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Webcast Series Strategies that help put chargebacks in their place

Visa® Claims Resolution

NOT TO BE DISTRIBUTED WITHOUT THE EXPRESS WRITTEN PERMISSION OF BANK OF AMERICA MERCHANT SERVICES.

This presentation is provided as a courtesy and is to be used for general information purposes only. Bank of America Merchant Services is not responsible for inaccurate or incomplete information. The material contained herein is subject to change. Individual circumstances may vary and procedures may be amended or supplemented as appropriate. This is not intended to be a complete listing of all applicable procedures. No information contained herein alters any existing contractual obligations between Bank of America Merchant Services and its clients.

Disclaimer

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Visa® Claims Resolution


Visa Claims Resolution (VCR) is a global mandate initiated by Visa to redefine the dispute process. Visa’s VCR model claims to seek a more simplified exception processing flow through “liability assignment”, which reduces timeframes, touch points and processes involved in resolving disputes by systematically routing disputes through one of two new processes:

- Allocation: Fraud and Authorization Claims; Visa Resolve Online will determine the financial liability assignment in real time and settle the funds within 24 to 48 hours

- Collaboration: Processing Errors and Cardholder Dispute Claims; Acquirers, issuers and merchants will interact to attempt and resolve the dispute prior to financial liability assignment

Visa Claims Resolution (VCR)

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High Level Impact • System/Process Rewrite for Disputes, Settlement, Credit/Risk

and Billing• Training; Operations and Merchant

• Introduce New Processing System and Manage Trailing for atleast Six Months

• New and Increased ROL Fees

• Manage Two Separate Visa Work Cycles; Allocation vsCollaboration

• Dispute Rule Changes

• Visa Drives Financial Adjustment Transactions versus theIssuer/Acquirer

• New Dispute Cycles

• Consolidation of Reason Codes; Claim Categories with SubReason Codes

• Timeframe Reduction

• Compelling Modifications and Data Requirements


Visa Claims Resolution (VCR) Client Impact

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Today

Dispute Financial • All chargebacks received through Interchange as a “Financial

Adjustment” Transaction Day 1 • Chargeback Representment credited Day 1 and funds

passed to merchant

Acquirers/Processors Cycle Timeframe • 45 Day Cycle for First Chargebacks• 30 Day Cycle for Arbitration/Compliance

Merchant Response Timeframe • Merchants are given 20 calendar days to respond to debits/request

for information

Tomorrow

Dispute Financial; April 2018 • Fraud/Authorization-Financial Adjustment Day 1

• Chargeback Representment (PreArbitration Request);• Financial adjustment to merchant only after

issuer/cardholder acceptance or Visa ruling in favor ofmerchant (Merchant holds debit)

• Processing Errors/Cardholder Disputes-Financial Adjustment Day 1• Chargeback Representment; Credited Day 1 and funds passed

to merchant• PreArbitration; Non-Financial

• Financial adjustment to merchant only after acquirerprocessor/merchant acceptance or Visa ruling in favorof issuer (Issuer holds debit)

• Trailing Support of current process for 6 months

Cycle Time Reduction • 30 Day Cycle for all Dispute Work Types- April 2018

• Current average cycle time including merchant response is 20calendar days for first chargebacks

• Reducing cycle time decreases merchant response timeframes,dispute delivery options and back office processes have toaccommodate same volume at reduced timeframes

*FD made changes in Oct 2016

Merchant Response Timeframe • Merchant response timeframe for disputes reduced and merchants

moved to electronic delivery to meet the timeframe • October 2016; Merchant Response Timeframe Reduced to 15

Calendar Days for Visa, MasterCard and Discover • October 2016; Elimination of any Prenotification to the

merchant prior to chargeback debit • Late or No Response Fees


Visa Claims Resolution (VCR) Client Impact

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Today Chargeback Reason Codes • Twenty two chargeback reason codes and descriptions to define

reason for the dispute

Dispute Cycles (Work Types) • First Chargeback – Issuer Initiated • First Chargeback Representment - Acquirer Initiated • PreArbitration – Issuer Initiated and Requires Acquirer Response • Arbitration – Issuer Initiated, Acquirer Notified/Response • PreCompliance – Issuer or Acquirer Initiate • Compliance – Issuer or Acquirer Initiate • Collections - – Issuer or Acquirer Initiate

