.avif)
Let’s look at Visa Compelling Evidence 3.0 (CE 3.0) to understand Visa Reason Code 10.4 and the way to guarantee protection against friendly chargeback fraud.
You want to win the chargeback fraud fight you’ve got on your hands.
According to Visa, one in five consumers has committed friendly fraud.
You need compelling evidence to win in these cases.
Visa defines “compelling evidence” and provides guidelines for how to use qualified data to overcome friendly fraud.
Capturing and storing compelling evidence for every transaction is in your best interest as a merchant. This is done with automated chargeback prevention services like ours, ChargebackStop.
What is Visa Compelling Evidence 3.0?
Visa Compelling Evidence 3.0 (CE 3.0) is a framework introduced by Visa to help merchants defend against friendly fraud - especially in card-not-present transactions, like online purchases. It outlines the types of data that can be used to prove that a transaction was legitimate, even when the cardholder disputes the charge.
This matters because friendly fraud is on the rise.
According to Visa, one in five consumers has committed it, often without malicious intent. A customer may simply not recognise a transaction or forget they authorised a purchase. Unfortunately, the result is the same: a chargeback that costs you time, revenue, and possibly your standing with your payment processor.
CE 3.0 aims to shift that dynamic.
By using qualified transaction data - like IP address, device ID, and past purchase patterns -merchants can prove that the cardholder did in fact authorize the transaction. If the data matches previous, fraud-free transactions from the same cardholder, the liability for the chargeback may shift away from the merchant.
In short, Visa Compelling Evidence 3.0 gives merchants a structured way to fight back against friendly fraud with data that banks recognize and accept. It's one of the most important tools available today to protect your business and recover revenue lost to invalid disputes.
What is Friendly Fraud and Chargeback Fraud & How Does Visa Compelling Evidence 3.0 Help?
Friendly fraud and chargeback fraud are related terms.
Both refer to a cardholder disputing a transaction on their credit statement.
Friendly fraud occurs when a customer mistakenly disputes a charge they authorised, often because they do not recognise the transaction. Rather than contacting the merchant, the cardholder disputes it with their bank, triggering a chargeback.
Chargeback fraud is deliberate. It happens when a cardholder knowingly disputes a valid transaction, attempting to recover the funds while keeping the product or service.
Both types of fraud fall under Visa Reason Code 10.4: Other Fraud — Card-Absent Environment.
To help merchants fight these disputes, Visa introduced Compelling Evidence 3.0 (CE 3.0).
By submitting qualified data—such as IP addresses, device IDs, and historical purchase records—merchants can prove the cardholder’s involvement. If the data matches previous fraud-free transactions, liability for the chargeback may shift back to the issuer.
Visa Compelling Evidence 3.0 gives merchants a stronger way to challenge friendly fraud and protect their revenue.
What is Reason Code 10.4?
Visa Reason Codes are the explanations for why a transaction is being disputed. The reason code is a numeric code with a brief explainer. There are many reason codes, and each card provider has their own reason code system.
As I mentioned above, Visa’s reason code 10.4 explains “Other Fraud—Card-Absent Environment.”
A “card-absent environment” refers primarily to online purchases where a physical card is not present during the transaction. Only the cardholder’s name, card number, expiration date, and security code are required of the purchaser. This is enough for a transaction to begin.
However, much more information is gathered electronically by the purchasing system. Merchants can use some of this information as Compelling Evidence 3.0-compliant data to avoid liability for online fraud.
Which Disputes Are Eligible for Visa Compelling Evidence 3.0?
Visa Compelling Evidence 3.0 is specifically designed for disputes filed under Reason Code 10.4: Other Fraud - Card-Absent Environment.
This means only card-not-present transactions are eligible - typically online, phone, or app-based purchases where the physical card is not used. The cardholder claims that they did not authorise the transaction or that fraud occurred without their knowledge.
Importantly, the disputed transaction must meet these conditions for CE 3.0 to apply:
- It must be processed through a card-not-present channel.
- It must be labelled under Reason Code 10.4 (not other types of fraud or service-related disputes).
- There must be no fraud alerts, disputes, or previous chargebacks linked to the historical transactions being used as evidence.
If these conditions are met, merchants can submit qualified data under CE 3.0 to fight the chargeback and potentially shift liability back to the issuer.
CE 3.0 gives merchants a powerful defence tool, but it is only available when the dispute falls under the right fraud category in the Visa framework.
What is Compelling Evidence According to Visa?
