the issuer, along with additional evidence.

In this workflow, represented cases jump directly to the pre-arbitration stage. This means the merchant only has one shot at challenging the claim before Visa becomes directly involved.

Collaboration Workflow - Customer and Processing Error Disputes

Collaboration Workflow - Customer and Processing Error Disputes

Here, Visa assigns initial liability to the merchant. However, merchants can contest a claim in this workflow by working with the banks to resolve the situation. This will follow a chargeback process more similar to that of other networks.

In other words, the dispute is represented to the issuer, along with additional evidence. The issuer (or the cardholder) then has the opportunity to accept the claim, or counter with new evidence.

The most noticeable difference between the two workflows is an additional round of back-and-forth between the parties before the case goes to Visa for arbitration.

What is Visa Arbitration?

According to Visa chargeback rules, arbitration is reserved for when all the parties involved—the banks, the cardholder, and the merchant—are unable to resolve a dispute. It’s basically “the last resort” for the Visa chargeback process.

At this point, Visa is asked to review all the evidence and make a final ruling on the case. Visa’s decision is the end of the dispute process, unless one party can provide additional evidence. Then, it will go back to arbitration again.

The step before this is often called a pre-arbitration, or pre-arb. Both workflows require a pre-arb prior to requesting arbitration. Because there is no opportunity to dispute a chargeback in the allocation workflow, the merchant must decide beforehand if they have enough evidence to win a case. Whichever party loses the arbitration will be liable for the fees, which can be substantial.

Learn more about Visa arbitration

Compliance Note

Visa’s chargeback rules are subject to change at any time.

This article reflects the most current information available at the time of writing. However, rule changes and updates happen on a regular basis. Merchants may consult the latest edition of the Visa Chargeback Guide to ensure compliance, or they can click below to speak with our experts on the subject.

What Fees Come with Visa Disputes?

Every Visa dispute will create additional work for all stakeholders. This means extra expenses, most of which will eventually be passed on to the merchant in the form of chargeback fees.

Of course, chargebacks on Visa transactions are already costly, just from the loss of merchandise and sales revenue. But there are administration fees and other costs attached to each dispute, too. These fees are never recovered, even if the merchant wins a reversal.

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So, how much will merchants have to pay? That can be hard to pin down.

Some costs come directly from Visa and are set by the network. Others can be levied by banks or processors. Visa doesn’t publish a fee schedule as comprehensive as other networks, but there is usually a $10-50 fee per each chargeback.

Multiple fees can be attached to each claim, and they add up quickly. For example, Visa chargeback costs can also include a $250.00 Technical Penalty in cases where the merchant violated Visa’s Merchant Agreement rules. All things considered, the costs for having Visa review a case can top $500; appealing a ruling can cost $1,000 or more.

Not all fees will apply to every situation, of course, but even a few are enough to impact the bottom line. Visa may assess fees to issuers and acquirers, but again, the costs are often passed on to the merchant.

Are There Time Limits on Visa Chargebacks?

It’s in everyone’s best interest to settle disputes as quickly as possible. That’s why hard deadlines are attached to nearly every step of the process. These deadlines will vary based on several factors, though, including the reason code.

The period allowed for cardholders to file chargebacks is usually 120 days, but it can be upwards of 540 days in some cases. That means merchants can receive chargebacks on sales that were completed more than a year ago.

Unlike consumers, banks and merchants don't get a lengthy time window for dispute responses. Merchants must respond within 30 days of the Central Site Business Date for each phase. Merchant time limits have only one exception: if either party wants to escalate a dispute to arbitration, they must do so within 10 days.

Also, remember that the acquirer acts as the middleman, and has various responsibilities before and after the merchant’s involvement. To ensure they make their own deadlines, banks and processors may give the merchant as few as five days to prepare a response.

Learn about Visa chargeback time limits

Should Merchants Challenge All Visa Disputes?

There are some types of Visa disputes merchants should never fight, specifically those resulting from genuine criminal fraud or errors on the merchant’s part. That said, most merchant chargebacks do not stem from these triggers.

