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Visa’s new rule change, Compelling Evidence 3.0, promises to provide significant benefits for merchants who are defending themselves from first party fraud. It is a thorough overhaul of the compelling evidence rules for representments and also affects Visa’ chargeback deflection solution, Verifi Order Insight. As a result, there are many questions that merchants may want to be answered.

What Is Compelling Evidence 3.0?

Compelling Evidence 3.0 in an update to Visa’s compelling evidence rules that aim to assist merchants in challenging fraudulent chargebacks that fall under reason code 10.4. These guidelines provide merchants with detailed instructions on how to dispute claims of fraud related to card-not-present (CNP) transactions that they believe are not being claimed legitimately. To qualify for Compelling Evidence 3.0, merchants must submit evidence of at least two non-disputed and non-fraudulent transactions that were settled with the same cardholder and payment method, at least 120 days before the dispute date. The undisputed previous transactions must match certain data elements to the disputed transaction. If merchants meet these data requirements, they are guaranteed to win the chargeback dispute.

What Is Order Insight 3.0?

There is no such thing as Order Insight 3.0.

How Does Compelling Evidence 3.0 Relate to Order Insight?

Compelling Evidence 3.0 can be processed pre-dispute or post-dispute. For pre-dispute uses, it is processed through Verifi Order Insight. This is a significant update as merchants had never previously been able to present compelling evidence before a chargeback has been filed.

Why Is Visa Instituting Compelling Evidence 3.0?

Visa initiated changes to its compelling evidence rules due to the increase in CNP transactions and changing nature of fraud in recent years. 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.

Does Compelling Evidence 3.0 Work With All Chargebacks?

Compelling Evidence 3.0 is only applicable to chargebacks with the reason code 10.4—Fraud, Card Absent Environment.

What Evidence Is Required for Compelling Evidence 3.0?

In order to qualify for Compelling Evidence 3.0, the disputed transaction must match at least two core data elements from two previous, undisputed transactions. The core data elements consist of customer account/login ID, IP address, shipping address, and device ID/device fingerprint. One of the matching data elements must be either an IP address or a device ID. Furthermore, the previous, undisputed transactions must be at least 120 days old but no more than 365 days old.

Why Does Compelling Evidence 3.0 Have a Waiting Period of 120 Days?

The requirement that the two previous transactions for Compelling Evidence 3.0 be at least 120 days old is to prevent unscrupulous cardholders from also claiming fraud on those transactions as well. By requiring the previous transactions to be 120 days, it shows that those transactions were genuinely undisputed as reason code 10.4 has a 120 day time limit.

When Can Merchants Use Compelling Evidence 3.0?

Merchants can use Compelling Evidence 3.0 pre-dispute if they are users of Order Insight. It can also be used, through VROL, post-dispute as part of the regular representment process.

What About Other Representment Efforts That Fall Outside of Compelling Evidence 3.0?

Other representments that do not qualify for Compelling Evidence 3.0 are unaffected by these rule changes.

Does Compelling Evidence 3.0 Apply to Other Card Brands?

No. It is a Visa rule and only applies to payment disputes on Visa cards from Visa-affiliated issuers.

Does Compelling Evidence 3.0 Apply to Card Present Transactions?

No. Compelling Evidence 3.0 only applies to CNP transactions that are classified under the 10.4 reason code.

Does a Chargeback Averted Through Compelling Evidence 3.0 Still Affect the Merchant’s Chargeback Ratio?

It depends. If the merchant averts the chargeback pre-dispute through the use of Order Insight, their chargeback ratio is unaffected. But if the chargeback is filed and the merchant uses Compelling Evidence 3.0 as a part of representment, their chargeback ratio increases.

Does a Chargeback Averted Through Compelling Evidence 3.0 Still Affect the Merchant’s Fraud Ratio?

No. Whether it is processed pre- or post-dispute, any chargeback that is overturned through the use of Compelling Evidence 3.0 results in the TC40 report being deleted and the merchant’s fraud ratio being unaffected.

When Is Compelling Evidence 3.0 In Effect?

Compelling Evidence 3.0 was put into effect on April 15, 2023.