Visa Changes Chargeback Dispute Program

Visa is changing how it deals with first-party fraud, or intentional cardholder misuse, the company announced in a blog post Tuesday.

Under the new plan, taking effect on April 15, 2023, Visa said it will let merchants provide additional data to prove that a disputed transaction was indeed valid, a step that is aimed at speeding up resolutions while making it easier for merchants to get a case dismissed.

“We’ve seen first-hand how first-party fraud is a financial burden for merchants. The updates Visa is making will help improve protection for small businesses and merchants against friendly fraud,” says John Drechny, CEO of the Merchant Advisory Group, which helped to put together the new policy.

According to the release, forms of proof that a merchant can provide include evidence of a similar purchase by the same customer, login credentials or proof of product use.

Visa’s policy change comes as new findings from PYMNTS and Verifi published this week have said chargebacks and disputes are up since the pandemic, which has seen more credit card transactions happening in general.

See also: The Data Point: 76% of Merchants Say Third-Party Dispute Resolution Is the Way to Go

The survey found that using third-party tools was a great help in letting merchants resolve disputed transactions, and the losses came out to 0.32% of annual revenues, as opposed to 0.46% losses from those using in-house tools.

More than three-quarters of the merchants surveyed said they use third-party tools to notify them of disputes. And 66% of those surveyed said they’d used third-party tools to cut operating costs in these matters.

“Resolving cardholder disputes using third-party tools has a measurable impact to the bottom line,” the study read. “66% of merchants report that these tools help cut their operating costs. Fifty-four percent of respondents say the tools help them reduce the effect that the disputed transactions have on their operations. Merchants also say the tools help them comply with a card network’s requirements such as controlling the dispute ratio, which 31% say is important.”

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