Friendly fraud is the source of more chargebacks than criminal fraud and merchant error combined. In fact, our data suggests that roughly six in ten chargebacks issued by banks are probable cases of friendly fraud.

These fraudulent chargebacks should all be challenged through representment. The merchant recovers funds, and cardholders learn that filing a bogus claim has consequences.

Learn about friendly fraud

What if a Merchant Gets Too Many Visa Chargebacks?

In the Visa Core Rules, the card scheme outlines the requirements for their compliance programs. If a business has too many disputes filed against it, Visa will move that merchant into a compliance program, which will hopefully mitigate the problem.

But how many is “too many?”

Visa chargeback thresholds are the formal chargeback limits placed on merchants by the card network. These thresholds are based on chargeback ratios (also called “chargeback-to-transaction ratios,” or “chargeback rates”). This is a measure of how many of a merchant’s transactions resulted in disputes.

Visa chargeback ratios start with the number of chargebacks received in a single month. That figure is then divided by the total number of transactions in the same month:

Learn about Visa chargeback thresholds

Are There Consequences for Excessive Visa Chargebacks?


The Visa chargeback process requires banks to track chargeback activity and flag merchants who breach the thresholds outlined above. There are different limits for what the network considers standard, “early warning,” and “excessive” tiers. These standards are based on two criteria: chargeback ratio, and the total number of chargebacks received.

For example, if a merchant breached Visa’s monthly chargeback threshold (0.9% of sales volume and $75,000 per month), they would be entered into the Visa Dispute Monitoring Program. Violating higher thresholds might push the business into the corresponding tier in the Visa Dispute Monitoring Program (VDMP).

Monthly Threshold
VDMP Early Warning 0.65% chargeback ratio and 75 chargebacks
VDMP Standard 0.9% chargeback ratio and 100 chargebacks
VDMP Excessive 1.8% chargeback ratio and 1,000 chargebacks

Merchants with excessive chargebacks represent higher risk, meaning they’ll have to work with a high-risk merchant account and/or processor. This translates to increased fees and stricter contracts. Failure to reduce their chargeback filings after the enforcement period ends could lead to account termination.

These consequences are not merely punitive. Visa is simply trying to protect their interests while mitigating risk to ensure consumer confidence. They also want to ensure that merchants’ sales tactics are ethical and that all methods and technologies are compliant with card network protocols.

Learn about the Visa Dispute Monitoring Program

Common Question

Can banks cancel merchants’ accounts for excessive chargebacks?

Yes, they can. In fact, to protect their relationship with Visa, thresholds from your bank or processor may be more stringent than those of the card network. If you approach the Visa threshold, the bank may proactively freeze or even cancel your account.

Managing Visa Chargebacks

Preventing, reversing, and managing Visa chargebacks can be a huge undertaking. The card network regularly publishes guidelines for accepting their card. To be successful, merchants must familiarize themselves with all the requirements and best practices; not just for Visa, but also for all the card networks.

Visa typically releases major rule revisions in April and October, but smaller updates can be published at any time. Regularly checking for new versions of the guide is the only real way to stay on top of requirements.

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For merchants, maintaining compliance and successfully managing chargebacks is tedious and time-consuming—but necessary—work. There are two ways merchants can approach this:

  1. Appoint an in-house chargeback manager to learn the latest trends, keep up with regulations, and combat chargeback threats.
  2. Outsource to a third-party professional who can conduct these operations on their behalf.

At first glance, using in-house resources may seem the cheaper option. However, most merchants find that outsourced chargeback management is more cost-effective, produces better results, and offers higher ROI.

True chargeback professionals have the knowledge, resources, and industry relationships necessary to stay on top of ever-changing threats and updated regulations. They’ll also bring the experience to quickly and efficiently handle disputes.

The experts at Chargebacks911® have been on the forefront of this fight for more than a decade, helping merchants manage chargebacks and protect their revenue. If you’re struggling with chargebacks from Visa or any other source, we can help you lower your ratio and up your ROI. For a free demo, contact us today.

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