Setting up Visa Financials Accounting
Setting up Visa Financials Accounting
Setting up Visa Financials Accounting
This topic defines the design for handling the transitional gain or loss due to exchange rate fluctuations during a chargeback process.
Use case examples
For valid disputes, issuers attempt to get a refund for the cardholder from the acquirers or merchants. It is called a chargeback. A typical chargeback process involves the issuer exchanging information with the acquirer or merchant and their attempts to prove the transaction's validity at multiple stages. As the chargeback progresses, there is also a cash flow accounted for between the issuer and acquirer.
International transactions involve exchange rate changes that can result in a transitional loss or gain during a cashback process. The issuer or the acquirer should bear the outcome of any such changes give the cardholder the exact refund as the disputed amount.
Visa provides a feature called 'Visa Financials' where it calculates and provides exact cash inflow or outflow at each chargeback stage through an API. The issuers need a concrete design to integrate with the API and post accurate accounting data for successful end of day closures.
An FX gain occurs when:
The issuer raises a dispute in the destination currency
The acquirer responds in the source currency
The response amount is recalculated in Visa using the applicable foreign exchange rate for the day leading to a new destination amount.
A gain ensues if the new amount is less than the original dispute amount.
An FX loss arises if the new destination amount is greater than the original dispute amount.
Before you begin
Issuer/ Issuing Bank : The bank or financial institution that issues the credit or debit card to the account or cardholder.
Acquirer/Acquiring Bank: The bank or financial Institution processing the payments on behalf of the merchants.
Dispute : A situation in which a customer questions the validity of one or more transactions on a credit or debit card account.
Considerations
- The Issuer must be subscribed on Visa Financials
- The Dynamic settings ‘FXwithVisaFinancials’ should be set to ‘true’
Process/Steps to achieve objective
We created the ‘InvokeGetDispFinancialDetails’ common flow to encapsulate the required RTSI calls and any associated data mapping. It has been adopted throughout the application to ensure a consistent pattern. You can plug this flow at any stage of the chargeback process to handle the FX Accounting.
The flow integrates with ‘GetDisputeFinancialDetails’ RTSI with the corresponding data transforms:
‘GetDisputeFinancialDetailsOperationRequest’ request data transform
‘GetDisputeFinancialDetailsOperationResponse’ response data transform
The RTSI requires DisputeFinId or DisputeItemID along with VisaCaseNumber as input parameters.
Visa returns a response message that includes the details of both the submitted VROL financial and received settlement advice. The ‘DestAmt’ attribute contains the updated response amount in the destination currency and consists of any FX gain/loss.
The ‘Offsetamount’ property is set to the difference between the original dispute amount and the updated destination amount in the ‘SetAccountingAmtForFXGainLoss’ data transform. This ‘Offsetamount’ is used to post the FX gain or loss accounting by sending the property as input to the accounting steps.
Results
The Issuers can observe the accounting including the FX Gain/Loss amounts.