Merchant Services

Visa Claims Resolution (VCR)

Executive Summary

Visa Claims Resolution (VCR) is Visa’s new dispute (chargeback) program that aims to address the rising number of disputes and an increase in related processing time and costs. The VCR initiative is designed to migrate from a litigation-based model to a liability assignment model that leverages existing data to simplify the processing of disputed transactions and speed up the end-to-end cycle time for resolution. Every merchant, acquirer and issuer worldwide that has Visa transactions and Visa disputes will be required to implement the new VCR program rules, which is scheduled to go live on April 13, 2018.

VCR has the following impacts on the disputes process:

  • Visa is changing some of the terminology related to dispute resolution.
  • Visa has created four new dispute reason categories: 10 - Fraud, 11 - Authorization, 12 - Processing Errors, and 13 - Consumer Disputes.
  • These four categories will be split into two distinct processes: Allocation (10 and 11) and Collaboration (12 and 13)
  • Visa will have 25 new reason codes that will fall within the four categories instead of the reason codes currently used (See Figures 1 and 2). In addition, the structure of the Visa dispute reason codes has changed and will be longer and include a decimal point(s). Your Web reports and delimited file reports will be updated to reflect the new reason codes. New dispute categories will also be added to your reports. NOTE: If your internal systems consume dispute reason codes and dispute categories, you will have to update your systems.
  • Visa has shortened the end-to-end cycle for dispute resolution to 30 days. You will have to respond by day 18 for Allocation disputes and by day 24 for Collaboration disputes.
  • On Allocation disputes, no provisional credit will be given when challenging a dispute.
  • The Online Chargeback Management system will be updated to reflect the new reason codes and case statuses.
  • Visa will block invalid disputes through a new set of business rules.

Below is a detailed overview of what each impact entails and what it means to you as a merchant. To jump to a particular topic, simply click on the hyperlinks below to navigate to the supporting information.

Frequently Asked Questions

Visa Claims Resolution (VCR) is Visa’s new dispute (chargeback) program.

The VCR program is a response to the rising number of disputes and an increase in related processing time and costs. The VCR initiative is designed to migrate from a litigation-based model to a liability assignment model that leverages existing data to simplify the processing of disputed transactions and speed up the end-to-end cycle time for resolving disputed transactions.

  • Visa is changing some of the terminology related to dispute resolution.
  • Visa has created to new high level dispute reason categories, Allocation and Collaboration.
  • Visa has 25 new reason codes that will be used instead of the reason codes currently used.
  • Visa has shortened the end-to-end cycle for dispute resolution to 30 days.
  • On Allocation disputes, no provisional credit will be given when challenging a dispute.

All merchants, acquirers and issuers worldwide are impacted by the VCR program.

We will launch changes at the same time as Visa on April 13, 2018. This date is subject to change as we get closer.

Disputes categorized within the Allocation process are related to fraud and authorization issues. These are called “Allocation” disputes because Visa allocates the financial liability of these disputes to the merchant and acquirer. It is expected that a majority of the disputes will follow this Allocation process.

Disputes categorized within the Collaboration process are related to processing errors and consumer disputes (other than fraud). These are called “Collaboration” disputes because Visa expects that the merchant and acquirer will have to collaborate with the issuer by sharing relevant information related to the transaction in order to determine who is financially liable for the dispute. It is expected that a smaller share of the disputes will follow this Collaboration process.

Disputes that are “in flight” during the migration crossover will remain on the legacy process. Only “net new” disputes that started after the migration date will go through the new VCR process.

Yes, you should expect to see fewer disputes. Through a new set of business rules, Visa’s system will evaluate a dispute at the time that it is created by the issuer and will determine if the dispute is valid or invalid. If the dispute is invalid, it will be returned to the issuer, without any action required by the merchant.

As a result of the VCR program there will be a change to the terminology.

Current Defined Term New Defined Term
Chargeback Dispute
Representment Dispute Response/Pre-Arbitraton
Chargeback Reversal Dispute Reversal
Representment Rev/Adjustment Dispute Response Reversal

Reason codes are changing as a result of the VCR program and each reason code is associated with a new Reason Category. In addition, the length and structure of the reason codes are changing from a current 2 digit code to 4 to 6 digits that will contain decimal(s) point(s). See the VCR mapping tables (Figures 1 and 2) to understand how the old reason code will be mapped to its new reason code.

Figure 1: Allocation Reason Code Mappings:

Allocation

Fraud Reason Codes
New VCR Reason Code Current Reason Code(s)
10.1 - EMV Liability Shift Counterfeit Fraud 62
10.2 - EMV Liability Shift Non-Counterfeit Fraud 81
10.3- Other Fraud - Card Present Environment 81
10.4 - Other Fraud - Card Absent Environment 83
10.5 - Visa Fraud Monitoring Program 93
Authorization Reason Codes
New VCR Reason Code Current Reason Code(s)
11.1 - Card Recovery Bulletin 70
11.2 - Declined Authorization 71
11.3 - No Authorization 72, 78

Figure 2:Collaboration Reason Code Mappings:

