As a business owner or executive, you must be tired of dealing with repetitive, time-consuming, and tedious chargebacks. However, not paying attention to this threat can result in an increased chargeback ratio, which will result in bigger payment processing fees. It can also lead to your merchant account being put into Visa/Mastercard redemption programs, which will result in up to $50,000 in fees and can lead to full account closure.
This is why making use of Rapid Dispute Resolution or RDR feature, a collab project of Visa and Verifi can be a lifesaver for many businesses. It allows configuring the rules that trigger after receiving Verifi chargeback alerts and issues automatic refunds to prevent chargeback disputes.
As Verifi is integrated with Covery antifraud system, this feature grants a powerful and reliable way to prevent online fraud and save your revenues. Below, we will look at how businesses from the USA, EU, and worldwide can make the most out of RDR with Covery.
What is dispute notification?
We are sure there is no need to tell in fine detail how chargebacks work. If a customer thinks you defrauded them (or intends to defraud you) they contact their issuer bank with a chargeback claim, stating that they are not satisfied with your products or services, or such services were never delivered.
A bank then initiates a dispute and contacts your bank and the PSP responsible for the transaction. Funds are deducted from your merchant account, including the chargeback body, a non-refundable chargeback dispute fee, and any potential upcoming expenses.
And only at this moment do you, as a merchant, receive dispute notification…
You do have some period (quite a short one) to provide any evidence you might have regarding the transaction details, to prove it was legitimate and not a fraud. But doing so manually is literally impossible, which is why online fraud is galloping across the world.
What are chargeback alerts?
Of course, there are automated tools for chargeback management, like Verifi and Ethoca, which are integrated with Covery. However, they still are not perfect, as the window for decision-making was too slim. Once the issuing bank received a chargeback claim, there was a period of several seconds to automatically refund the transaction and avoid all the consequent charges.
If you configure chargeback alerts, Ethoca or Verifi will execute automated scenarios and refund the chargeback body or provide the needed transaction details. With Covery, it is fully automated, even if somewhat time-consuming to configure. But what about RDR?
What is an RDR alert?
After releasing RDR as a joint project with Verifi, Visa changed the chargeback process described above. Now, there is a prolonged grace period for handling chargebacks. Some of them will still require your manual attention or in-depth configuration for automated refunds with Covery.
But what if you prefer to refund all transactions under $50 no questions asked? Or refund payments that came through a specific bank, as their chargeback management routine is too complicated? Or refund payments from a specific country? This is where RDR shines.
There are 10 possible rulesets, and each rule can have one or more of these 7 parameters:
- Transaction Date
- Issuer BIN
- Transaction Currency Code
- Transaction Amount
- Purchase Identifier
- Dispute Condition Code
- Dispute Category
Thus said, you can configure up to 70 scenarios to handle your most repetitive chargeback cases. Should any transaction match these rules, they are refunded automatically as soon as a dispute notification is received from an issuing bank.
This way, your chargeback ratio remains unaffected and you save a ton of time, nerves and money on chargeback management. Most importantly, RDR provides for a much longer grace period after dispute initiation. This allows every merchant to invoke automated response scenarios to provide really RAPID dispute resolution.
Visa describes RDR as an upgrade to the currently available CDRN — Cardholder Dispute Resolution Network. Previously, it was the seller’s responsibility to review every dispute, provide proof of legitimacy or initiate a refund within 72 hours, regardless of holidays, or other conditions. Now, a seller can preconfigure a ruleset for most common chargebacks to automate the major cut of the routine.
Who are the major providers of chargeback prevention alerts?
As we mentioned above, Verifi and Ethoca are the two most notable providers of chargeback alerts. However, these notifications are not the sole services they offer, by far. Both dispute resolution networks help minimize your chargeback losses, but they do it differently.
- Ethoca just refunds the chargeback body at once to prevent affecting your chargeback ratio and avoid any dispute-related fees and charges
- Verifi uses its Order Insight (former VMPI) service to provide every transaction’s available details. This allows the banks and PSPs to get a full picture and more often than not resolve chargeback disputes in your favor. With time, this helps reduce the number of fraud by up to 80%, but it requires in-depth configuration and ongoing monitoring to remain efficient.
RDR does not replace any of them, it rather provides a convenient way to automate routine chargeback management toil. It can be especially useful for high-risk merchants, who have to deal with large volumes of repetitive chargebacks daily due to the specifics of their industries.
RDR is a long-awaited feature for reducing the effort needed to keep chargebacks at bay. Let 70 rulesets not dissuade you — Covery risk analysts often operate risk logic engine rulesets of 1000+ scenarios for our customers. Thus said, Covery can provide a subscription to risk analyst services, so a qualified specialist can set your RDR up and running to ensure you get the most out of this opportunity and reliably prevent online fraud. And this is by far not the only thing Covery anti-fraud system can do for you…
An anti-fraud tool steadily growing in popularity in the US, Europe, and countries outside of the EU, Covery helps address all risk mitigation, transaction monitoring, and chargeback management needs of any company, whether a startup or an established enterprise. To become better acquainted with the value we can drive to your business, order a free demo and see for yourself!