There’s an increasing need for powerful tools to help fight these financial crimes. Enter Visa’s Compelling Evidence 3.0 (or “CE 3.0”), a ruleset designed to provide strong evidence to help combat fraud.
CE 3.0 offers a significant step forward in the fight against invalid chargebacks. However, it’s a bit overly-optimistic to believe that this will be the “silver bullet” against chargebacks that some in the payments space are hoping for.
What is Visa Compelling Evidence 3.0?
With the chargeback process often being slow, opaque, and convoluted, it can be difficult for merchants to successfully dispute fraudulent or unwarranted chargebacks. This results in lost revenue, damaged reputations, and a diminished customer experience.
Compelling Evidence 3.0 is a set of guidelines and evidence requirements that merchants and acquirers can use to strengthen their cases when disputing chargebacks.
The ruleset, which takes effect on April 15, 2023, applies primarily to disputes marked with a Visa reason code 10.4: Other Fraud – Card-Absent Environment. Previously, merchants could only respond to these disputes using evidence from a single previous transaction. Also, the IP address, email, mailing address, and phone number were all required to match.
With CE 3.0, dispute responses are only required to match two of the following:
- Customer account/login ID
- Delivery address
- Device ID/device fingerprint
- IP address
The merchant also does not need to wait until the dispute response phase. Through Order Insight, this information can be provided during the pre-dispute phase, effectively preempting the chargeback.
Improving the Chargeback Process
The need for a standardized, evidence-based approach to the chargeback process is pretty obvious at this point. Visa’s Compelling Evidence 3.0 aims to address this need by providing clear guidelines and requirements for all parties involved. This will help create a more equitable and effective process for handling chargebacks.
By requiring that all parties adhere to these guidelines, CE 3.0 helps to promote transparency and accountability. Merchants have a clearer understanding of the information and documentation they need to provide in order to effectively dispute a chargeback. They also have more clear instructions on how to submit that information.
The goal of CE 3.0 is to provide a more level framework for all parties involved in the chargeback process. By doing so, the hope is that the chargeback process becomes more efficient, transparent, and fair.
CE 3.0 will reduce confusion, minimize disputes, and expedite the resolution process altogether. Ultimately, this will help reduce instances of unwarranted first-party chargebacks, and reduce costs for everyone involved.
A Good Start
While Visa’s Compelling Evidence 3.0 is a significant step forward in the fight against invalid chargebacks, it’s important to recognize that it can’t solve every problem. CE3.0 serves as a solid foundation for improving the chargeback process, but it’s only one piece of a broader solution to better manage disputes.
To truly minimize chargebacks and protect their businesses, merchants need to implement comprehensive strategies. This includes employing a multi-layered approach that combines advanced technology, robust security measures, and employee training.
For instance, implementing tools like artificial intelligence and machine learning can help detect and prevent fraudulent transactions before they occur. Investing in secure payment processing systems, such as those that support tokenization and end-to-end encryption, can help protect sensitive customer information and reduce the risk of data breaches. Training employees to recognize the signs of fraud and follow best practices for handling customer transactions can further reduce the likelihood of chargebacks.
Merchants should also strive to create exceptional customer experiences, as poor customer service or unclear policies can sometimes lead to unwarranted chargebacks. Merchants want to minimize the chances of a customer initiating a chargeback due to dissatisfaction or misunderstanding. They can do this by providing clear communication, responsive support, and transparent return policies.
One Piece of the Puzzle
Visa Compelling Evidence 3.0 is a valuable component in the ongoing battle against chargeback misuse.
By helping to standardize the chargeback process, and promoting transparency and accountability, CE 3.0 can help merchants and financial institutions better handle and resolve disputes. However, it’s essential to recognize that CE 3.0 can’t be a “one-size-fits-all” solution.
To effectively combat fraud and chargebacks, merchants must take a more holistic approach against fraud. They should employ a combination of advanced technology, robust security measures, employee training, and exceptional customer service. Anything less is merely ignoring one side of the coin for the other.
