A Guideline of Visa Chargeback Policy Changes

1
A Guideline of Visa Chargeback Policy Changes

• Chargeback Expertz

2
Introduction

• Every Merchant is talking about Chargebacks
  today. Its the latest hot topic of late and for
  good reasons. According to a recent report by
  First Annapolis Consulting, chargebacks for
  card-present transactions increased 50 following
  the October 1 EMV liability shift. While this
  took merchants by surprise, it did not surprise
  issuers who, until the October 2015 liability
  shift for chip cards processed at card-present
  non-chip terminals, were absorbing the cost of
  fraud for counterfeit cards. Issuing Banks and
  Financial Institutes are allowed to chargeback
  and/or pass back the fraud to the merchants who
  were not processing chip cards.

3
This last point is important, as the data shows
that there are two drivers of the high
chargebacks

• According to Merchant Stronghold Merchant Services
  , hackers and criminals are avoiding businesses
  that are processing chip cards and merchants
  processing mag stripe only are bearing the brunt
  of chargebacks. For example, a small gym chain in
  south Florida was hit with 10,000 in chargebacks
  from October 2015 through March 2016 in the same
  period in the prior year they had just 89 in
  chargebacks.
• A new trend has been created, dubbed friendly
  fraud or in simple words online shoplifter,
  when the cardholder disputes a charge knowing
  that the merchant did not read the chip on the
  card. Cardholders disputes a charge with an
  intent to miss use the merchants terms and
  conditions and policies. Friendly fraud is
  especially difficult to detect and stop because
  it essentially pits a cardholders word against
  the merchant and bank, according to Apoorv Joshi
  ChargebackSecurity.com.

4
Merchants fight back

• Merchants are beginning to fight back, primarily
  through Chargeback Companies and lawsuits against
  the Cardholders, Issuing banks and even the Visa
  and MasterCard branded networks. One such lawsuit
  claims that major credit card companies and the
  nations largest banks conspired to shift
  liability for fraudulent credit card transactions
  in the U.S. to merchants. The complaint claims
  that the move to cards that include electronic
  chips designed to be more secureso-called EMV
  chipshas been plagued by technical glitches and
  used as cover to illegally shift fraud-protection
  costs.

5
Visa chargeback changes

• Visa went first, announcing several
  merchant-friendly changes. Visa also laid out two
  major changes to chargebacks. The goal was to
  reign in the friendly fraud and the volume of
  chargebacks merchants have to deal with.
  Beginning July 22, 2016, chargebacks for
  counterfeit fraud for transactions under 25 will
  be blocked meaning issuers will have the
  liability for this fraud and have to credit the
  Cardholder. This is a temporary change though
  that is said to expire in April 2018.

6
Visa chargeback changes

• Another change is that the merchant is now only
  liable for the first ten chargebacks on any given
  card, as of October 2016. After that, the issuer
  takes responsibility for fraud. This is an
  interesting one. This is to limit serial
  chargebacks abusers of the whole payment process.
  Visa estimates these last two changes will cause
  merchants to see up to 40 percent fewer
  counterfeit chargebacks and a 15 percent
  reduction in U.S. counterfeit fraud dollars being
  charged back each year.

7
Visa chargeback changes

• This was not it, Visas announced changes to its
  chargeback policy, limiting issuers to
  chargebacks over 25, and no more than 10
  per account!
• American Express likewise followed suit in making
  similar changes to its chargeback policies. 
  Similarly, MasterCard announced policy changes
  too. MasterCard also added that
  The MasterCard network system will now prevent
  invalid chargebacks for fraud occurring at ATMs
  and automated fuel dispensers where liability shif
  ts do not go into effect until October 2016 and
  October 2017, respectively.

8
US HQ10300 49th Street N Suite 427 Clearwater,
Florida 33762 UK HQ45 Rosehaugh Road
InvernessInverness-Shire IV3 8SW 1
855-465-4723 app_at_chargebackexpertz.com