Merchant Dispute Delivery Options • Electronic• Fax • Mail

Compelling Information • All documentation/scenarios are utilized to try and defend the

case for the merchant and recoup funds

Tomorrow Chargeback Reason Code Consolidation • April 2018; Four Reason Codes with Dispute Condition Code

• Fraud, Authorization, Processing Errors and Cardholder Disputes • Dispute Condition Code will define true reason for dispute

• April 2017; First Data to release electronic file specifications to allow merchants to code for thespec changes for April 2018 release

Dispute Cycles (Work Types); April 2018 • First Chargeback – Issuer Initiated • First Chargeback Representment - Acquirer Initiated • PreArbitration – Issuer or Acquirer Initiate • Arbitration – Issuer or Acquirer Initiate • PreCompliance – Issuer or Acquirer Initiate • Compliance – Issuer or Acquirer Initiate • Collections – Issuer or Acquirer Initiate Note: Additional Cycle for Acquirer based on Claim Reason Code

Merchant Dispute Delivery Options • Electronic Delivery of disputes is the best solution to accommodate for the reduced cycle time.

First Data will still provide merchants with the option to receive their dispute correspondencethrough Mail and/or Fax.

*Merchants that receive and/or send electronic files will be required to make coding changes*Merchants that continue to Fax/Mail responses or receive correspondence through Fax/Mail willbe billed additional fees

Compelling Information; April 2018 • Limited to specific scenarios outlined in Visa rules, which impacts funds that we are currently

able to recover for scenarios that Visa does not list • Required to provide specific compelling scenario as data element on all

representments for Fraud CNP and Merchandise/Services Not Received • Dispute Products and Electronic Response Files to accommodate the specific

compelling scenarios to meet Visa mandate (changes to Dispute Manger and response forms October 2017)

• Merchant required to select corresponding compelling scenario when responding todispute

Note: This will increase merchant financial risk for fraud chargebacks


20 Day Merchant Response – Timeline for processing of 1st Chargebacks & 1st Chargeback Reversals

Chargeback Timeline

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• System Load: Cases are received from issuing bank into Disputes Back office, validated for appropriate indicators and required documentation,and enriched with available authorization & transaction detail

• System Processing: Cases are being generated and directed to the issuing bank via the appropriate response system with all requireddocumentation to support the reversal request.

• Investigator Review: Cases are reviewed for validity during the initial investigator review period; merchant response documentation isvalidated during the second investigator review period to ensure the merchant has provided a valid remedy to the dispute.

System Load System Processing

15 Day Merchant Response – Timeline for processing of 1st chargebacks & 1st chargeback reversals

System Load System Processing

Investigator Review Merchant Response Investigator Review

4/2018 Visa Mandate Cycle Time Reduction

Investigator Review Merchant Response Investigator Review

Note: VCR (Visa Claims Resolution) Effective April 2018. Indicates Potential Weekend


VCR: Allocation - Pre Arb Accepted

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Dispute Initiated Dispute Received Dispute Received

Pre Arb Acceptance Sent

Cardholder Initiates Chargeback

CARDHOLDER ISSUER ACQUIRER MERCHANT

Merchant Response

Processor Response

+$ -$ +$ +$ -$

60

Days

-$

Dispute Lost PreArb Initiated

Response Sent PreArb Initiated PreArb Received

Dispute Lost PreArb Acceptance Sent

PreArb Acceptance Received

PreArb Acceptance Received

Issuer Response

-$ -$ -$ +$ +$ +$


VCR: Allocation – Pre Arb Decline

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Dispute Initiated Dispute Received Dispute Received Cardholder Initiates Chargeback

Processor Response

Merchant Response

PreArb Initiated

Filed Arb Initiated

Network Ruling

+$ +$ +$ -$ -$

PreArb Received Pre Arb Initiated Dispute Response

Dispute Won Pre Arb Decline Sent Pre Arb Decline Received Pre Arb Decline Received

