Rules

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Visa, the largest payment network in the United States, made some changes to its rules related to chargebacks and representments which went into effect in October 2015. The ultimate goal of the rule changes was to provide merchants with greater flexibility in the types of evidence that merchants can provide for chargebacks and representments.

Rising online sales necessitated rule changes

Visa says that it made the changes because digital commerce – led by an increase in transactions coming from mobile devices – is on the rise, and with this increase in online sales comes an increase in disputes related to online purchases.

The payment network says that it is trying to simplify the dispute resolution process and expands the rights and dispute resolution options for merchants.

Four types of chargebacks are affected

Visa amended its rules for four chargeback codes:

  • 30: Services not provided or merchandise not received
  • 53: Not as described or defective merchandise
  • 81: Fraud – card present environment
  • 83: Fraud – card not present environment

For each type of chargeback, Visa has expanded the types of data that it will accept for a dispute. Merchants can now include photographs or emails, for example, as a way of proving that a customer is in possession of the merchandise or is using the services sold. This is a change from the previous policy, providing merchants with greater flexibility.

Merchants can also use data such as the IP address to link a customer with a purchase, again providing merchants with an additional piece of evidence that that a transaction was legitimate.

Representment of digital goods

Merchants that sell digital goods, such as media, movies, books, games, software and music now have an additional layer of documentation that they can use to verify a transaction. For chargebacks identified as fraudulent transactions, sellers of digital goods that are able to provide the following documents and certifications are now able to represent transactions:

  • Evidence that the merchant is the owner of the operating system for the subject electronic device.
  • Evidence that the merchant has been successfully registered into the Visa Digital Commerce Program.
  • Evidence that the account set up on the merchant’s website or application was accessed by the cardholder and successfully verified by the merchant, before or on the transaction date.
  • Evidence that the disputed transaction used the same device and card as any previous, undisputed transactions.
  • Proof that the device ID number, IP address and geographic location and name of device (if available) are linked to the cardholder profile on record with the merchant.
  • Description of the goods or services, as well as the date and time they were purchased and successfully downloaded.
  • Customer name linked to the customer profile on record at the merchant.
  • Evidence that the customer password was re-entered on the merchant’s website or application at the time of purchase.
  • Evidence the merchant validated the card when the cardholder first linked the card to the customer profile on record at the merchant.

This additional representment right requires that the merchant have all of these elements, but it can prove valuable considering the increase in transactions for digital merchandise.

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