Verifi notes in a blog post that Visa post-purchase dispute volumes went up more than 7% in 2023 alone.
As mentioned in the update from Verifi, 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.”
As explained by Verifi, 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.”
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.”
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.”
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.”
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.”
