Gabe McGloin
According to a recent survey, removing transaction disputes from the payments ecosystem has become the number one concern for merchants, with a tertiary concern of fraudulent chargebacks, otherwise known as first-party-misuse1. The question is – how do you stop payment disputes and still do right by your customer? Research shows it’s five to twenty five times more expensive to acquire a new customer than keep an existing one2, comparatively, after a positive post-purchase experience, 77% of consumers recommend brands to their peers3. Chargeback management is an essential customer retention strategy.
In Verifi’s webinar, ICYMI: 2022 Was A Big Year For Disputes, experts from Verifi sat down with one of Verifi’s largest merchant clients to discuss dispute dispute prevention strategies. This particular merchant’s view was that the post-purchase consumer experience is imperative to mitigating chargeback fraud, which is so often the result of consumer confusion. As digital payments expand, consumers now make purchases from multiple devices, with multiple family members accessing the same accounts, and often utilizing varied kinds of payment portals to process the payments. In the webinar, panelists concluded, it’s only natural that it would be difficult to trace certain transactions back to the source. The first step in chargeback mitigation and a positive post-purchase experience should start with transaction transparency.
Verifi’s client explained: “We tend to think of disputes [as a] funnel, or a waterfall, and the higher up the funnel we can provide clarity for the customer or resolve the issue, the better for everyone involved in the dispute process.” The client goes on to detail that they use Verifi’s Order Insight to provide additional information to the customer through their bank – within the customer’s banking applications with digital receipts, or through issuer customer service agents who are given enhanced transaction detail to communicate back to the customer.
Now with Visa’s new compelling evidence changes, the ICYMI: 2022 Was A Big Year For Disputes speaking panel agreed another layer of protection will be available for merchants to deflect 10.4 fraud disputes. Using Order Insight, merchants are already using have Qualified Transaction Data to automatically send back to issuers to deflect false credit card disputes before they become chargebacks and factor into fraud and dispute ratios.
What is Qualified Transaction Data for Visa 10.4 Fraud Disputes?
Systemic Dispute Deflection*
Qualified transaction data can validate Visa 10.4 disputes as invalid, blocking future disputes
☑ Pre-dispute – Order Insight
- Deflect disputes
- Avoid dispute ratio impact
- Avoid fraud ratio impact
☑ Post-dispute
- Retain revenue
- Reverse fraud ratio impact
If a customer still believes a transaction should be disputed after transaction clarity has been provided, merchants can add ease to the post-purchase experience by using tools like Verifi’s RDR and CDRN, which allows merchants to refund the pre-dispute before it becomes an official chargeback. The merchant panelist explained, “we really think receiving a chargeback and representing it should be a last resort… we think about disputes in a holistic way and try to deflect as many as possible up top [of the funnel], and what we cannot, we refund [via RDR and CDRN] where it makes sense.”
Dispute representment can lead to lost customers and comes with added operational expenses and high fees. The sharp rise in dispute volumes over the pandemic catapulted all stakeholders into action to collaborate on how to remove unnecessary disputes from the ecosystem. Look ahead to 2023, merchants have more options than ever deflect disputes and combat chargeback fraud on a global scale.
1 2022 MRC Fraud & Payments Report
2 Customer Retention Marketing vs Customer Acquisition Marketing
3 ProProfs HelpDesk Blog, July 2, 2022