Visa: We, for One, are Creative in Dispute Resolution

To the Editor:

The Dec. 30 Comment by Diogo Teixeira of Livermore Research Group, "Dispute Resolution Needs Web and Some Creativity" described some of the challenges facing the credit card industry regarding chargeback processing and the handling of disputes. Though Visa's chargeback rates are actually just a tenth of the ratio quoted in this piece, we still see this as an important issue. Visa is working diligently to address the need for a faster, more efficient dispute-resolution process for banks and cardholders alike, and significant changes are already taking place.

In 1999, Visa and a working group of card issuers, acquirers, processors, and selected merchants began what we call Red, a project to design a streamlined chargeback process that would be faster, simpler, and less contentious; require less paper; and attempt to prevent disputes before they ever happened by making information that often resolves questions readily available to consumers. Indeed, part of the plan involves moving toward the availability of an online point-and-click dispute-resolution environment.

Over the past couple of years, the focus of Red has been to introduce process improvements that bring benefits to all parties as quickly as possible with minimal systems impact. Visa implemented initial changes targeted at emphasizing communication and reducing paper documentation. We also recently introduced a more simplified set of regulations and began to lay the groundwork for more streamlined back-office procedures.

Last month Visa announced availability of Visa Resolve Online, a Web-based tool that Visa member financial institutions will use to simplify the entire chargeback process. The system allows issuers to query Visa's database for accurate information and provide substitute drafts to facilitate cardholder recognition of transactions, and additions to the system this spring will automate and further expedite the flow of information. Other improvements, including enhancements to dispute resolution, have been planned as well.

Visa has also been the industry leader in systems that reduce fraud and chargebacks. Our risk identification service provides acquirers reports of fraud activity at unique merchant locations. Our chargeback monitoring programs identify merchants with excessive chargeback levels. Our address verification service and Card Verification Value 2 (CVV2) have been very effective in preventing fraud and chargebacks in card-not-present transactions. Verified by Visa, a new service, authenticates the identities of Visa cardholders shopping online, and has been a key tool in preventing fraud.

Visa and its member banks have long held improving the dispute-resolution process a high priority and have made major strides toward that goal.