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Visa and American Express Announce Changes to Chargebacks
Tuesday, July 19, 2016 6:45 AM

Major card networks have announced changes to their chargeback policies. The changes, which will become effective in the coming weeks, 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.

Visa’s changes become effective July 22, at which time 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, Visa issuers will be limited to 10 fraudulent chargeback transactions per account. American Express is making similar changes, with the termination of $25 chargebacks coming in late 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 percent reduction of chargeback transactions and approximately a 15 percent 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.