Improved Communication a Key Feature of Visa’s Updated Chargeback Rules
In a similar vein, changes made to the preliminary stages of chargeback claim processing are designed to reduce miscommunication between the merchant and the cardholder in an effort to eliminate the need for a chargeback. When a chargeback claim is first received, Visa automatically contacts the merchant to inform them, giving the merchant an opportunity to provide additional identifying information about the transaction or reach out to the consumer with the offer of a refund, credit, or other solution. If these measures are successful, the chargeback is not processed, and the merchant is not penalized. Likewise, Visa’s automated systems respond to a chargeback claim by reviewing the transaction history between the cardholder and the merchant for other transactions that may be related to the contested transaction – such as a credit to the cardholder’s account that might represent a refund being issued by the merchant. If further investigation indicates that the related transaction did, in fact, satisfactorily resolve the dispute, the chargeback is not processed.
Should a transaction prove fraudulent, Visa’s updated policies of communication regarding chargebacks mean that the merchant account holder is informed of the flagged transaction. This enables the merchant to take steps to protect themselves from additional fraud associated with the same card by suspending activity on the compromised account, stopping shipment of any orders currently being processed for that account, and contacting the cardholder about the issue. Though this does not negate the original chargeback, it helps merchant account holders ensure that they do not suffer multiple chargebacks from the same compromised consumer credit card. This is not the only change made by Visa to shield merchants from repeated chargebacks from a single credit card. Under the recent chargeback rule changes, an issuing bank may not initiate more than 35 fraud disputes on card-not-present transactions on any individual card within a 120 day period. This both provides incentive for issuing banks to respond promptly and appropriately to cases of possible fraud, and protects merchants from repeated chargebacks stemming from a single compromised card. In the event thatmultiple fraudulent transactions between a given card and a given merchant are made before the problem is discovered and flagged, the merchant may file their responses to the resulting chargebacks as a “bundle,” rather than going through the same process for each individual transaction.