Among the vast amount of personal and system data the purchasing systems gather, there are specific bits which can prove a transaction is valid.
Visa calls this information “Compelling Evidence.”
However, this information must be taken in the context of previous transactions with that cardholder to be legitimate proof.
This is known as “Qualified Transaction Data.”
Qualified Transaction Data
Qualified data, gathered and stored at the time of a transaction, includes:
- Account ID
- IP Address
- Shipping Address
- Device ID
Any two of these items may be chosen for proof, and one must be the IP address or the Device ID (fingerprint).
Eligible Transactions
The qualified transaction data of the disputed transaction is required to match historical transactions by the same cardholder.
At least two historical transactions are used as context and reference. These transactions’ data must match the current qualified transaction data.
Also, the two historical transactions must contain and match the current card number (PAN) while being older than 120 days but less than or equal to 365 days.
Historical transactions must be void of prior fraud activity or claims. The merchant must also be the same on all three transactions.
How Does Visa Compelling Evidence 3.0 Work for Merchants?
Visa Compelling Evidence 3.0 gives merchants a way to challenge disputes more effectively by using qualified transaction data to prove that a cardholder authorised a purchase. Whether a dispute is caught before it becomes a formal chargeback, or after one has already been filed, CE 3.0 offers two clear paths to defend the transaction.
Pre-Dispute Process: Blocking the Chargeback Before It Happens
Here’s how the pre-dispute process deflects the fraudulent transaction before a dispute is filed.
- Visa pre-selects 2-5 transactions with no fraud activity that occurred within 120-365 days of the disputed transaction.
- The merchant must systematically return the qualifying data elements for the selected transactions.
- The data will be validated and passed to Visa for the liability decision.
- If the decision criteria are met, the pre-dispute will be blocked, and transaction liability will shift to the issuer.
Post-Dispute Process: Fighting a Chargeback After It’s Filed
After a dispute is lodged but before arbitration begins, a merchant can submit qualifying data points to the acquiring bank. This may allow the merchant to recoup revenue lost to illegitimate fraud disputes labelled Visa reason code 10.4.
- In conjunction with the acquirer, merchants locate and package CE 3.0-compatible data elements for the two historical transactions.
- The acquirer delivers the response package to Visa’s Resolve Online service (VROL) for validation.
- The dispute will be reversed if the data elements from the historical transactions meet the qualification criteria and are accepted by the issuer. Liability will shift to the issuer.
Advantages of Visa Compelling Evidence 3.0
Visa CE 3.0 gives merchants a clearer, data-driven way to challenge friendly fraud. Its benefits include:
- Stronger protection against chargebacks from card-not-present transactions
- Faster dispute resolution using structured, qualified data
- Improved win rates with issuers by meeting Visa’s strict evidence standards
- Reduced financial loss from unjustified fraud claims
- Prevention of disputes through pre-dispute blocking
With CE 3.0, merchants can defend revenue more effectively while streamlining their chargeback management.
Prevent Fraud and Chargebacks Before They Happen
The good news is that fraud and chargeback prevention is automated now.
ChargebackStop’s chargeback prevention platform handles all the details for you.
Transactions are monitored, potential problems are identified, and you are given the power to reduce chargebacks by 99%.
Looking Forward
Contact us to find the answers to your questions.
Our customer service is free, of course, and we are eager to help you understand more about chargebacks and prevent them before they happen.
Visit ChargebackStop.com for a free demo of our platform and more information.
FAQ: Visa Compelling Evidence 3.0
How does Visa Compelling Evidence 3.0 impact the chargeback process?
Visa Compelling Evidence 3.0 aims to streamline the chargeback process by making it easier for merchants to present their cases with relevant and qualified evidence. This can lead to quicker resolutions, reduce the incidence of unjustified chargebacks, and ultimately lower operational costs related to disputes.
How do merchants submit evidence under Visa Compelling Evidence 3.0?
Merchants can submit evidence through their acquiring bank or payment processor using the platforms and procedures established for dispute resolution. It's essential to follow Visa's guidelines for evidence submission to ensure the information is presented effectively.
Can Visa Compelling Evidence 3.0 guarantee a win in a dispute case?
While Visa Compelling Evidence 3.0 significantly improves a merchant's ability to fight friendly fraud by providing clear guidelines on compelling evidence, it does not guarantee a win in every dispute case. The outcome depends on the completeness and relevance of the evidence provided in the context of the dispute.
