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Are merchants ready to handle the fast lane of chargebacks and dispute resolution?
One element of the transaction process has forever changed the way merchants process disputes: chargebacks and dispute resolution. Visa USA and Visa International are in the process of reengineering their dispute and arbitration processes. While deadlines for changes for the Visa Re-engineering of Disputes (RED) process have been implemented throughout 2003 and 2004, the most recent rollout for Visa's changes went into effect in October 2004 and could leave some merchants confused about reason codes, regulations and what information to provide their processor should they be involved in a dispute.
A Look at Dispute Resolution
During the last 25 years, rules regarding merchant compliance with credit card disptites and arbitration have remained relatively unchanged-until now. Visa RED, like all aspects of business in the 21st century, is designed to automate, streamline and eliminate unnecessary steps. It used to take three chargeback cycles and up to 345 days to resolve a dispute; now it takes one chargeback cycle and 180 days to resolve most chargebacks. What was once a 21-day cycle to receive information on disputes and arbitrations now is an eight-day cycle.
These changes benefit merchants by speeding up the chargeback process. It also forces better upfront communication between card issuers and cardholders so that problems are handled before they become chargebacks.
Behind the Scenes: Moving Paper Mountains
In the past, merchant processors and issuing banks literally had to move mountains of paper to comply with dispute regulations. Visa RED's online-based system allows issuers and acquirers to scan information directly into the system, providing quicker and easier access to dispute information, with all information located in one place. In addition, many of the major payment processors are developing their own...