Issuer Response

Processor Response

Filed Arb Received Dispute Lost

Filed Arb Lost

Filed Arb Won Dispute Won -$ +$

70 D

ays (

Max

) (T

BD) D

ays

Dispute Won Filed Arb Won Filed Arb Lost Dispute Lost


VCR: Collaboration

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Dispute Initiated Dispute Received Dispute Received

Response Sent Response Received

Cardholder Initiates Chargeback

Processor Response

Merchant Response

PreArb Initiated

Filed Arb Initiated

PreArb Initiated PreArb Received PreArb Received

PreArb Response PreArb Response PreArb Response Received

Issuer Response

Filed Arb Initiated Filed Arb Received

Network Ruling

Filed Arb Lost Filed Arb Won Dispute Won Dispute Lost

Issuer Response

Dispute Lost

PreArb Accepted

+$ +$ +$ -$ -$ -$

+$ +$ -$ -$ -$

-$

-$ +$ -$

Merchant Response

Response Received


Tools for Managing Disputes


• Consolidated, user-friendly web portal available 24/7

• Key, at-a-glance information on all payment streams

• Easy, self-enrollment

• Quickly view 7 day summaries for net Sales andExpenses

• Stay on track with daily alerts of deposit or chargebackactivities

• Help protect your business from missed deadlines andunnecessary write-offs with online chargebackmanagement toolWhat is Business Track®?

Business Track

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• ClientLine® is a web-based reporting tool providing youaccess to your processing information.

• Provides instant access to an overview of recentlyprocessed disputes, for your entire business. This isknown as “The Disputes Dashboard.”

• Provides a set of reports aimed at providing quickaccess to the information your business needs.

• Reports are available for delivery into Excel, PDF, WordDoc, Text Doc, and CSV files. This enables you to utilizevarious software programs, such as Microsoft Access orMicrosoft Excel, to analyze the information. This opensa wide range of popular tools that have been developedto create charts, graphs, custom queries, reports, etc.

• Provides detailed transaction information for credit,debit/EBT, chargebacks, and adjustments.

• Access to simple queries for account summaries, bankdeposits, rate analysis, activity summaries and more.

What is ClientLine®?

ClientLine.net

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Key Features • Accessible via the internet from the Business® portal 24/7• Manages disputes at the chain and corporate levels• Six months of transaction and authorization detail• Enter up to 1,000 characters of free form text directly into Dispute Manager, eliminating the need to

upload text documents• Electronic archive of all dispute documentation provided by both processor and merchant during case life

cycle• Respond to dispute requests electronically, expediting response times and simplifying back office tasks• Systemic work prioritization and improved ability for managing risk• Easy online help screens that provide you with information you need to effectively respond to

chargebacks and retrievals

What is Dispute Manager?

Dispute Manager

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Dispute Manager provides you with a internet-based chargeback and retrieval workflow management tool that enables better management of your cardholder dispute volume.


Communication between Bank of America Merchant Services and you in regard to electronic dispute processing involves several types of files:

What is Dispute Electronic Communication?

Dispute Electronic Communication

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• Electronic file (DFM): File to notify you of your daily retrieval, chargeback and exception (arbitration,compliance, Collection) cases that require action.

• eResponse file: File you use to respond to dispute cases through a bulk process• ZIP file containing an index text file and corresponding image files• Response file will be transmitted from you to Bank of America Merchant Services• Merchant Services through MessageWay• System (Dispute Manager) can receive and process this file seven days a week• Ability to accept multi-page combined image or single page• Supported image types: .tiff (compressed/non-compressed), .bmp, .jpg/.jpeg, .gif, .pdf

Questions?

Confidential — NOT TO BE DISTRIBUTED WITHOUT THE EXPRESS WRITTEN PERMISSION OF BANK OF AMERICA MERCHANT SERVICES.

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© 2017 Banc of America Merchant Services, LLC. All rights reserved. All trademarks, service marks and trade names referenced in this material are the property of and licensed by their respective owners. Merchant Services are provided by Bank of America, N.A. and its representative Banc of America Merchant Services, LLC. Banc of America Merchant Services, LLC is not a bank, does not offer bank deposits, and its services are not guaranteed or insured by the FDIC or any other governmental agency. ARTMFN78-10/2017

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webcast series - adobe€¦ · fraud/authorization-financial adjustment day 1 • chargeback...

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