As card-not-present transactions rise, Visa is changing how it deals with first-party misuse
Visa has recently posted an update regarding its chargeback dispute program. Under the new plan, coming into effect on April 15, 2023, the payment processor will allow merchants to provide additional data to prove that a transaction disputed by a customer was valid.
Chargeback fraud appears when a cardholder disputes a legitimate purchase. The transaction may not be well-planned, e.g. a child uses her parents’ card, or long-forgotten recurring subscriptions appear in the bill. However, such misuse of one’s money has nothing to do with merchants. Unfortunately, they are the ones who suffer from refuting valid purchases.
Merchants lose costs and time responding to the false claim. Besides, such incidents increase a merchant’s chargeback ratio, impacting their business. The issue is significant as first-party misuse accounts for up to 75% of all chargebacks. Moreover, the number of chargebacks and disputes has grown since the pandemic.
Therefore, Visa is taking steps towards improved protection for small businesses and merchants against friendly fraud. When a new policy becomes effective, sellers may provide evidence of a similar purchase by the same customer, login credentials or proof of product use.