Credit unions and banks that issue Visa cards have some changes they'll need to make in the upcoming year. There are three mandates that will go into effect in the next year.
October mandates
First in line is the Visa Account Updater, which states that all Visa card issuers must use the Account Updater service. Merchants who work with recurring payments will benefit the most from this mandate, as it will update the information as it changes. Because of this, cardholders will no longer need to contact individual merchants with account information changes. This mandate goes into effect Oct. 1, 2016.
The second will go into effect Oct. 14. This mandate states that all Visa issuers will be required to offer cardholders the choice to opt into an alerts service. The purpose of this rule is to help reduce fraud.
According to PYMNTS, issuers have two options to comply. One is to develop their own system. A network-branded solution is available to use as a starting point. The second option is to outsource the process to a third party that meets all alert requirements.
Cardholders have several options. First, they can choose to not receive alerts. If they do want the alerts, they can choose between getting emails, which are free, or SMS messages, which cost 1 cent per message for Visa users.
Why alerts are beneficial
Rachna Ahlawat, executive vice president at Ondot Systems, explained to PYMNTS that many people have shown an interest in being more involved in managing their cards. Actively engaging consumers by giving them useful information in a way they are most likely to act on it - texts or email - is a step in the right direction in reducing fraud and related costs.
However, Ahlawat warned credit unions, banks and other issuers to not go overboard with the messaging, though. Different people will have different preferences as to what types of messages they want. While alerts about potential fraud and purchase alerts can be a good idea, sending too many notifications may cause some to ignore all of them.
Regardless of consumer preference, studies have shown that alerts help in reducing fraud by about 40 percent. Additionally, using SMS capabilities can help lower instances when an abnormal but legitimate purchase triggers a fraud alert. This is because an SMS alert can take location data and compare it to where a purchase was made.
"Already having the last known location of the user on the server allows issuers, in real-time, to correlate and allow a transaction which otherwise would have been declined because they suspected fraud," Ahlawat told PYMNTS.
Another benefit that comes from offering an alert system to cardholders is increased consumer confidence in using that card. People feel more secure when they know their credit union is looking out for them, and these alert systems prove this to be true.
April 2017 mandate
The third mandate won't go into effect until next April. This one consolidates chargeback reason codes into four different categories. This is a big change, considering there are currently 22 options. The four resulting categories will be:
- Processing errors
- Fraud
- Consumer disputes
- Authorizations
The reason behind this mandate is to make exception transactions simpler for issuers and merchants alike, and to change the way people address these issues from a litigation-based standpoint to a liability-assignment one.
As these deadlines come closer, it's important for credit unions and other financial institutions to get prepared. It's also important to remember that these changes are designed to make things easier and more secure for cardholders, financial institutions and merchants alike.
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