How Visa Claims Resolution (VCR) Changed the Chargebacks Ecosystem

Visa Claims Resolution (VCR) was rolled out in 2018 with immediate and profound implications for the entire payments ecosystem. The card network wanted a streamlined and increasingly automated payment dispute resolution process that would be easier and faster for all parties when dealing with payment reversals. While achieving these aims to a great extent, the new system was also accompanied by certain drawbacks for merchants fighting disputes. This article will explore both, as well as what merchants can do to make the most of VCR.

VCR replaced Visa’s 22 legacy dispute codes with new chargeback reason codes divided into four different categories belonging to two workflows. The first two categories are “Fraud” and “Authorization” and belong to the “Allocation” workflow. The last two categories are “Processing Errors” and “Consumer Disputes”, which belong to the “Collaboration” workflow. Some 60 percent of  Visa disputes are Allocation-related, while 40 percent of disputed transactions are Collaboration-related.

Allocation automates the determination of chargeback liability based on Visa’s internal data. With Allocation, a chargeback that proceeds to the acquirer goes directly to pre-arbitration if the acquirer disputes liability, with the aim of eliminating an unnecessary round of correspondence between the issuer and acquirer.

Visa also conducts a series of automated checks to determine whether the disputed transaction is 3D Secure authenticated, has already been refunded, or if the transaction was disputed after the allotted time frame. In any of the above cases, Visa blocks the dispute as an invalid chargeback, significantly reducing the volume of chargebacks outstanding.

Collaboration is essentially the same as Visa’s prior method for dealing with chargebacks; the acquirer can dispute a chargeback with a representment, and the issuing bank disputes the representment with a pre-arbitration filing.

While often discussed together, and both created to streamline the chargeback process, VCR is distinct from VROL (Visa Resolve Online). VROL is simply Visa’s technical platform for communication, data storage, and document transfer between merchants and card issuers. Think of VCR as the rules of the road and VROL as the vehicle – VCR defines processes, while VROL provides the infrastructure where these processes take place.

One of the self-proclaimed goals of VCR was to reduce the duration of the chargeback process. To attain this goal, VCR reduced the timeframe for the initial response to a dispute from 45 days to 30 days. Now, instead of taking up to 150 days to resolve a payment dispute it takes up to 70 days for Allocation cases and up to 100 days for Collaboration cases. Visa also no longer allows merchants to default to “no response” in reaction to a chargeback. Merchants must accept or contest liability, or they face penalty fees for lack of response.

Visa also used VCR as an opportunity to reduce the overall volume of chargebacks merchants face. VCR requires issuers to proactively review associated transactions (credits, reversals, adjustments) before filing a payment dispute. These transactions are identified by examining historical transactions with similar characteristics using Visa’s authorization, clearing and settlement systems.

Should an associated transaction render the payment dispute invalid, the chargeback is rejected before it is filed and no chargeback defense is needed, saving both the issuer and acquirer significant amounts of administrative labor. Visa also phased out the previously common “unrecognized” chargeback reason code (number 75), forcing issuers to help cardholders identify the transactions they are contesting and categorizing them with greater detail.

VCR also incentivizes cardholders to be more vigilant regarding fraud by allowing fewer opportunities to submit card-not-present chargebacks. Cardholders are now only permitted to file up to 35 fraudulent chargebacks on the same card within a period of 120 days for card-not-present transactions. With VCR, it is up to the issuer to decide if they want to close an account once fraud is reported. However, failure to close an account prevents the issuer from filing fraud disputes on any new transactions on that account, across all merchants.

While streamlining the dispute process, Visa Claims Resolution has several significant limitations. While the initiative successfully reduced timeframes and automated some aspects of dispute management, these shorter windows frequently create additional pressure on merchants who now have less time to gather and submit compelling evidence. Furthermore, the automated blocking of some fraudulent disputes, while helpful, has had

minimal impact on the rising tide of friendly fraud, which accounted for up to 80% of all chargebacks in 2024.

The complexity of VCR’s workflows can also prove challenging, as merchants must navigate intricate dispute categories and specific evidence requirements that vary by reason code. The system’s strict documentation requirements and rigid timeframes can lead to automatic losses even when merchants have valid cases, simply because they failed to meet a technical requirement or deadline. 

Despite VCR’s streamlining of the dispute process, many merchants still find it difficult to stay on top of all the requirements and deadlines. Both the cut in initial dispute response time and the penalization of merchants who fail to respond, have emphasized the need for professional chargeback management solutions that can address disputes promptly, and at scale. For merchants who wish to return their focus to their primary business concerns, there is Justt – the fully-automated chargeback mitigation solution.

Justt’s solution is precision-engineered to guarantee industry-leading win rates. Our AI-driven chargeback solution builds the market’s strongest compelling evidence documents while providing a hands-free experience for customers.  Unlike template-driven solutions and in-house teams, Justt’s comprehensive automation means that nuanced, data-driven representments can be generated at any scale, without compromising on quality – freeing up your resources for allocation on what matters to your business.