Every year, card networks such as Visa and Mastercard implement updates to their rules, and 2024 is no exception. This year's changes are particularly significant, with Visa consolidating chargeback reason codes and Mastercard refining its dispute timelines. Understanding these updates is crucial for navigating the complexities of chargebacks and protecting your finances.
Visa’s Major Updates
Visa has eliminated the standalone reason code 12.1 for late presentment. These cases will now be categorized under code 11.3. This adjustment alters how chargebacks are reported and requires more stringent evidence to support disputes. Merchants will need to prioritize swift and accurate evidence gathering, especially in scenarios that necessitate compelling proof and conform to the authorization-to-clearing timelines.
Mastercard’s Adjustments
Mastercard maintains its existing numeric/alpha code structure; however, significant changes regarding dispute management are noteworthy. The new guidelines clarify the proper use of Single Message and Dual Message Systems, emphasizing the importance of clear evidence and communication when responding to disputes. Merchants will need to adapt to these modifications to ensure compliance and success.
Practical Effects for Merchants
Merchants may observe certain disputes transitioning from one chargeback code to another, affecting how these disputes are processed and resolved. To stay proactive, focus on quick and thorough evidence collection. Think of it as keeping a well-organized toolbox; it’s vital to have your authorization logs, AVS/CVV confirmations, and detailed shipping records readily available when faced with chargebacks.
Immediate Actions to Take
- Revamp Chargeback Handling Processes: Update your internal processes to align with the new Visa and Mastercard guidelines.
- Shorten Evidence Collection Timelines: Adjust your procedures to gather evidence more quickly. This will enhance your chances of successful representment.
- Update Dispute Resolution Templates: Revise your templates to comply with the new code-specific expectations. Be vigilant for changes in issuer reason-code labels to ensure your automated routing and response systems are accurate.
Reacting promptly to these network changes will streamline your dispute resolution process and protect your revenue from unjustified chargebacks.
Key Changes Merchants Must Know
- Visa: Reason-code consolidation and timing/evidence modifications have taken effect. Visa's removal of the standalone 12.1 means that merchants must now handle these cases under 11.3, which alters chargeback defense strategies. Compelling evidence rules and authorization-to-clearing timeframes have also been updated, necessitating speed and quality in evidence submission.
- Mastercard: While retaining its numeric/alpha code structure, Mastercard has published updated merchant chargeback guidelines that highlight the need for adhering to revised timelines. The focus is on proper usage of charging message systems and new expectations regarding evidence handling.
- Practical Effect: Merchants should anticipate disputes that once fell under one Visa code might now appear under another. This will impact routing, templated responses, and recovery strategies. Furthermore, quicker and more specific evidence collection is essential to meet demanding standards.
What to Change in Your Processes Right Now
- Map Old to New Codes: Update your internal triage and reporting systems to handle cases previously categorized as 12.1 under the new 11.3 workflows.
- Shorten Evidence Collection Windows: Confirm the timelines with your payment service provider (PSP) or acquirer for authorization-to-clearing and prepare to assemble compelling evidence more rapidly.
- Update Templated Representments: Revise your dispute response templates in accordance with the new code-specific evidence expectations. Avoid relying on generic solutions.
- Monitor Issuer/Processor Messages: Stay alert for any changes in issuer reason-code labels on incoming chargebacks to ensure your automation rules are accurately routing and responding.
Quick Merchant Checklist
- Audit chargeback-routing rules for Visa 11.3 compared to legacy 12.1 handling.
- Verify your PSP/acquirer submission cutoffs for representment evidence and adjust service level agreements (SLAs) accordingly.
- Ensure order logs include timestamped authorizations, clear billing descriptors, and shipment tracking/proof of delivery to counter processing and authorization challenges.
- Train customer experience and operations teams on updated code meanings so that refunds, returns, and friendly fraud prevention align with network definitions.
Sources and Where to Validate Further
- Visa’s Dispute Management Guidelines (June 2024) provide official policy updates and timelines for merchants.
- Industry analyses tracking practical impacts of reason-code consolidations can clarify recent updates.
- The Mastercard Chargeback Guide offers detailed information about reason-code usage and messaging formats.
Staying informed and proactive regarding these network changes will not only refine your chargeback resolution processes but also help safeguard your business against financial losses.
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