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What Is Visa Compelling Evidence 3.0 & How to Prepare for It?

Boaz Gam

Boaz Gam

CEO

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28.10.2022
5 min
Article content
  1. Why Is Visa Taking Action Now?
  2. What Exactly Is Compelling Evidence 3.0?
  3. Changes That Come With Visa CE3.0
  4. How Will Merchants Submit Evidence from April 2023?
  5. How to Prepare for Visa’s New Compelling Evidence Standard
  6. Bottom Line: Timely Preparation is Key

A Merchant’s Guide to Visa Compelling Evidence 3.0

Friendly fraud is a compounding issue that is all too familiar to merchants. It occurs when a consumer makes an online purchase with their payment card and then disputes the charge. Sadly, over the past few years, the number of such fraudulent instances leading to chargebacks has grown significantly along with the rise of eCommerce.

To address this problem, Visa, one of the biggest card networks, has updated its dispute program. The policy’s new version, Compelling Evidence 3.0 (CE3.0), is going into effect on April 15, 2023. Read this overview to find out what these changes are all about and how to prepare for them.

Why Is Visa Taking Action Now?

A Merchant’s Guide to Visa Compelling Evidence 3.0

Card-not-present retailers have seen transaction volumes grow by 51% between 2019 and 2021. However, the number of disputes has also risen by 29% during this period - from nearly 6 million cases in 2019 to approximately 8 million in 2021. Visa suspects up to 80% of these disputes to be fraudulent, resulting in losses of over $25 billion a year1, which are numbers clearly calling for action.

Thus, in response to such alarming figures, Visa decided to update its dispute program developed in partnership with its clients, the Merchant Risk Council (MRC), and the Merchant Advisory Group (MAG). The aim of CE3.0 is to reduce fraud in the payment ecosystem, minimize losses, and help merchants fight against first-party misuse.

What Exactly Is Compelling Evidence 3.0?

A Merchant’s Guide to Visa Compelling Evidence 3.0

Visa states that Compelling Evidence is proof of the cardholder participating in a transaction, receiving the goods or services, or benefitting from the purchase.

Due to the fact that chargebacks are a consumer protection instrument, financial institutions and credit card companies typically side with cardholders when mediating disputes. Compelling evidence from merchants has the power to make these entities change their minds when a case is being reviewed.

Compelling Evidence 3.0 is Visa’s take on creating a new standard regarding what is accepted as valid proof of the merchants’ honest actions and can be used in resolving chargebacks in their favor.

Changes That Come With Visa CE3.0

A Merchant’s Guide to Visa Compelling Evidence 3.0

When Visa’s new CE3.0 standard takes effect in April 2023, merchants will need to provide the following proofs as compelling evidence:

  • The customer's IP address or device ID.
  • Two of the core transaction data elements (IP address, shipping address, user account, and device ID) matching between the two previous transactions and the one being disputed.
  • Two former transactions using the same payment card that are over 120 days old and have never been subject to dispute or marked as fraudulent.

How Will Merchants Submit Evidence from April 2023?

A Merchant’s Guide to Visa Compelling Evidence 3.0

Merchants will be able to provide evidence against fraud claims in two instances:

  1. During the pre-dispute phase, when the claims arrive through Verifi’s Order Insight
  2. After a dispute has been submitted and the chargeback can be found in Visa Resolve Online

In the first case, Visa will pick up to five transactions that are older than 120 days old and were never disputed. If the merchant can provide the data elements required by CE3.0 for two of those purchases, Verifi will review the dispute and prevent it from becoming a chargeback.

The liability for resolving the case will then shift to the card issuer, and neither the merchant’s chargeback rate nor their fraud rate will be affected.

When the dispute has already become a chargeback, the merchant can still fight it through the chargeback representment process. To do it, they will need to work with an acquirer to select the transactions with the qualifying data elements, fill out the necessary forms, and submit the data to Visa Resolve Online.

If the process is successful, the business’s fraud rate will not be affected, yet the chargeback will still count against them.

How to Prepare for Visa’s New Compelling Evidence Standard

A Merchant’s Guide to Visa Compelling Evidence 3.0

There are several things merchants could do to prepare for Visa’s new anti-chargeback standard, namely:

Collect CE3.0 Remedy Criteria for All Transactions

Visa suggests all merchants start aggregating the data elements, such as IP addresses, device IDs or fingerprints, shipping addresses, and account login IDs, already now. This way, they will have plenty of evidence to use in the event of disputes when the new standard goes live. Businesses will then be able to share the collected data via Order Insight and prevent chargebacks effectively.

Implement a Digital Fraud Prevention Solution

One of the best ways to prevent friendly fraud is to stop bad actors before authorizing a dishonest transaction. However, doing it manually would be impossible, especially when it comes to bigger companies.

Payneteasy’s 150+ customizable anti-fraud filters, customer behavior analysis function, and chargeback prevention solution with an Ethoca integration accurately identify fraudulent activity and help you mitigate the risks associated with it.

Get a Dispute Management Tool

Effective friendly fraud prevention requires yet another essential element - a dispute and chargeback management solution. Such a tool enables merchants to provide customers and issuers with more compelling evidence and handle the process in the most efficient way possible.

Bottom Line: Timely Preparation is Key

A Merchant’s Guide to Visa Compelling Evidence 3.0

All in all, to be well-prepared for Visa’s CE3.0 standard, merchants need to make sure they are collecting the necessary data elements in advance. Merchants should also store these details in a way that they are easily accessible in case there is a need to respond to an Order Insight inquiry or submit them to Visa Resolve Online.

Finally, it’s essential for businesses to have the right tool kit to prevent and manage disputes. That’s where Payneteasy comes in - reach out to us, and we will gladly provide you with more information on how we can help your business avoid chargebacks and different types of fraudulent activity!

1 - Visa - What every merchant needs to know about friendly fraud

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