The Benefits of Visa Compelling Evidence 3.0 and Verifi Order Insight

Visa will implement its new Compelling Evidence 3.0 ruleset on April 15, 2023. Visa is implementing this new tool in response to the increase of chargebacks with the 10.4 reason code for fraud in a card-not-present (CNP) transaction. Visa has observed a 51% increase in CNP transactions between 2019 and 2021 and a 29% increase in payment disputes during the same time period. This new tool will provide benefits for participating merchants who use it during representment as well as chargeback deflection benefits for merchants who use it in tandem with Verifi Order Insight. Much has been written about how Compelling Evidence 3.0 works but it is useful to emphasize just why it’s such a beneficial tool for merchants.

Compelling Evidence 3.0 Requirements

In order to make use of Compelling Evidence 3.0, merchants are required to provide evidence of a minimum of two non-disputed and non-fraudulent transactions from the same cardholder with the same payment method that were settled at least 120 days before the dispute date. Additionally, there must be a match of at least two core data elements between the prior transactions and the disputed transaction, with one of them being either IP address or device ID. The core data elements include customer account/login ID, IP address, shipping address, and device ID/device fingerprint. If a disputed transaction meets these requirements, it is eligible to be deflected or fought with Compelling Evidence 3.0. Only chargebacks (or potential chargebacks) with the 10.4 reason code are eligible for Compelling Evidence 3.0.

Compelling Evidence Allows You to Present Compelling Evidence Before the Chargeback

The most game-changing aspect of Compelling Evidence 3.0 is the way that it works with Verifi Order Insight to allow merchants to present compelling evidence before the chargeback is even filed. Normally, compelling evidence can only be presented as a part of the chargeback representment process. Even if the merchant prevails in representment, they will have to pay chargeback fees and have their chargeback ratio increase.

Thanks to the changes associated with Compelling Evidence 3.0, participating merchants will actually be able to present compelling evidence as part of their efforts to deflect and prevent chargebacks for the first time. If the merchant participates in Verifi Order Insight, they will be able to present compelling evidence through the Order Insight process for any potential chargebacks that can be refuted according to the requirements of Compelling Evidence 3.0. Because this process occurs before the chargeback is actually filed, successful efforts deflect the chargeback. In addition to preventing the loss of the revenue from the transaction, this also prevents any associated fees from being levied and precludes any increase to the merchant’s chargeback ratio.

Compelling Evidence Covers Revenue Losses for Qualifying Representments

Compelling Evidence 3.0 also has significant utility during the representment process, as well. Namely, it guarantees merchants that they will be reimbursed for qualifying transactions even if they lose the representment decision. While this will not prevent the merchant’s chargeback ratio from increasing and will not cover chargeback fees, it is still a valuable resource for participating merchants.

The representment process imposes a significant amount of uncertainty upon merchants and turns largely upon decisions made by other parties. By offering guaranteed coverage of lost revenue, Compelling Evidence 3.0 reintroduces a certain measure of certainty into the representment process for merchants. Additionally, Visa has explained that both pre- and post-dispute Compelling Evidence 3.0 transactions will have the associated TC40 record removed and will not impact the calculations for the Visa Fraud Monitoring Program (VFMP).

It Allows Merchants to Ensure That Key Evidence Is Considered

While merchants could always present evidence of previous transactions from the same cardholder claiming fraud, there was no guarantee that such evidence would be considered during representment. Now, thanks to Compelling Evidence 3.0, that evidence is guaranteed to be considered for qualifying disputes. While the specificity of Compelling Evidence 3.0 does prevent it from being applicable to the wide variety of different kinds of chargebacks, it is indispensable for chargebacks that can be readily disproven with the sorts of evidence of previous transactions covered by Compelling Evidence 3.0.

Conclusion

For merchants that face risks from 10.4 chargebacks from repeat customers, Compelling Evidence 3.0 is an invaluable tool for combatting first party fraud. Taking full advantage of it does require some technical work to set up the required data transfers and necessitates certain forms of recordkeeping related to the specific requirements of Compelling Evidence 3.0. But for merchants that are able to do so, this will likely pay enormous benefits, allowing them to insinuate themselves into new stages of the chargeback process with more evidence at hand and have stronger guarantees of self-defense.