Your Guide to Visa Chargeback Time Limits

Written by Bruno Farinelli | May 16, 2024

Chargeback time limits are designed to ensure disputes are resolved efficiently and fairly. Each card network has its own time limits, which vary depending on the network and the reason behind the dispute. But the overarching idea is to promptly return funds to the rightful party.

However, while a speedy chargeback process is generally a good thing, Visa has a much shorter time limit for businesses to dispute a chargeback than the customer. And, that can make it harder for businesses to successfully win such disputes.

In this guide, we’ll explain Visa’s dispute process and provide best practices for successfully disputing chargebacks during Visa’s short window.

Here’s what ecommerce businesses need to know to increase the likelihood they’ll be able to win chargeback reversals with Visa. A thorough understanding of the dispute process is the best place to start.

Overview of the Visa Dispute Process

Most times, the commerce part of ecommerce works well. The customer gets the goods or services, and the business receives payment. Everybody is happy. However, if the process doesn’t go well and the customer initiates a chargeback, that triggers Visa’s dispute process.

Customer dispute

The clock for Visa chargebacks starts ticking on the transaction processing date. Customers generally have 120 days from the original transaction or expected delivery date to file a chargeback when the reasons for the chargeback fall within these four categories: Fraud, Authorization, Processing Errors, and Consumer Disputes. For example:

Fraud — The cardholder claims they didn’t authorize or participate in the transaction.
Late presentment —VISA cannot verify that a transaction was deposited within 30 days.
Incorrect purchase amount —The cardholder claims the amount charged is not correct.
Duplicate processing —The cardholder did make one purchase, but the charge was duplicated without authorization.
Canceled recurring transactions —The customer asked a business to cancel a recurring transaction, but the business failed to do so.

Dispute response

Once a customer has filed a chargeback, it’s up to the business to defend itself. This can be a time-consuming process that requires research to secure evidence to present to VIsa. (One of many reasons why ecommerce businesses should take action to prevent chargebacks in the first place. More on that below.)

During this dispute response phase, businesses have just 20 days to respond with compelling evidence. Although the specific evidence required varies by reason code, it usually includes documentation such as:

Email correspondence between the customer and the merchant
Customer information, like username and IP address
Order, shipping and delivery confirmations
Proof the customer downloaded or viewed digital goods (e-books, games, computer software, etc.)
The merchant’s terms of service and return and refund policies
Customer signature authorizing payment
Proof the customer received or used the disputed merchandise

Pre-arbitration

If the merchant files a response to the chargeback and wins, the issuing bank or cardholder then has 30 days to dispute the transaction a second time. In these cases, they’ll initiate a second, or pre-arbitration, chargeback.

Arbitration

If a second chargeback is filed, the card network makes the final decision, usually within 10 days. Unfortunately, businesses rarely win in arbitration. The reason why is simple: Businesses usually provide all their supporting evidence during representment and rarely have new information at the arbitration stage to support their case.

Visa Dispute Time Limit Exceptions

While business dispute time limits are straightforward, there are some exceptions on the cardholder’s side.

Cardholders have just 75 days to file a dispute for card recovery bulletin or authorization issues. On the other hand, when disputes are related to services not provided, merchandise not received or not as described, or defective merchandise, cardholders have 540 days to file.

Visa has four chargeback reason codes for exceptions to the standard dispute time limits:

Visa Fraud Monitoring Program

Reason Code 10.5

The 120-day time limit begins counting from the day the fraud is identified by the Merchant Fraud Performance Program.

Services Not Provided or Goods Not Received

Reason Code 13.1

When delivery would be reasonably expected after the actual transaction date, i.e., tickets to a future sporting event, the time limit starts on either:

The transaction date, if the delivery date was unspecified.
The date the cardholder returned or attempted to return the merchandise for late delivery.

Also, the dispute must be processed either:

Within 120 days from the last date the cardholder expects to receive the goods/services (but no more than 540 days from the transaction date).
Within 120 days of the date the cardholder was informed that the goods/services would not be provided (but no more than 540 calendar days from transaction).

Finally, the issuing bank must wait 15 calendar days before initiating a dispute.

Not as Described or Defective Merchandise

Reason Code 13.3

When a cardholder deems the goods/services defective or not as described, the Visa chargeback time limit is calculated based on one of the following:

Goods/services were purchased on or before the transaction processing date:

120 calendar days past the date the cardholder expected or was promised to receive goods or services.

