Can Visa’s VMPI Plug-in Help Reduce Chargebacks and Fraud?

When Visa launched its new Visa Claims Resolution (VCR) Initiative in April 2018, it was a dramatic departure from the company’s previous litigation-based chargeback dispute process. Central to this overhaul is the Visa Merchant Purchase Inquiry (VMPI) plug-in – a new solution designed to help issuers directly communicate with merchants in real time to review unrecognized transactions before they’re even submitted.

The goal? Increased customer satisfaction, fewer chargebacks, and a better understanding of fraud.

But does the plug-in live up to the hype?

How Does VMPI Work?

Under the legacy system, merchants had no way to stop a customer from filing a chargeback; merchants had to wait until after the chargeback was filed before they could introduce compelling evidence to prove their innocence. But using VMPI, merchants can preload key transaction details and allow issuers access to these at the beginning of the dispute process. Visa calls this submission of detailed supplemental information “proactive representment,” which means merchants have the opportunity to prevent, not just respond to, chargebacks.

Merchants who choose to participate in the program simply need to install VMPI in to their VROL platform. Merchants can integrate directly with Visa’s systems, or they can work with Visa-appointed facilitators to integrate with VMPI on a merchant’s behalf.

Participating merchants can respond to VMPI inquiries with credit notifications, transaction inquiry responses or both.

Here’s how it works.

  1. When a cardholder calls their issuer with a transaction question, the call center representative first accesses VROL to identify the transaction.
  2. If the merchant participates in VMPI, the VROL platform sends a transaction inquiry to the merchant via the plug-in and includes key data elements the merchant can use to identify the transaction.
  3. The merchant responds with transaction-specific data (e.g., description of goods purchased, the device used for purchase, date item was downloaded) or a statement of intent to credit the customer’s account.
  4. Visa sends the data to the issuer, who shares it with the cardholder in an effort to identify the transaction and resolve the concern.

Why Merchants Should Use VMPI

This real-time data-sharing exercise lets merchants and issuers seamlessly exchange critical transaction information to resolve customer concerns, and that’s a huge benefit in today’s growing e-commerce market.

Here are two other reasons to consider installing the VMPI plug-in.

Prevent Chargebacks

In 2015, Visa saw customers initiate more than 2.5 million chargebacks — and many of these occurred simply because customers didn’t recognize a transaction on their statement.

And these disputes and chargebacks can be expensive for merchants. Not only does the cost of representing a chargeback often exceed the transaction amount itself, but an excessive number of chargebacks can also cause a merchant to lose their merchant account and bring sales to a halt entirely.

But VMPI promises to reduce the number of disputes that really aren’t disputes by providing the information a customer needs to recognize and understand the transaction. And if the merchant responds to a VMPI inquiry with a credit notice, the customer issue is considered immediately resolved. Although the merchant loses revenue and product with the credit, it prevents the questionable transaction from potentially escalating into an expensive chargeback.

Provide Better Fraud Reporting

Because VMPI can notify merchants in real time when an issuer identifies a fraudulent transaction, these retailers can stop orders before they ship, suspend accounts to prevent further fraud and contact the customer to resolve disputes.

VMPI and VCR will also improve the way merchants, credit card issuers and Visa itself share fraud details and limit losses. Even beyond the initial response, merchants can use VMPI data (like resolution vs. dispute rate and overall refund rate) to better understand their overall fraud situation and how they can mitigate risk.

With just a few simple steps, merchants can integrate VMPI into their e-commerce platform to recover more revenue, reduce chargebacks, and increase income. But merchants shouldn’t stop there. They should also be using a robust fraud protection solution that can help prevent fraud before checkout.

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If you’re not sure what fraud protection solution can provide this peace of mind for your business, download our free “Fraud Protection Buyers Guide.” We’ll explain all the options available to you and help you determine the level of protection and service that makes sense for you.