Do card chargebacks apply to VRP payments?

No. A VRP is an account-to-account payment, so card chargeback rules do not apply. The customer authenticates the mandate with their own bank when they set it up, which also reduces fraud. For a PayFac, that removes the card chargeback process from recurring charges collected this way.

Different rails, different rules

Chargebacks are a card scheme mechanism. A VRP is an account-to-account payment, authorized by the customer with their bank through open banking. Scheme rules on reason codes, deadlines and representment do not apply. If a customer disputes a VRP collection, the question goes to the bank under payment services rules, as for any bank transfer.

Why fraud is lower

• The customer authenticates with their bank when setting up the mandate, not with the merchant.
• Limits on amount and period are enforced by the bank.
• There is no card number to steal and reuse.

What PayFacs gain and lose

Removing card chargebacks from recurring charges reduces fees, dispute work and monitoring exposure. In exchange, the merchant loses the card dispute process as a customer reassurance, and refunds have to be issued as separate transfers rather than reversals. Operators that offer both rails should present VRP where recurring volume and dispute risk are highest, keep cards where customers expect them, and report both in the same view so merchants can compare failure rates and cost.