There is a delay in delivery of the goods or services:

120 calendar days past the date the cardholder was told the goods/services would not be delivered/provided.

Goods or services were provided after the transaction processing date:

120 calendar days past the date the cardholder received the goods or services.

Credit Not Processed

Reason Code 13.6

Issuers must wait 15 calendar days from the credit transaction receipt date before initiating a dispute unless doing so would cause the dispute to exceed the time limit.

Disputes must be processed no later than 120 calendar days from either:

The transaction processing date
The date on the credit transaction receipt; if the CTR is undated, then from the date the cardholder returned the merchandise or canceled services

Challenges of the Shortened Visa Chargeback Time Limit

While the new timeframes do ensure faster dispute resolution, the shorter Visa chargeback time limits also present some challenges.

Not every business is able to adequately respond to Visa chargebacks with the condensed time limits. Many businesses still rely on a mostly manual process of gathering evidence to defend against disputes, which means that research can often take longer than the dispute process allows. This can strain internal resources and put pressure on the business.

If a business can’t adequately research a dispute and provide the right supporting evidence, they risk making mistakes during representment that can cause them to lose the dispute.

To make matters worse, if a business misses a deadline during the Visa chargeback process, Visa now automatically rules against the businesses and assesses added fees and penalties.

One of the best ways for businesses to avoid the time, hassle and expense associated with disputing chargebacks is by stopping chargebacks from happening in the first place.

How to Minimize Visa Chargeback Disputes

Disputes are costly. Not just in the dollar amount of the transaction and the merchandise, but also in the time spent researching and preparing a dispute response. These evergreen best practices can help ecommerce businesses reduce chargebacks and challenge them more effectively when they do happen.

Use an Address Verification Service (AVS). This tool validates if the billing address entered by a customer on an ecommerce store matches the address on file at the bank or credit card company.
Require CVV2 numbers for each transaction. These numbers are printed on the card, rather than embossed or stored in the magnetic strip. As a result, requiring these numbers can minimize card-not-present fraud, because fraudsters will generally need to have the card in hand to have this information.
Ensure your business name is recognizable on cardholders' bills or bank statements. Check with your acquirer to be sure it has the correct information on your “Doing Business As” (DBA) name, city, and state/region/province.
Ship items before depositing the transaction. If customers see a transaction on their monthly Visa statement before they receive the merchandise, they may dispute the billing.
Keep the customer informed. Communicate early and often to alert the customer to any events that don’t square with their expectations. For example, if the merchandise or service will be delayed, advise the cardholder of the new expected delivery or service date.
Be prompt in canceling recurring transactions. If a customer requests cancellation of a transaction that is billed periodically (monthly, quarterly, or annually), cancel the transaction immediately or as specified by the customer and advise the customer in writing that the service, subscription, or membership has been canceled.
Make your return process customer-friendly. Research has revealed that customers may file a chargeback if they find a business’s return policy or process cumbersome, hard to understand, or overly strict. To head off these chargebacks, ensure customers can easily find return information and support.
Combat non-delivery chargeback claims with delivery tracking. End-to-end order tracking and delivery confirmation, even including a photograph of the delivered package at the shipping address, provides undeniable proof to dispute these claims.

In addition to these evergreen tips, it’s important to remember that strategies for fighting chargebacks will need to evolve over time to keep pace with ever-changing fraud tactics. Any fraud prevention and protection tools you’re using need to be kept current.

AI-powered order screening tools are effective at identifying fraud risks in real time, from both new and returning customers where static rules or internal approved lists may not suffice. To verify fraud attempts and prevent false declines, consider having orders that score high on fraud risk reviewed by experts.

Similarly, monitoring bulletins and press announcements from major card issuers and digital wallet providers can help businesses stay informed about current chargeback disputation requirements, processes and deadlines.

If your business lacks the in-house resources to review orders in real-time, handle chargebacks or stay abreast of new developments in the fraud space, think about engaging a third-party mitigation service provider to manage them.

All of these measures are vital for reducing chargebacks and false declines so businesses can maintain revenue and retain customers. ClearSale can shed light on the fraud prevention and chargeback management options available to your business. Contact us today to find out how you can protect your bottom line.

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