Visa post-purchase dispute volumes went up more than 7% in 2023 alone1. The combination of lost sales, dispute fees, operational costs, relating to disputes, can cause merchants to lose unnecessary revenue. An active dispute prevention strategy can help merchants limit post-purchase losses by stopping disputes in the interim between when a cardholder initiates a dispute and when a card issuer logs the dispute – otherwise known as the pre-dispute stage.
Solutions like Verifi’s Cardholder Dispute Resolution Network (CDRN) and Rapid Dispute Resolution (RDR) give merchants the power to resolve pre-disputes by issuing the cardholder a credit before a dispute is logged with the issuer, resulting in lower dispute ratios, fewer duplicate refunds, and decreased operational expenses.
What are the differences between CDRN and RDR?
CDRN is a manual card brand agnostic solution that operates independently of card brand networks. Merchants are sent pre-dispute notifications directly when issuers submit cases directly from cardholders. Disputes are paused and posted in Verifi | One, the web portal that supports CDRN, for 72 hours, giving the merchant the opportunity to determine how they would like to resolve the dispute – either by crediting the funds back or continuing with the dispute process. In many cases, this also gives the merchant the ability to stop shipment on goods the cardholder has already received a refund on.
RDR operates largely the same as CDRN, but rather than necessitating manual review, the merchant uses a robust, automated decision engine to set rules of acceptance or refusal – without the merchant ever needing to login into the system. The RDR system works for merchants in two ways. First, it will apply a merchant’s pre-set rules and either accept liability, resulting in a customer refund, or declining the pre-dispute and allowing it to continue through the dispute lifecycle.
What is the dispute flow of CDRN and RDR?
CDRN and RDR have a similar dispute lifecycle flow with the key differentiating factor being that CDRN never reaches the acquirer and is instead manually resolved by the merchant. Alternatively, RDR pre-disputes route through to the acquirer, where the pre-dispute is automatically resolved by Visa/acquirer per the rules defined by the merchant.
Rules Selection
Both CDRN and RDR require the merchant to determine a logic of which cases they want to accept liability for (and thereby provide the cardholder a credit) versus which cases they want to proceed in the chargeback lifecycle. The difference is that for RDR, merchants pre-set customizable rules in the RDR auto-decision engine to control the outcome.
How do merchants customize RDR rules to control auto-decisioning?
Merchants can set up to ten customizable rules per BIN/CAID – the rules can be the same for all BIN/CAID or different for each. Each rule is given seven unique decision attributes to determine if the decision engine will auto-resolve the pre-dispute or push it through to complete the dispute lifecycle.
Each rule must have at minimum four elements:
1. Rule name
- This can be used to simplify communication between RDR and a merchant’s own internal CRM
2. Transaction Attribute
- Transaction Amount
- Dispute Category
- Dispute Condition Code
- Personal Account Number BIN
- Purchase Identifier
- Transaction Date
- Transaction Currency Code
3. Operator
- Greater than
- Less than
- Equal to
4. Value
Each rule can have multiple conditions after the initial four are satisfied by adding additional attributes.
Use Case Scenarios
Scenario 1:
A merchant only wants to accept dispute liability on pre-disputes when the order ID is present because this data point simplifies the merchant’s internal transaction match process.
CREATE RULE:
- Rule Name – Order ID Required
- Attribute – PurchaseIdentifier
- Operator – Isblank
- Value – FALSE
Scenario 2:
A merchant only wants to accept liability on fraud disputes, and only if the disputes are under a specific amount.
CREATE RULE:
- Rule Name – Fraud Less than 15
- Attribute – Disputes Category code
- Operator – EqualTo
- Value – 10-Fraud
AND
- Attribute – TransactionAmount
- Operator – LessThanOrEquals
- Value – 15
Scenario 3:
Merchant is conducting a production beta test and wants to ensure the tests leading up to the official launch do not result in fraudulent VISA disputes.
CREATE RULE:
- Rule Name – Fraud VIP Beta
- Attribute – TransactionDate
- Operator – GreaterThan
- Value – 6/25/2020
AND
- Attribute – PurchaseIdentifer
- Operator – Contains
- Value – VIP
AND
- Attribute – DisputeCategory
- Operator – EqualTo
- Value – 10-Fraud
Key Takeaways
Every business has its own unique preferences for when it makes sense to resolve a dispute in the pre-dispute phase versus allow it to continue through the dispute lifecycle. Both CDRN and RDR give merchants the ability to find the custom balance that works best for their business to optimize profitability and reduce post-purchase revenue drain.
1Visa Internal Reporting