A Information to Visa’s Newest Chargeback Rule Replace

Visa has lately introduced adjustments to its chargeback guidelines. Particularly, it has launched a Compelling Proof requirement for disputes falling underneath the Visa CE/30 chargeback purpose code 

Which means that it is going to require retailers to supply proof supporting their declare {that a} transaction was approved by the cardholder. Retailers should additionally present that the products or companies have been delivered as agreed. The change got here into impact on April fifteenth, 2023. It applies to all retailers globally. 

The context for this transformation is that, based on Visa, disputes associated to fraudulent transactions have elevated by 15% yr over yr. The brand new Compelling Proof requirement is meant to supply a extra sturdy framework for resolving these disputes each effectively and pretty. 


visa cards


A short overview of Visa dispute classes

Visa disputes fall into 4 broad classes: fraud-related disputes, authorization disputes, processing errors, and client disputes.  

Fraud-related disputes are the commonest kind of dispute. They will happen when a transaction isn’t correctly approved by the real cardholder. 

Authorization disputes happen when the service provider fails to acquire correct authorization for a transaction.  

Processing errors can occur when a transaction is processed incorrectly (e.g., it’s a replica of a earlier transaction). 

Shopper disputes happen when the cardholder both doesn’t obtain the products or companies for which they paid or is dissatisfied with them. 


The drivers behind the brand new rule replace 

Pleasant fraud, alternatively referred to as chargeback fraud or payer fraud, refers to conditions the place a cardholder abuses the chargeback course of to keep away from paying for a services or products. It’s completely different from cases the place clients unintentionally provoke a chargeback on a legitimate transaction as a result of they don’t acknowledge or recall the acquisition. 

This kind of payer fraud is a rising concern for retailers. Along with the lack of income, it additionally exposes them to chargeback charges. Moreover, excessive ranges of chargebacks can result in a service provider being perceived as excessive danger. Which means that some service suppliers could refuse to work with them in any respect. Those who do will sometimes cost greater charges. 

Visa has launched a number of options aimed toward decreasing the chance of pleasant fraud and offering retailers with a good alternative to contest chargebacks. One in every of these options is the compelling proof rule. This requires retailers to supply clear proof each that the real cardholder approved the transaction and that the products/companies have been offered as agreed. 


VISA Compelling Proof 3.0 Defined

Visa has offered detailed steerage on the practicalities of the Compelling Proof 3.0 rule. There are, nonetheless, three key factors that every one retailers should perceive. 


Authentication vs Authorization


Authentication pertains to verifying the identification of the payer. Authorization pertains to a service provider requesting permission from a payer’s financial institution to proceed with a transaction.  

When authentication takes place, it typically occurs earlier than a transaction is shipped for authorization. (If the authentication fails, there isn’t any level in requesting authorization). Some transactions are, nonetheless, approved with out the payer being authenticated by their financial institution (by way of Visa).  

For instance, all chip and PIN transactions are authenticated, however not all are approved on-line. In contrast, many contactless transactions are approved on-line, however only a few are authenticated.  

Retailers who don’t authenticate payers by way of the strategies supplied by the scheme should still set up them by different means, e.g., ID checks. Retailers would, nonetheless, want to make sure that their method was each sturdy (compelling) and authorized (e.g., underneath GDPR). In different phrases, the authentication would should be sturdy sufficient to fulfill Visa however not extreme. 


Items/Companies Offered as Agreed

It’s not essentially sufficient simply to point out that the products or companies have been offered. You want to have the ability to give compelling proof that they have been equipped as agreed.  

For instance, if it was agreed that an merchandise can be delivered on or earlier than a sure date, you would wish to show that the merchandise was delivered on time. Alternatively, you can present that supply was tried as agreed, however there was no person out there to obtain the merchandise. 

The way you go about offering it will, after all, most likely relys on the nature of what you are promoting. Some choices you would possibly think about embrace: 


  • Proof of supply/tried supply 
  • Proof of a recurring billing agreement (e.g., a subscription settlement) or proof of related earlier purchases. 
  • Proof of utilization (e.g., log-in data) 


Deadlines are last

Retailers have 20 calendar days to supply compelling proof. That is completely non-negotiable. 


Chargeback guidelines earlier than and after


The next desk reveals the key variations in Visa chargeback guidelines earlier than and after the implementation of Compelling Proof 3.0. Please notice, nonetheless, that the precise chargeback guidelines and necessities could range based mostly on the specifics of every transaction and the dispute class concerned.  


