We are often told that to get ahead we should get our head down, get stuck in, and get stuff done. In some instances, this is great advice, but as a general rule it’s terrible.
According to Financial Fraud Action UK (FFA UK), annual Card Not Present (CNP) fraud losses on UK-issued cards totalled £432.3 million in 2016. In an era of increasing fraud and chargebacks, it is more important than ever for merchants to work collaboratively with credit card issuing banks to reduce CNP risk.
Too many information silos and an elongated and frayed customer experience can lead to inefficiencies. The best way to combat these inefficiencies is to get your head up and understand other elements of the disputes process. Doing so provides ample opportunity for merchant-issuer collaboration to tackle the disputes process, which will ultimately save time and money for each party.
The impact of disputes on merchants
There are a variety of reasons as to how cardholder disputes occur, including but not limited to: vague descriptors, unintentional card use, fraudulent transactions, and illegible documentation. In addition, an overwhelming majority of cardholders (86%) bypass the merchant and go directly to their issuing bank with any transaction disputes.
Historically, the life cycle of disputes has been an arduous process that’s riddled with inefficiencies. From directly competing solutions that only provide a limited timeframe (often forcing a refund), to excessive time spent by staff on chargeback management and the potential for a negative customer experience, there are many areas that can be improved upon with issuers and merchants working side by side.
Through merchant-issuer collaboration, inefficiencies in the dispute resolution process can be minimised. Issuers can direct the cardholder straight to the merchant to resolve any issues, putting the merchant back in control. Disputes can be resolved far earlier in the process, denying the possibility of a chargeback by offering a refund or issuing a credit.
Many hands make light work
We can learn a lot about collaboration from Meerkats. To survive in the harsh and dangerous conditions of Africa, mutual trust within a mob enables them to prosper. One member guards the mob while the others feed, tasked with spotting danger and alerting them with ample time to run to safety.
One way that the payments industry can work more closely is through merchant-issuer collaboration networks. Working within a real-time collaboration network to prevent chargebacks is a win-win scenario for merchants and issuers. This will provide both parties with the ability to resolve disputes in an efficient and timely manner, avoiding a negative customer experience before resulting in a chargeback to the merchant.
We fully understand the benefits and huge upside of collaboration, which is why we created our patented “closed loop” Cardholder Dispute Resolution Network® (CDRN), connecting issuers with participating merchants to enable near real-time collaboration for quick resolution of both credit and debit fraud and non-fraud disputes. Whether the issuer is identifying a fraudulent charge or the cardholder is the one initiating a dispute, by sharing the information with the merchant, all parties benefit.
By engaging in a collaboration network, issuers are afforded the opportunity to address the dispute with the merchant directly––allowing both to avoid the costs and operational drain associated with chargebacks. Direct contact between issuer and merchant is not the only benefit of working together.
Stopping the chargeback before it happens
Redirecting disputes directly to the merchant for quick resolution (72 hours is granted to assess and resolve the dispute, compared to the standard 24 hours offered by similar solutions) leads up to a considerable number of chargebacks being stopped. With near real-time notifications in place, merchants can be notified of a chargeback almost immediately, enabling a fast resolution with the bonus of not draining resources and staff in what has traditionally been an exhaustive chargeback management process.
Avoid unnecessary additional business-related costs
Exchanging data with issuers creates zero guesswork for merchants in relation to refunding transactions, reducing operational costs, and time spent on processing chargebacks that can be avoided.
As the saying goes, a problem shared is a problem halved. By working side by side, merchant-issuer collaboration can streamline the dispute handling process end-to-end. This helps to minimise risks, lower costs for all parties, and improves the customer experience overall. Collaborating benefits both sides of the dispute resolution process. With issuers relieved of increased operational costs and unnecessary write-offs, and merchants able to retake control of the dispute process, both parties are better enabled to respond and resolve any issues directly with the consumer.