The Visa Chargeback Process, Step by Step
A Visa dispute moves in set stages. Here is what happens at each one, and what to send to keep your money.
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What is a Visa chargeback?
A chargeback is a statement credit the cardholder receives from their card issuer after a dispute. A refund comes from the merchant, while a chargeback comes from the card issuer. A Visa chargeback is one that runs under Visa's rules, and the money leaves your account without you sending it.
A Visa dispute is how a card issuer sends a contested transaction back. Visa says the acquirer looks into each dispute, and if it is valid, takes the amount from the merchant's account and tells the merchant. Visa says a merchant who cannot fix a dispute takes the loss.
How a Visa dispute begins
The cardholder calls their bank and says the charge is wrong. The issuer checks the claim against Visa's rules. If the claim fits a dispute condition, the issuer files the dispute and the case starts.
Visa says a merchant may settle a dispute by giving its acquirer more details about the sale. If that works, the case ends there. If not, the money comes out of your account and you get a notice.
If you are not sure what the notice means, start with how to read a chargeback notice.
The four Visa dispute categories
As part of the VCR Initiative, Visa consolidated its 22 legacy reason codes into four dispute categories. Every Visa dispute falls into one of them.
- 10 Fraud. The cardholder says they never made or allowed the charge.
- 11 Authorization. Something went wrong when the sale was approved.
- 12 Processing Errors. A technical mistake, such as a duplicate charge.
- 13 Consumer Disputes. The cardholder has a problem with the goods or service.
The category tells you what kind of proof will help. A fraud claim needs proof the cardholder made the purchase. A consumer dispute needs proof of delivery or the terms they agreed to.
How to respond to a Visa chargeback
A merchant can accept a Visa dispute, or reject it by sending supporting documents to its card processor. The best way to respond is online through your Merchant Account.
A good reply explains the documents, addresses the specific dispute reason and describes the steps taken to resolve it. Your documents should include a copy of the charge record or credit record. Visa dispute evidence must be easy to read and in English, or come with an English translation.
Visa says accepting a dispute that cannot be fixed may save the time and cost of fighting it. If the proof is weak, taking the loss can be the cheaper choice.
Time limits and late responses
Each step of a Visa dispute has a set time limit, so a late answer can lose the case. Visa says the merchant's time to respond is the time on the acquirer's request, and it may vary by acquirer. Check the notice and ask your processor if the deadline is unclear.
Visa's rules say a side that does not respond in time closes the dispute cycle and is responsible for the amount. Visa says a merchant can lose the sale amount and the goods, and also pay its own costs to respond.
Compelling Evidence for fraud disputes
Compelling Evidence is proof from the merchant that the cardholder took part in, received, or benefited from the transaction. Visa lets merchants send Compelling Evidence for conditions 10.1, 10.3 and 10.4.
Good examples are order records, delivery logs, and account activity that tie the cardholder to the sale. The goal is to show the person behind the card was the person behind the order.
Pre-arbitration and arbitration
An acquirer may respond only once to the original Visa dispute. If the issuer still disagrees, the case moves to pre-arbitration. Visa's rules say pre-arbitration is the stage where the issuer must deal with the evidence in the acquirer's Dispute Response. After a Dispute Response, the issuer may switch dispute conditions only if the first condition was valid.
If the banks still cannot agree, the case goes to arbitration. Visa's rules define arbitration as the process where Visa decides who is liable after the dispute cycle is done. Visa looks at whether time limits were met and documents were supplied, readable and translated. Visa also bars a side from giving it anything at arbitration that it never sent to the other side.
For more on that middle stage, see pre-arbitration, or read what happens after you answer a chargeback.