Upcoming Chargeback Operational Impacts Regional - Disputes.pdf · Phase or Visa rules in the Acquirer’s favor during the Arbitration Phase. Allocation Dispute Reason Codes . Authorization

Upcoming Chargeback Operational ImpactsOverview of 2018-2019 Past and Scheduled Association Disputes Processing Changes

2018 Scheduled Association Disputes Processing Changes2

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Overview

2018 Visa Dispute Processing Changes and Update (VCR)

2018-2019 MasterCard Dispute Processing Changes (Claims Manager)

Summary of Changes and Impact to Risk Management

2018 VCR Impacts and Upcoming Changes


Visa Claims Resolution (VCR) Implementation

April 15, 2018VCR Implementation Worldwide

(Hong Kong and New Zealand, October 2017)

September 30, 2018Visa VCR Accept and Response Fee

Implementation


Visa Claims Resolution Impacts since 4/15/2018Additional Internal Controls and Data Points at VisaTo eliminate invalid chargebacks/disputes from entering the Visa System from the issuer, Visa is going to introduce edits at the front end of the dispute process. For example, if an issuer is attempting to submit a ‘card not present’ fraud case, and the transaction data shows that the card was swiped or chip enabled, Visa will not allow the dispute to continue. By introducing edits at the front end of the dispute process, it is anticipated that there will be reduction in the number of disputes flowing through Visa.

Reason Code Consolidation and RenamingVisa will consolidate the current 22 different chargeback reason codes into four dispute categories: Fraud, Authorization, Processing Errors, and Consumer Disputes.Disputes Divided into 2 Separate Categories and Workflows (including timeline changes)• Allocation Disputes (Fraud and Authorizations) • Collaboration Disputes (Processing Errors and Consumer Disputes)

New Terminology and Types of DisputesOld Term: Chargeback New Term: Dispute

Old Term: Representment New Term: Dispute Response


$$ Important Liability Shift Notice: Once Visa has processed an Allocation Dispute against an Acquirer, liability for the dispute will remain at the Acquirer unless the Issuer accepts liability via the Pre-Arb Phase or Visa rules in the Acquirer’s favor during the Arbitration Phase.

Allocation Dispute Reason Codes

Authorization• 70 (Card Recovery Bulletin or Exception File)• 71 (Decline Authorization)• 72 (No Authorization)• 73 (Expired Card)• 78 (Service Code Violation)

Legacy Chargeback Reason Codes Qualified for Allocation DisputesFraud• 62 (Counterfeit Transaction)• 81 (Fraud – Card Present• 83 (Fraud – Card Absent)• 93 (Merchant Fraud Performance)

10. Fraud• 10.1 – EMV Liability Shift Counterfeit Fraud• 10.2 – EMV Liability Shift Non-Counterfeit Fraud• 10.3 – Other Fraud-Card Present Environment• 10.4 – Other Fraud-Card Absent Environment• 10.5 – Visa Fraud Monitoring

11. Authorization• 11.1 – Card Recovery Bulletin• 11.2 – Declined Authorization• 11.3 – No Authorization

New VCR Allocation Dispute Categories


Allocation Dispute Life Cycle and Timeline Impacts

Legacy Life Cycle of a Chargeback/Dispute

• Chargeback – 120 to 180 Days (timeframe extensions apply)

• Representment – 45 Days from CB processing date from Issuer

• Issuer Initiated Pre-Arbitration Request - 30 Days from Representment processing date

• Acquirer Pre-Arbitration Response – 30 Days from Pre-Arbitration Processing Date

• Issuer Initiated Arbitration – 30 Calendar Days from Pre-Arbitration Response Processing Date

New Life Cycle of a VCR Allocation Dispute

• Allocation Dispute – 120 to 180 Days (timeframe extensions apply)

• Acquirer Initiated Pre-Arbitration – 30 Days from CB processing date from Issuer

• Issuer Pre-Arbitration Response – 30 Days from Pre-Arbitration Processing Date

• Acquirer Initiated Arbitration – 10 Calendar Days from Pre-Arbitration Response Processing Date


CollaborationDispute Reason Codes

Consumer Disputes• 30 (Services Not Provided)• 41 (Cancelled Recurring Transaction)• 53 (Not As Described or Defective Merchandise)• 85 (Credit Not Processed)• 90 (Non-Receipt of Cash or Load Transaction Value)

Legacy Chargeback Reason Codes Qualified for Collaboration DisputesProcessing Errors• 74 (Late Presentment)• 76 (Incorrect Currency or Transaction Code)• 77 (Non-Matching Account Number)• 80 (Incorrect Transaction Amount or Number)• 82 (Duplicate Processing)• 86 (Paid by Other Means)

12. Processing Errors• 12.1 – Late Presentment• 12.2 – Incorrect Transaction Code• 12.3 – Incorrect Currency• 12.4 – Incorrect Account Number• 12.5 – Incorrect Amount• 12.6 – Duplicate Processing/Paid by Other Means• 12.7 – Invalid Data

