An understanding of the chargeback process workflow is important. Once you are familiar with how the process works, you can manage chargebacks with a high return on investment.
Note
The chargeback process differs slightly for Mastercard®, American Express®, and Discover® disputes.
In any chargeback situation, there are five roles:
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The cardholder is a consumer who has been issued a credit or debit card. Unless the transaction is fraudulent, the cardholder is the person who makes the purchase.
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The issuer is the cardholder’s bank.
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The merchant is a business that has been approved to process credit and debit card purchases.
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The acquirer is the merchant’s bank.
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The card brand (Mastercard®, Visa®, etc.) acts as the go-between, facilitating messages and activity between the issuer and acquirer.
These parties play their roles during each stage of the chargeback process.
Unlike other card brands, Visa uses two different workflows to manage disputes.
The collaboration process is essentially the same workflow that the other card brands use to manage chargebacks.
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The issuer submits a dispute to the acquirer via Visa’s online portal.
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The acquirer passes the dispute to the merchant.
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The merchant can challenge the validity of the dispute, if desired.
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If both sides continue to pursue the matter, pre-arbitration and arbitration can follow.
For collaboration disputes, we encourage you to accept liability if a case advances to pre-arbitration. We do not recommend that you continue fighting.
This is because we help you create the most compelling dispute response possible with all available evidence during the initial response. Unfortunately, if you respond a second time, your argument will not be any more compelling than it was the first time. This means a pre-arbitration response simply increases your costs without increasing your odds of winning.
Instead of using your resources to fight pre-arbitration cases, spend that time analyzing your chargeback data.
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What are the most common characteristics of winning responses?
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What elements are missing from responses that result in a loss or pre-arbitration?
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How can you optimize your response strategy so that you win more and lose less?
Allocation is a newly adopted management style that takes advantage of Visa’s internal data and automated technology.
Visa consults internal data in an effort to assign liability to either the issuer or merchant.
If liability is assigned to the issuer, the case is closed, and the bank or cardholder is responsible for the transaction amount. If liability is assigned to the merchant, they can either accept responsibility or submit a response.
However, because liability has already been assessed for allocation disputes, there technically is not a dispute response opportunity for merchants. Instead, the response is considered pre-arbitration.
For allocation disputes, we encourage you to advance the case to pre-arbitration, because it is your one and only chance to prove your case. In these situations, gather all your available compelling evidence — just like you would for any other chargeback — and respond to the dispute.
Pursuing pre-arbitration for allocation disputes does not automatically advance the case to arbitration (a common misconception). You are the one to decide if an allocation case should advance to arbitration — not the issuer. Therefore, you will not have to pay any additional fines simply for stating your case through pre-arbitration.
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