What is Visa Claims Resolution (VCR)?

VCR allocation is the newly adopted management style that takes advantage of Visa’s internal data and automated technology.

Visa consults internal data in an effort to assign liability to either the issuer or merchant. 

If liability is assigned to the issuer, the case is closed and the bank or cardholder is responsible for paying the transaction. If liability for the dispute is assigned to the merchant, the merchant can either accept responsibility or respond. 

However, because liability has already been assessed for allocation disputes, there technically isn’t a dispute response opportunity for merchants. Instead, the response is considered pre-arbitration. 

Visa’s intent was for allocation to reduce workloads and costs for issuers, acquirers, and merchants. However, certain challenges remain. If your business is struggling to understand or manage allocation disputes, contact Midigator. We’re happy to discuss the implications for your organization.

The VCR collaboration process is essentially the same workflow that Visa used for decades (and which other card brands still use today). 

The issuer submits a dispute to the acquirer. The acquirer passes the dispute to the merchant. The merchant can challenge the validity of the dispute, if desired. Pre-arbitration and arbitration may follow.

Allocation dispute outcomes are determined by CVV2, AVS and 3D Secure 2.0 responses. If you don’t use these tools, you may be found liable and lose the ability to challenge the dispute.

  SOLUTION: Use fraud prevention tools.

Check with your processor about adding CVV2, AVS, and 3D Secure 2.0 to your pre-authorization fraud screening.

Not only can these tools help stop fraudulent transactions from being processed, they can also serve as a key piece of compelling evidence if you choose to fight allocation disputes.

Like your chargeback-to-transaction ratio, card networks also monitor your fraud-to-sales ratio. With VCR regulations, the risk of breaching fraud-to-sales thresholds increases.

Visa retired the “unrecognized” reason code (number 75) — a reason code that wasn’t previously considered fraud. Now, those unrecognized disputes are often funneled into the fraud dispute category — an action that does impact the fraud-to-sales ratio.

  SOLUTION: Be proactive.

If your fraud-to-sales ratio increases and you could possibly breach thresholds, take action.

• Use dispute resolution tools. Issuer-to-merchant collaboration networks (like Order Insight and Consumer Clarity) can resolve cardholder issues before they progress to disputes.
• Update your billing descriptor. Use words and phrases cardholders will recognize. Consider adding your phone number or website to your billing descriptor so the customer can contact you — and not the issuer — if there are problems.
• Improve the customer experience. Make sure your customer service department is answering emails promptly and phone call wait-times are short.
• Issue refunds promptly. And properly document action taken in your CRM.
• Upgrade pre-transaction fraud screening. If genuine fraud is a concern for your business, take steps to reduce your exposure now (these tools can help). You won’t be able to sustain high levels of legitimate fraud and friendly fraud.

The VCR initiative was designed to weed out invalid cases — like disputes initiated after a refund has been issued. However, the process is subject to error.

It is possible to refund a transaction and still get a dispute

  SOLUTION: Take quick and accurate action.

When a cardholder initiates a dispute, the first thing the issuer does is consult Visa Resolve Online (VROL) to conduct a transaction inquiry. The transaction inquiry will return pertinent transaction data that will help the issuer determine how to proceed.

For example, if the transaction inquiry reveals a credit has already been issued, the dispute will be closed.

Therefore, it is imperative that you issue refunds promptly so the action will be noted in VROL when the issuer checks.

It has always been challenging for merchants to create and submit dispute responses on time. A lot of revenue is forfeited simply because cases expire without action.

Unfortunately, the task is even more arduous with VCR. Within the 30-day VCR time frame that’s allotted for a dispute response, merchants usually only have between 3 and 18 days to act. 

Moreover, with VCR, you aren’t allowed to simply let disputes expire. You must respond to at least accept liability. If you don’t, you’ll have to pay additional fees.

  SOLUTION: Organize and automate.

Review your transaction data. Make sure you are collecting all necessary compelling evidence and you can easily access it. 

You should also consider switching from a manual response process to an automated response process. Automation can respond to disputes well within the allotted time frame, meaning you never have to worry about cases expiring or needlessly sacrificing revenue. 

Technology can also easily compile compelling evidence that is specific to reason code. This gives you the best possible chance of winning more disputes, thus increasing your overall ROI.

Visa plans to further shorten the dispute response time frame to 20 days, meaning you would probably have 12 days or less to respond. At that point, your processes will have to be automated and scalable. You may as well make the transition now!

If you needed any more encouragement, Visa provides financial compensation to merchants who respond quickly. The faster you respond, the less you pay in fees. The longer it takes, the more you’ll be charged.

Midigator automation is compliant with VCR. If you’d like to see how the technology can streamline and simplify VCR requirements, sign up for a demo here.

Visa created VCR as a technological solution to a modern challenge. This is just one of many ways the payment industry is morphing into an efficient, tech-driven, data-oriented era.

Unfortunately, manual processes no longer have a place in this advanced environment. If you want to experience all the benefits Visa has intended, you must likewise embrace technology.

If you remain dependent on manual processes, VCR could actually increase costs rather than decrease them. You’ll need more skilled laborers to duplicate what technology can do seamlessly.

  SOLUTION: Trust technology.

Fortunately, the transition from manual labor to advanced technology isn’t difficult. In fact, it infinitely simplifies things!

A single integration with Midigator means you are fully compliant with all Visa program updates — plus, you get so much more!

• Unprecedented transparency and efficiency
• Intelligent, data-driven decisions
• Reduced labor costs
• Unrivaled ROI

Full compliance with VCR can significantly improve your business’s bottom line. Contact Midigator today to learn more.