We are frequently asked inquiries about chargebacks for credit cards and the distinctions between numerous large credit card brands. To assist you as well as other merchants, we’ll examine Visa chargebacks and give you key information that you must be aware of when handling these types of chargebacks.
What are Visa Chargebacks?
It’s a reverse of a transaction amount made by the issuing bank when an individual file an appeal against the Visa credit card transaction. The bank that issued the card debits the merchant’s account and credits the cardholder for a short period of time in the event of further investigation. Since a few years ago, Visa stopped referring to these as chargebacks, and began labeling them “disputes.”
When they receive a chargeback notice merchants may choose to refund the transaction or challenge the chargeback with representation. In the process of representing, the business will provide the bank with proof that the disputed transaction is valid.
The bank that issued the chargeback can decide to reverse or maintain the chargeback based on evidence. If both parties are dissatisfied with the outcome the chargeback is referred to arbitration, in which Visa decides.
When a merchant either is successful or unsuccessful in a dispute or is affected by a chargeback cost. This fee is charged by banks that acquire merchants to avoid chargebacks. The amount charged varies depending on the processor used and whether the merchant is in an industry with high risk or not.
Why Visa Accepts Chargebacks
The FCBA was passed in 1974 to reduce the liability of consumers and protect consumers from fraudulent charging practices. However, the FCBA contains specific provisions such as a 60-day period for cardholders to contest the charge. But, it allows the card networks and banks that issue cards to design their own guidelines to deal with chargebacks.
Chargebacks increase confidence of cardholders when it comes to purchases with credit cards and they are aware that their liability for the deeds of deceitful merchants, fraudsters or identity theft crooks is confined. However, there are some cardholders who discover and exploit loopholes, which allows them to engage in innocent fraud.
Here are some more blogs to check out
- Chargeback Prevention: Finding the Right Strategy
- Tokenization and Fraud Prevention: An Overview
- What is Chargeback Fraud | How to prevent It
- Chargeback Fees: An Overview
Understanding Visa Chargebacks Terminology
As with any other field that is regulated by the government, the credit and banking card industry is characterized by its own lengthy list of terminology and acronyms. Make sure you are aware of the key Visa or industry standard terminology
- Acquirer (acquiring bank): A person who authorizes a merchant to sign a contract or provides money to a cardholder as the form of cash in a direct or indirect way, and in turn, enters the transaction receipt into the interchange.
- Authorization: Authorization is a process in which an issuer, VisaNet processor as well as Visa Stand-In Processing (STIP) accepts the transaction. This can include offline authorization.
- Cardholder: A person who is authorized to use a credit card as well as a virtual.
- Card issuer: An financial institution that issue Visa cards.
- Chargeback: Chargeback is a transaction which an issuer sells to the acquirer.
- Issuing bank: Issuing bank is a person who has a contract with a cardholder to facilitate the issue of one or more products from a payment card.
- Merchant: Any individual, company, or firm who has signed a contract through an acquirer with the intention of accepting Visa as payment in exchange for sale of products or services.
Working with Visa to Manage Chargebacks
The Visa chargeback cycle and dispute resolution procedure could be broken down in couple of simple steps. We suggest that you become up to date with Visa guidelines, rules and procedures for dispute resolution regarding chargebacks.
- The customer (cardholder) file a dispute regarding the transaction.
- A bank (card issuer) could ask the client to write a detailed explanation of the issue. It is then a transaction (sale) will be sent back to the buyer via VisaNet.
- The acquirer is now able to decide if they want to settle this issue or transfer the dispute to you, the buyer.
- If you do get notified that the charges have been refunded, then you are able to decide whether to accept the claim or contest the chargeback.
- The acquirer examines the information that you’ve supplied. If you decide to challenge the chargeback, and your acquirer is in agreement with you the chargeback is transferred via VisaNet to the bank that issued the chargeback.
- Now, the bank issuing the chargeback will decide on what to do with charging back claims.
- The decision is by your choice of whether you want to contest any chargeback claims.
The key aspect to remember is that during the Visa chargeback process, the company will be in contact directly with the customer throughout the entire process.
Visa Guidelines and Rules
To reduce the number of cardholder issues and concerns, Visa has very clear guidelines and guidelines on how businesses should disclose key information in order to help their patrons. One area where Visa is extremely specific is regarding your return as well as refund policies. As we’ve previously written and as Visa states in its chargeback Management Guidelines in the Visa Merchants guide, it’s essential to ensure that this information is easily and clearly accessible to your customers and in doing this, you can stop the occurrence of chargebacks or disputes.
It is in your best interest to adhere to the guidelines below: Visa guidelines:
- Card-present transactions and merchants: Your refund/cancellation/return policy must be clearly printed on the front of the purchase receipt near the signature space or in another obvious area. If the policy is located placed on the back of the receipt, or in the attached paper, it should be enough space to accommodate the signature or initials of the person who purchased the item. (Read the Disclosure for Merchants with Card Present in Chargeback Management Guidelines to Visa Merchants to find additional information regarding Disclosure statements.)
- Card-not-present transactions and merchants: For phone transactions, your refund/cancellation/return policy must be mailed, emailed, or texted to the customer and cardholder. The burden is on you to demonstrate that the cardholder receive the information. This is why keeping accurate records is essential. When it comes to Internet and mobile transactions the policy must be clearly stated at two different places when you check out the purchaser must agree to or acknowledge your policy or on the screen at checkout near click to submit. The key here is that the cardholder is clearly presented with your refund/cancellation/return policy.
Learning More about Visa Chargebacks
There’s a lot more you should be aware of and know about Visa chargebacks, and working with this business. For instance, make sure you know the Visa reasons codes, copies the requirements for request, get guidance from Visa on how to minimize chargebacks and how to provide convincing proof.
Being aware of and comprehending knowing and understanding this information can help in enhancing your relationships with Visa and, ultimately, your customers. The guidelines and recommendations from Visa have been put set in place to assist all involved to work together and run an effective business.