13. Consumer Disputes• 13.1 – Merchandise/ Services Not Received• 13.2 – Cancelled Recurring• 13.3 – Not as Described or Defective Merchandise/ Services• 13.4 – Counterfeit Merchandise• 13.5 - Misrepresentation• 13.6 – Credit Not Processed• 13.7 – Cancelled Merchandise/Services• 13.8 – Original Credit Transaction Not Accepted• 13.9 – Non-Receipt of Cash or Load Transaction Value

New VCR Collaboration Dispute Categories


Collaboration Dispute Life Cycle and Timeline Impacts

Legacy Life Cycle of a Chargeback/Dispute

• Chargeback – 120 to 180 Days (timeframe extensions apply)

• Representment – 45 Days from CB processing date from Issuer

• Issuer Initiated Pre-Arbitration Request - 30 Days from Representment processing date



New Life Cycle of a VCR Collaboration Dispute

• Collaboration Dispute – 120 to 180 Days (timeframe extensions apply)

• Acquirer Initiated Dispute Response – 30 Days from Dispute processing date from Issuer

• Issuer Initiated Pre-Arbitration Request - 30 Days from Dispute Response processing date




VCR Accept Fees Timeframe Implementation 9/30/2018

• Implementation Timeline: September 30, 2018

• Acquirer/Merchant Accept Liability Timeframe: 21 days after receipt of Dispute

• Fee Amount: TBD by Visa, Acquirer/Processor

2018/2019 MasterCard Dispute Processing Changes


MasterCard Claims Manager Brief Summary

• Implementation Timeline: Claims Manager open to all parties: June 2018. Target migration completion date: June 2019

• Additional Automation and Edits at MasterCard: Invalid Chargeback blocking and MasterCard will perform refund/credit checks

• Addition of Pre-Chargeback Cycle: Possible Inclusion of Merchant in the Dispute Cycle to resolve dispute before a CB is processed. Timeline: TBD

• More Robust MasterCom Chargebacks Interface for Processors: Legacy MasterCom primarily utilized for Image Tracking. New MasterCom will assist with end to end tracking of a Dispute for its entire LifeCycle.


MasterCard Upcoming Chargeback Rules Changes

Effective October 2018:• RC 4837 (No Cardholder Authorization) : Removes condition which allowed an Acquirer to provide new information of a

merchant name/location/dates as a remedy when there is a complete mismatch between authorization and clearing.

• RC 4863 (Does Not Recognize): Requires cardholder letter or email as supporting documentation in first chargebacks. Documentation must be a direct result of cardholder communication. Expedited Dispute Resolution forms or phone call documentation will not be allowed. To be eliminated between June and October 2019.

• RC 4834 (Point of Interaction Error): Moves Late Presentment chargeback rights and language to RC 4808.

• Compliance Filings: Requires Pre-Compliance to be filed prior to escalation as Compliance case for all applicable Compliance case filing reasons. Reduce Pre-Compliance and Compliance Case filing timeframes from 180 days to 120 from the central site processing date/violation date or 45 days form the chargeback reject date / fee collection date


MasterCard Upcoming Chargeback Rules Changes

Effective April 2019:

• Arbitration Chargeback Cycle Elimination: Arbitration chargeback cycle will be removed. As a result, documentation requirements will be moved to the first chargeback cycle.

• RC 4840 (Fraudulent Processing of Transactions): Will be eliminated and no longer valid.

• RC 4834 (Point of Interaction Error): Reduces first chargeback timeframes from 120 days to 90 days.

• Pre-Arbitration Filings: Requires Pre-Arb Case filings for Fraud (excluding chip 4870 / 4871 chip /PIN liability shift chargebacks) , Cardholder Disputes and Point of Interaction Error reason codes prior to escalating as an Arbitration case.

Summary of Changes and Impact to Risk Management


Risk Impacts/Summary

Visa Claims Resolution (VCR)

• Reduced overall dispute cycle timeframes once a Dispute starts from 150 Days to 100 Days

• 45 Day Response Time to Represent (Dispute Response) Reduced to 30 Days

• Allocation Disputes will immediately shift liability to the Acquirer and it will be up to the Acquirer to pursue a Pre-Arb and provide Compelling Evidence

• Effective October 1, 2018: VCR Non-Accept Fees are implemented.

• Increased Pre-Processing Edits at Visa should reduce overall Incoming Chargeback/Dispute counts at Acquirers

Mastercard Claims Manager

• Reduced overall dispute cycle timelines due to initial processing timeframe reductions and elimination of the Arbitration Chargeback Phase

• Elimination of the Arbitration Chargeback Phase may see an increase of incoming Pre-Arbitrations from Issuing Banks

• Increased Pre-Processing Edits at MC and the addition of the Pre-Chargeback Cycle should reduce overall Incoming Chargeback/Dispute counts at Acquirers

Questions?

Domenic CironeVice President, Chargebacks ProcessingDomenico.Cirone@evopayments.com516-962-7928evopayments.us

http://www.evopayments.us/

Documents

Upcoming Chargeback Operational Impacts Regional - Disputes.pdf · Phase or Visa rules in the Acquirer’s favor during the Arbitration Phase. Allocation Dispute Reason Codes . Authorization