Collaboration

Processing Error Reason Codes
New VCR Reason Code Current Reason Code(s)
12.1 - Late Presentment 74
12.2 - Incorrect Transaction Code 76
12.3 - Incorrect Currency 76
12.4 - Incorrect Account Number 77, 80, 81, 83
12.5 - Incorrect Amount 80
12.6.1 - Duplicate Processing 82
12.6.2 - Paid By Other Means 86
12.7 - Invalid Data 72
Processing Error Reason Codes
New VCR Reason Code Current Reason Code(s)
13.1 - Merchandise/Services Not Received 30
13.2 - Cancelled Recurring Transaction 41
13.3 - Not as Described or Defective Merchandise/Services 53
13.4 - Counterfeit Merchandise 53
13.5 - Misrepresentation 53
13.6 - Credit Not Processed 85
13.7 - Cancelled Merchandise/Services 85
13.8 - Original Credit Transaction Not Accepted 85
13.9 - Non-receipt of Cash or Load Transaction Value 90

The biggest change to challenging a dispute under the VCR program is the day that you must respond to the dispute. If you do not plan on challenging the dispute then you should accept the dispute. For Collaboration disputes, you must respond to the dispute by day 24 if you intend to challenge the dispute. For Allocation disputes, you must respond by day 18, if you intend to challenge the dispute. The “respond by date” will reflect the timelines above. The compelling evidence that is needed to challenge a dispute has not changed and should be included if you plan to challenge a dispute.

For Allocation disputes, there will be no provisional credit that is given to the merchant upon challenging the dispute. However, for Collaboration disputes, the process will remain the same as it is today and a provisional credit will be given whenever a Collaboration dispute is challenged.

As a result of the changes to the reason codes and dispute processing paths, your merchant reports will change. Web reports that currently contain dispute reason codes will reflect the new reason codes and new dispute categories.

Impacted Web reports

PTO Users

  • PDE-0017 – Chargeback Activity
  • PDE-0020 – Chargebacks Received
  • PDE-0039 – Chargebacks Won/Lost

 

ROL Users

  • Exception Summary Report
  • Pending Chargeback
  • Denied Reversal
  • Reversal

Impacted flat files

PTO Users

  • PDE-0017 – Chargeback Activity
  • PDE-0020 – Chargebacks Received

 

ROL Users

  • Combined Extract
  • Chargeback File

For Allocation disputes, the VCR program changes the dispute process significantly.

  • The overall cycle has been shortened to 30 days.
  • On Allocation disputes, if a merchant wants to challenge a dispute, an outgoing pre-arbitration (instead of representment) is initiated.
  • When a dispute is challenged and an outgoing pre-arbitration is issued, a provisional credit will no longer be given to the merchant.
  • For Allocation disputes that have been “Auto-Returned to Merchant”, Chase will auto-accept the dispute on behalf of the merchant on day 19 if Chase has not received a response from the merchant by the end of day 18.
  • For Allocation disputes, other than those that are “Auto-Returned to Merchant”, a response to challenge the dispute is needed by the end of day 24.

Allocation Process Flow

Enlarge Image new visa dispute process paths

For Collaboration disputes, VCR program changes the day on which a response is needed to challenge the dispute changes. For Collaboration disputes, a response to challenge the dispute is needed by the end of day 24.

The process flow for a Collaboration dispute is the same as it is today, with the only exception being the terminology change for a representment. For a Collaboration dispute, a “dispute response” is issued instead of a representment.

For Collaboration disputes, you must respond to the dispute by day 24 if you intend to challenge the dispute. For Allocation disputes, you must respond by day 18, if you intend to challenge the dispute. The “respond by date” will reflect the timelines above.


Dispute Respond by Day

Enlarge Image visa dispute timing
  • The process to challenge a dispute within the Online Chargeback Management System remains the same:
    • Continue to challenge the dispute using “Available Actions” in the Online Chargeback Management System, level 2, dispute detail screen
    • Continue to provide the sufficient compelling evidence
  • The new Visa reason codes will be visible in the level 2, dispute detail screen
  • Case statuses will reflect the following new Allocation case statuses:
    • OPA_REQPND – Case status when Chase initiates a pre-arbitration
    • OPA_REQACC – Case status when Issuer accepts a pre-arbitration
    • OPA_REQDEN – Case status when the Issuer denies a pre-arbitration
  • Mailing and faxes will reflect the new reason codes
  • Mailings and faxes will reflect the shortened dispute cycle and inform clients of “respond by date”.

As a result of VCR, there will not be any changes to fees assessed related to dispute management.

Reason code 75, “Cardholder does not recognize” does not provide information to resolve a dispute and as such will be retired. After the VCR go-live date, the issuer will be required to use one of the new reason codes. Visa expects that the majority of the volume associated with reason code 75 will fall into the Fraud bucket.

After the VCR go-live date, you will continue to see disputes with reason code 98 for Collaboration disputes only in the Collaboration process. In the Collaboration workflow, a “dispute response” is used to challenge a dispute and if the issuer denies or rejects a dispute response, the issuer will initiate a pre-arbitration (also referred to as a second chargeback). After VCR, you will not see any issuer initiated pre-arbitration associated with an Allocation dispute.