ffective October 4, 2003, Visa USA will eliminate the second chargeback and second re-presentment as part of its ongoing Re-Engineering Disputes ("RED") Project. The RED changes are designed to streamline the chargeback process by capturing the dispute information electronically to track receipt of the documentation/information by the correct party and reduce the time to resolve chargebacks.

To expedite dispute resolution and facilitate exchange of information rather than simply providing documentation, the second chargeback cycle is being eliminated. If a dispute is not resolved after one dispute cycle, the issuer, rather than the acquirer, will decide whether to file for arbitration.

Additionally, the retrieval request-related "second first chargeback" will be eliminated. This means that merchants should provide all of the information necessary to rebut the chargeback the first time because it now will be the only time.

Here are some definitions of chargeback terms the Merchant Level Salesperson should understand:

• Retrieval Request: An issuer's request for a transaction receipt, which could include a paper copy, a facsimile or an electronic version.
• Chargeback: A transaction that an issuer returns to an acquirer to reverse a transaction.
• Chargeback Advice: A VisaNet message, sent in response to a chargeback, that notifies the issuer of the VisaNet Documentation Automation Service status of the acquirer.
• Chargeback Period: The number of calendar days from the central processing date of a transaction receipt, during which time the issuer may exercise a chargeback right.
• Re-presentment: A clearing record that an acquirer presents to an issuer through interchange after a chargeback to reverse the chargeback.
• Arbitration: A process where Visa determines financial liability between issuers and acquirers for transactions that are presented and charged back.
• Presentment: A clearing record that an acquirer presents to an issuer through interchange, either initially (a first presentment) or after a chargeback (a re-presentment).
• FastTrack Exhibits: A series of specific questionnaire-style exhibits designed for each chargeback category to facilitate the exchange of information in the chargeback process. A FastTrack Exhibit is required when documentation is sent to the opposing member and may be used in place of a cardholder or merchant letter.
• Visa Resolve Online: The new online Visa service for the retrieval and transmission of dispute resolution information and documentation.
• Transaction Receipt: An electronic or paper record of a transaction (or a copy, including microfilm), generated at the point-of-transaction, including:
  • Credit Transaction Receipt
  • Electronic Transaction Receipt
  • Guest Folio
  • International Airline Transaction Receipt
  • Order Form
  • Sales Draft
  • Substitute Transaction Receipt
  • T&E Document
  • Transaction Record

Effective October 4, 2003 an issuer must not charge back the transaction a second time, and the acquirer must not present the transaction a third time. So it is important for the merchants to provide all rebuttal information for the chargeback.

A member has the right to file for arbitration after receiving a subsequent chargeback or re-presentment.

If requested by the acquirer and permitted under applicable law, the issuer should provide the cardholder's address.

An acquirer must not process a transaction as a first presentment (i.e., a sale) if the transaction previously has been charged back.

Also effective October 4, 2003, Visa's operating regulations have been revised to require the use of Visa Resolve Online for the transmission of all the chargeback and re-presentment documentation as well as all arbitration and compliance case filings, including pre-arbitration and pre-compliance.

To re-present a chargeback, the acquirer must provide the issuer with the following:

• Any documentation or information to remedy the first chargeback.
• When documentation is provided, applicable FastTrack Exhibit.
• When information not available as Member Message Text is provided to support a re-presentment, applicable FastTrack Exhibit.
• For non-fraud related disputes, the acquirer also may provide the applicable FastTrack Exhibit, in lieu of a merchant letter, to convey the required information for a re-presentment right.

Finally, as part of the ongoing RED project, the Visa Mediation Service will be eliminated effective October 4, 2003 for Visa USA only.

The good news is that the chargeback process will become more streamlined and should become less confusing to the merchant.

It is going to be extremely important in re-presenting chargebacks to provide information and documentation that actually rebuts the cardholder complaint and not just send the same information for each chargeback.

The vast majority of a typical merchant's chargebacks are for only two or three different reason codes. Work with merchants to have them understand how their chargebacks are occurring and to take steps to prevent and defend them.

David H. Press is Principal and President of Integrity Bankcard Consultants, Inc. Phone him at 630-637-4010, e-mail him at dhp@integritybankcard.net or visit www.integritybankcard.net