The pace at which merchants must react and respond to transaction disputes is staggering. Due to the outdated dispute and chargeback process, it’s a race against a ticking clock to launch a successful representment case.
The existing transaction dispute process lacks cohesion and collaboration, creating a never-ending cycle of unnecessary chargebacks, lost revenue, and increasing liability costs.
It’s tempting to give in and accept the results of disputes as the cost of doing business, but that is a short-sighted approach. Instead, it’s time for merchants and issuers to better understand the challenges in the chargeback system and take a strategic approach to end the stress, costs, and uncertainty surrounding transaction disputes.
Why Transaction Disputes Happen
The main drivers of transaction disputes include:
- True fraud. Intentional or true fraud applies when a consumer’s credit or debit card data is compromised and used illegally. Fraudsters have become adept at stealing credit card and personal information from consumers.
- Friendly fraud. Friendly fraud can either be an intentional or innocent act. Intentional friendly fraud is the same as shoplifting – the consumer steals from the merchant by claiming that the product was never delivered, requests a refund without returning the product, or has buyer’s remorse and disputes the transaction. Unintentional friendly fraud happens when a consumer is confused about a charge – such as forgetting they made the purchase, or seeing an automatic renewal on their statement that they don’t remember authorizing.
- Merchant error. Errors can include a duplicate credit card charge, confusing billing descriptors, lost delivery, or not canceling a subscription – which can result in a chargeback.
- Ease-of-access. Just as it’s exceptionally easy to make a purchase, it’s just as easy to dispute the transaction. The simplicity of online sales with stored credit card and password data, delivery details, and instant shipping, makes one-click shopping a breeze. When remorse sets in, consumers simply click “Dispute Charge,” to initiate the transaction dispute process. Merchants are then forced to choose between challenging the chargeback to save the sale and limit their liability, or accepting it to protect their relationship with the customer.
Collaboration to Limit Transaction Disputes
Inevitably, consumers will dispute charges. What isn’t assured is that a dispute will result in a chargeback if merchants and issuers work together to resolve the issue.
- Evidence infrastructure. Merchants and issuers need to use available tools that collect and store critical purchase details, including confirmation emails, proof of delivery, complete purchase details, and customer transaction history. This information enables effective customer service support and can help build a successful dispute response case.
- Customer service support. Issuer and merchant customer service teams need fast and easy access to transaction information to solve the customer’s problems quickly, identify cases of friendly fraud, or identify true fraud.
- Merchant-issuer collaboration. With access to the right information at the right time, issuers can react quickly and alert the merchant to the dispute. This allows the merchant to work directly with the customer to resolve the problem before it becomes a chargeback. When this happens, the customer has a better experience and both issuer and merchant avoid costly losses and fees.
Need more evidence? Take a moment to review the Visa Claims Resolution (VCR) changes to understand that collaboration has evolved from a suggestion to a strong industry recommendation.
Contact Verifi to learn how Order Insight™ can enable true collaboration that will help you change how you can operate within the current transaction dispute process without absorbing the costs of chargebacks.