Visa recently revised and updated its evidence requirements necessary for merchants to challenge so-called “friendly fraud” disputes and prove that a fraudulent purchase had not taken place, and introduced “Remedy”.

Visa regularly makes these kinds of changes to keep pace with the always-evolving security threats that are an unfortunate reality of the credit card universe.

As you probably know, friendly fraud is when a customer makes a card purchase and then disputes the charge from their bank—only it turns out there is no legitimate reason for such a claim to be made.

In such a scenario, the burden of proof of the illegitimacy of a fraud claim usually becomes the merchant's responsibility. In challenging a fraud claim, the merchant needs to present evidence that there has been no fraud. The key to the success of such a challenge is that this evidence be the kind that Visa considers compelling and thereby supports the merchant's appeal.

Let's get to the numbers behind the new update. 

Let's start with payment processing technology, including credit card and ACH (Automated Clearing House) payments. It has never been simpler, and more secure to process payments, thanks to all the innovations that have come on the market in recent years. Even better, the costs associated with these newer technologies are usually made up by the long-term savings and other efficiencies they create.

3   This is the third time in recent years Visa has modified the way and the type of evidence that needs to be collected by merchants to challenge disputes.

CE 3.0  That's what Visa calls this new version of fraud-challenging protocols. The “CE” stands for “compelling evidence.”

10. 4  That's the reason code CE 3.0 attempts to address. The 10.4 reason code concerns card-not-present fraud. That would include purchases made online and over the phone. By claiming the 10.4 reason code, a cardholder stipulates that she did not authorize or participate in a card-not-present transaction and, therefore, the purchase must be fraudulent. 

4/15/23The day the new rule changes went into effect.

There are two major advantages to CE 3.0 for merchants:

1  CE 3.0 creates a system for disputes to never happen in the first place


2   CE 3.0 allows merchants to respond to disputes in a manner that greatly increases their odds of winning a dispute challenge, by using the Remedy option instead of compelling evidence in response to 10.4.

The basic idea behind CE 3.0 is if a merchant can establish that in the past, the person claiming fraud had made purchases that were not fraudulent, it is Visa's contention that the latest fraud claim cannot be legitimate. In other words, past proof of legitimate purchases negates the more recent purchase that is being claimed as fraudulent. 

This is powerful stuff! Visa is now guaranteeing that the fraud charge will not stand, and the merchant is not required to make a dispute provided the merchant does two things:

ONE  The merchant needs to produce two records of previous purchases by the buyer that were not disputed


TWO  These two previously undisputed transactions must have occurred within a specific timeframe.

120 –The minimum number of days that an undisputed purchase was processed that can be used as compelling evidence under Visa's new CE 3.0 rules.

365 – The maximum number of days that an undisputed purchase was processed that can be used as compelling evidence under Visa's new CE 3.0 rules.

The evidence presented to prove a previous purchase was valid must include two of the following four items:

1  Customer account or login ID
2  Delivery address 
3  Device ID or device fingerprint 
4  IP address

Obviously, merchants will want to make sure their purchase records are up-to-date and easily accessible in order to produce these four items. 

77.5%  That is the percentage of Visa disputes in 2021 that were classified as 10.4. Unfortunately for merchants, the 10.4 reason code has a lower-than-average win rate. But the CE 3.0 should change those odds of winning more in favor of merchants.   

Basically, Visa has made it much easier for merchants to refute fraud claims. Now, a merchant must present the evidence described above and Visa will recognize the merchant's challenge with no questions asked. Visa will automatically rule in favor of the merchant guaranteed. 

100%  –  That is how much we at Qualpay are behind our customers.  So should you have any questions about Visa's new dispute rules, do not hesitate to get in contact with us. 

About Qualpay

Qualpay is a technology-first, flexible payments platform. We simplify and improve the payments process for merchants across a range of industries, and we help ISVs create value for their customers with elegantly embedded payment and banking services. Qualpay leverages the most up-to-date technology to reduce costs and streamline back-office operations.