Lately we’ve written extensively about the new Visa Claims Resolution process, which is going to be a game-changer for high risk merchant credit card processing. There are many industries – travel, online dating and virtually anything subscription-based – that fall under the high risk category because of the propensity for chargeback disputes. This is precisely the reason high risk merchants need to familiarize themselves with Visa’s Claims Resolution.
For decades, the prevailing attitude among merchants has been that the chargeback dispute process favors the consumer and that they are consistently at a disadvantage. There are arguments to support both sides. Based on what we’ve read and the like-minded people to whom we’ve spoken, that misunderstanding is likely going away. Visa’s chargeback dispute process has undergone significant changes so that the process is faster and more efficient.
While chargebacks and friendly fraud continue to be rife in high risk merchant credit card processing, we feel there are good days ahead. Under Visa’s new protocol, with merchants performing their due diligence – from prevention to disputing – they will win the majority of disputes in this process.
What high risk merchants may not know about chargebacks
As the tide is turning toward a fairer, faster method of settling chargeback disputes in merchant credit card processing, there are opportunities and facts of which perhaps merchants aren’t aware, but should be.
- The consumer must make an effort to process a return: In the past, there were certain reason codes which called for the consumer to resolve the chargeback dispute with the merchant. In the new climate, both Visa’s allocation and collaboration channels emphasizes this more than ever.
- Product price only: We’ve heard and read of consumers filing chargebacks and demanding shipping costs be included in addition to cost of the product or service (this was never more true than the UPS/FedEx fiasco over the holidays of 2014, when thousands of deliveries missed Christmas deadlines). When the credit card issuer rules in favor of the consumer, the merchants are only responsible for the cost of the product/service.
- When a product arrives late: Speaking of late deliveries, because a product arrives late – as thousands did after the Christmas holiday of 2014 – it doesn’t always mean a merchant is going to incur a chargeback. The consumer is firstly required to make a return to the merchant.
- Windows of opportunity: There have always been ample windows of time that merchants need to use to find compelling evidence to defend themselves, particularly if the dispute is mediated through the ‘collaborative’ channel. Prior to Visa’s Claims Resolution, merchants had 45 days to respond, but that has since been reduced to 30 days (and soon to be 20 days).
- Issuers are always identifying the bad actors: The four major card brands each have protocol in place that examine purchases, returns, chargeback claims and consumer (and merchant) histories. Thus, each are working behind the scenes to bring resolution. Prior to the Visa Claims Resolution taking effect, there were occasions when card brands identified bogus chargebacks without the merchant ever knowing. Now, the very first step of Visa’s allocation process is to determine if the chargeback is valid, through which it is hoping to eliminate 14 percent of disputes in merchant credit card processing straightaway.
A common misbelief: Issuing banks don’t fight for merchants
On a Sunday afternoon in January of 2015, I received a call from my credit card issuer notifying me of a $1,500 purchase of a Dell desktop computer made on my credit card. I knew nothing about it. I never even carried that particular card on me, rather saving it for emergencies. I disputed the charge on the spot, and the issuer was very helpful.
Two weeks later, the issuer telephoned me, informing me that the merchant (and, assuming the acquiring bank) examined the transaction and determined it was legitimate, in effect accusing me of trying to commit friendly fraud. Again, I vehemently disputed the purchase, and when I felt my pleas weren’t being heard, I asked the issuer a question.
‘Where was the computer shipped?’
The issuer didn’t give an address, just the state: Indiana.
‘What is my address,’ I asked (I live in coastal New England).
With that exchange, I was exonerated. To my point, however, the issuer made an effort to defend the merchant. Soon after, I started getting literature from Dell in the mail, addressed to a name of whom I wasn’t familiar. I informed my issuer of this, and they were thankful. I also asked about my case, but they were unable to provide details as it was ongoing.
I was never charged for the computer.
Merchant credit card processing with Instabill
With our live, one-on-one merchant credit card processing support, Instabill gives its merchant partners all the tools and guidance they need to survive, including support for chargeback prevention, mitigation and even reversal. We’re always up for talking about the best possible merchant account services at 1-800-530-2444.