Visa, American Express announce changes to chargebacks

July 15, 2016

Major card networks have announced changes to their chargeback policies, with the changes becoming effective in the coming weeks. The changes come as a result of merchant complaints of ballooning chargebacks stemming from the migration to EMV chip cards.

Chargebacks are a demand by credit card issuers for a retailer to make good on the loss stemming from a fraudulent or disputed transaction. For more information, including links to each card issuers proposed changes, see CUNA’s CompBlog.

Visa’s changes become effective July 22, and starting that date Visa will block all U.S. counterfeit fraud chargebacks under $25. According to Visa, “these smaller chargebacks generate a great deal of work and expense for merchants and acquirers, with limited financial impact for issuing banks.”

Beginning in October (no exact date has been specified), Visa issuers will be limited to 10 fraudulent chargeback transactions per account.

American Express is making similar changes, with the end of $25 chargebacks coming at the end of August, and the end of 2016 for the 10 transactions per account limit.

Both Visa and American Express have estimated that the combined impact of these changes would result in a 40% reduction of chargeback transactions and approximately a 15% decline in chargeback dollars.

The new guidelines will remain in place through April 2018 for both Visa and American Express.

MasterCard has announced enhancements to speed its EMV testing and certification process, but has not implemented any rule changes.