Bruno Farinelli
Visa introduced the VCR initiative in 2018 to streamline and speed up the chargeback resolution process. As a result, the timeframe for resolving disputes dropped from 100 days down to 31. However, while a speedy chargeback process is generally a good thing, the new Visa chargeback time limits may have unwittingly made it harder for merchants to successfully win customer disputes.
Here’s what e-commerce merchants need to understand and comply with, to increase the likelihood they’ll be able to successfully fight chargebacks.
1. First Chargeback: 120 Days
The clock for Visa chargebacks starts ticking on the transaction processing date. Customers generally have 120 days from the transaction processing date to file a chargeback when the reasons for the chargeback include:
- Fraud
- Late presentment
- Incorrect purchase amount
- Duplicate processing
- Canceled recurring transactions
There are several exceptions to this rule. Cardholders have just 75 days to file a dispute for card recovery bulletin or authorization issues. On the other hand, when disputes are related to services not provided, merchandise not received or not as described, or defective merchandise, cardholders have 540 days to file.
2. Representment: 30 Days
Once a customer has filed a chargeback, it’s up to the merchant to defend themselves. During this dispute response phase, merchants now have just 30 days — down from the original 45 — to respond with compelling evidence. Although the specific evidence required varies by reason code, it usually includes documentation such as:
- Email correspondence between the customer and the merchant
- Customer information, like user name and IP address
- Order, shipping and delivery confirmations
- Proof the customer downloaded or viewed digital goods (e-books, games, computer software, etc.)
- The merchant’s terms of service and return and refund policies
- Customer signature authorizing payment
- Proof the customer received or used the disputed merchandise
3. Pre-Arbitration Chargeback: 30 Days
If the merchant files a response to the chargeback and wins, the issuing bank or cardholder then has 30 days to dispute the transaction a second time. In these cases, they’ll initiate a second, or pre-arbitration, chargeback.
4. Arbitration: 10 Days
If a second chargeback is filed, the card network makes the final decision, usually within 10 days. Unfortunately, merchants rarely win in arbitration. The reason why is simple: Merchants usually provide all their supporting evidence during representment and rarely have new information at the arbitration stage to support their case.
Challenges of the Shortened Visa Chargeback Time Limit
While the new timeframes do ensure faster dispute resolution, the shorter Visa chargeback time limits also present some challenges.
Not every merchant is able to adequately respond to Visa chargebacks with the condensed time limits. Many merchants still rely on a mostly manual process of gathering evidence to defend against disputes, which means that research can often take longer than the dispute process allows. This can strain internal resources and put pressure on the business.
If a merchant can’t adequately research a dispute and provide the right supporting evidence, they risk making mistakes during representment that can cause them to lose the dispute.
To make matters worse, if a merchant misses a deadline during the Visa chargeback process, Visa now automatically rules against the merchant and assesses added fees and penalties.
One of the best ways for merchants to avoid the time, hassle and expense associated with disputing chargebacks is by stopping chargebacks from happening in the first place.
But finding the right fraud prevention solution for your business isn’t always easy. ClearSale’s “Fraud Protection Buyers Guide” sheds light on the different fraud prevention and chargeback management options available to you and helps you identify which works best for your e-commerce store and the new Visa chargeback time limits. Download your free copy today, and start defending your business.