Chargeback Guidelines  Earlier than CE 3.0  After CE 3.0 
Dispute Classes  22  52 
Proof Necessities  Restricted  Particular 
Required Proof  None  Compelling Proof, together with proof that the transaction was approved by the cardholder and that the products or companies have been delivered as agreed 
Deadline to Reply to a Chargeback  30 calendar days  20 calendar days 
Legal responsibility for Chargebacks   Based mostly on pre CE 3.0 guidelines  Legal responsibility shift for sure fraud-related chargebacks 


The significance of the 120-day ready interval

A buyer has 120 calendar days by which to cost again a transaction. This era begins on the transaction-processing date and is non-negotiable 

Retailers should be conscious that fraudsters could wait till the very finish of this ready interval to lift a chargeback. It’s because it maximizes the probability that the service provider can have destroyed the compelling proof, they may have used to dispute the chargeback.  

Retailers ought to subsequently guarantee that they hold all related compelling proof till the deadline for elevating a chargeback is handed. 


The 2 methods to use Compelling Proof 3.0

There are two methods retailers can use compelling proof to guard themselves from unwarranted chargebacks 

The primary is to verify to answer any requests for data raised by a payer’s financial institution. Remember that many payer banks will attain out to retailers earlier than elevating a proper chargeback. After they do, use the chance to cease a chargeback from being raised by demonstrating that the transaction was legit. The second is to answer any chargebacks which might be raised via the Visa disputes system. 

In each instances, there are two keys to success. The primary is to make completely positive that you just reply by the related deadline. The second is to guarantee that your response is each full and clear. 


Giving full and clear responses

Basically, it’s essential to make sure that your response covers all the pieces the requester could want to know in a approach that they will perceive. Specifically, by no means assume that one thing is clear to another person simply because it’s apparent to you. For instance, in case you are sending laptop logs, ensure to clarify what they imply. 

Arguably, there’s a third approach to make use of Compelling Proof 3.0. That’s to make use of its necessities to tell what you are promoting processes. This may maximize your likelihood of having the ability to use Compelling Proof 3.0. to shield what you are promoting. 


How will Compelling Proof 3.0 have an effect on retailers?




Like all adjustments, Compelling Proof 3.0 can have its advantages and its drawbacks. Its fundamental profit is that it ought to give retailers a a lot greater degree of safety towards payer fraud. Its fundamental downside is that it locations a reasonably excessive administrative load on retailers.  

On condition that Compelling Proof 3.0 is already in drive, retailers ought to already be working inside its framework. If, nonetheless, you’re nonetheless contemplating what Compelling Proof 3.0 means, in observe for what you are promoting, listed here are the three key factors it’s best to think about. 


Do what you are promoting processes allow you to generate compelling proof?

In essence, may you comprehensively show, if challenged, that the real cardholder approved the transaction and that you just fulfilled it accurately?  If not, what updates do it’s essential to make as a way to? 


Are you storing your compelling proof appropriately? 

It’s good to hold your proof secure, however you additionally want to have the ability to retrieve it inside 20 calendar days if challenged. How will you obtain this?  For instance, will you scan paper paperwork?  In that case, how will you make sure that the scan is correct?  Will you retain each the paper doc and the digital document of it?  The place will you retain them? 


Can you reply to enquiries/chargebacks successfully?


When issuers attain out to retailers, they are going to typically request a response by a sure date. It’s essential to respect this, in any other case, the issuer could proceed to lift a chargeback with out your enter. Ideally, it’s best to reply as rapidly as doable. As soon as a chargeback is raised, you could reply inside the scheme deadline. At present, that is 20 calendar days. 



In conclusion, VISA’s newest chargeback rule replace, Compelling Proof 3.0, brings important adjustments to the dispute decision course of. The brand new guidelines intention to cut back pleasant fraud and enhance the dispute decision course of for retailers and issuers.  

Retailers should now present compelling proof to defend towards chargebacks, both earlier than or after the chargeback happens. Whereas this will likely require extra effort from retailers, it could possibly assist scale back chargebacks and therefore shield income 

Retailers ought to already be working inside the Compelling Proof 3.0. If, nonetheless, you haven’t up to date your chargeback administration technique, it’s best to make it a prime precedence to take action.



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