Visa Rapid Dispute Resolution (RDR) and Chargeback Prevention

If you are dealing with a legitimate claim for a refund, Rapid Dispute Resolution prevention engines can be helpful to your business, especially if your company is almost breaching the Visa chargeback threshold.

With a Visa Rapid Dispute Resolution, merchants will have a powerful solution to reduce chargebacks that are valid claims. We will further discuss the specifications of an RDR tool and the benefits for a company acquiring it.

What is Rapid Dispute Resolution?

Rapid Dispute Resolution (RDR) is a new chargeback prevention tool for merchants offered by Verifi (a Visa solution) that acts on a pre-dispute stage. The difference between RDR and CDRN is that a Visa Rapid Dispute Resolution automates the decision-making process with no action from the seller aside from defining the initial rules.

According to internal data, Visa expects an increase of 66% in digital payments, especially with a card-not-present transaction. An RDR decision engine is here to make dispute resolution more automated.

In fact, RDR is present in a pre-dispute stage because it is not officially a chargeback. With Rapid Dispute Resolution, sellers can decide if they want to credit the client to avoid a chargeback. It is a way to manage Visa disputes by showing customers that merchants wish to solve them quickly.

Therefore, apart from reducing the number of conflicts, an RDR resolved transaction will also not have a negative impact on the sellers’ chargeback ratio and consequently reduce the number of disputes.

How Can a Merchant Use RDR

A seller can take advantage of Visa Rapid Dispute Resolution to defend their business from chargebacks. But first, it is essential to identify if you are facing criminal fraud or a merchant error. If this is the case, you should use RDR because it would be hard to reverse this situation in the seller’s favor. It is wiser to refund and avoid a chargeback.

Although, if you believe you are the target of friendly fraud, you can fight it through representment. Remember that your chargeback rate can be low if you refund every dispute, but you might find yourself with too many friendly fraudsters on your back, which can have financial repercussions.

A seller can reduce chargebacks because they can act before they are filed. With parameters previously defined, the decision engine will be able to determine if there should be a refund to the customer. The Rapid Dispute Resolution Visa can then do the refund automatically. No chargeback will be filed if the merchant accepts liability.

But how can sellers customize these parameters to their company’s needs? The first step is to analyze previous chargebacks and identify any patterns. And then focus on the parameters, such as transaction amount, chargeback reason code, and client’s bank identification number. For example, an organization can even establish that disputes under $40 will always be refunded because it will not justify the time and cost of representment.

It is also important to remember that sellers should regularly review the rules to confirm they generate the desired outcomes. Sellers should consider the reason for the disputes, the number of times a merchant accepts liability, the number of disputes ending up in chargebacks, and how many were followed by representment and had a positive outcome, among other things.

You can work on Rapid Dispute Resolution efficiency by analyzing data to ensure that it is not refunding friendly fraudsters. Keep track of the refund rate, and if there are too many refunds and the risk of a chargeback is low, it is time to revise your rules. It will help with not exceeding the Visa chargeback limits. Be aware that Visa has a ratio of 0.9% chargeback and a monthly threshold of 100 chargebacks.

How Does RDR Work?

Rapid Dispute Resolution (RDR) will verify the rules previously defined and validate, according to them, if the claim is applicable for refund. Then, the credit will automatically go to the issuer’s account.

After a cardholder issues a transaction dispute, it will go through a Resolve solution. The seller with Rapid Dispute Resolution Visa at his disposal can automatically accept sending back the credit to a cardholder.

The merchant must fix rules and parameters for this to work efficiently. In fact, start by defining the disputes to resolve with Rapid Dispute Resolution and then tailoring the parameters to be followed while evaluating the transaction data. Here you can find some examples of parameters that you can define according to your business requirements:

• Amount and date of the transaction
• Issuer BIN
• Chargeback reason code
• Purchase identifier
• Currency code
• Dispute category

Another significant advantage of Visa transactions is that a Visa guarantee protects the sellers. It assures that the dispute is eliminated and no chargeback is initiated. Moreover, there will be no manual action from the merchant to send the funds to the client and are, therefore, quicker to solve. It means a zero impact on the chargeback ratio and improved customer service.

When the amount claimed is debited, this information will be shared by Visa with the acquirer bank and then to the merchant.

Is RDR Effective In Reducing Chargeback Costs?

Visa’s Risk Dispute Resolution program helps merchants reduce chargeback costs by automating processes, customizing fraud rules, preventing chargebacks, reducing false positives, and ultimately increasing sales and conversion rates while minimizing friction.

1. Automate processes: RDR streamlines the chargeback process by automating certain tasks, such as generating and submitting dispute responses. This saves time and resources for merchants, allowing them to focus on their core business operations.
2. Customize fraud rules: RDR enables merchants to set up and customize fraud detection rules based on their specific business needs. By implementing tailored rules, merchants can identify and flag potentially fraudulent transactions, reducing the risk of chargebacks.
3. Prevent chargebacks: When using RDR Visa guarantees that transaction disputes will not end in chargebacks this ensures merchants don’t have to pay chargeback fees and additional processing fees due to a high chargeback rate.
4. Reduce false positives: By leveraging advanced analytics and machine learning algorithms, RDR helps merchants improve their fraud detection accuracy. This reduces the occurrence of false positives, where legitimate transactions are mistakenly flagged as fraudulent, ensuring that genuine customers are not inconvenienced or discouraged from making purchases.
5. More sales and higher conversion: With reduced chargebacks, merchants can retain revenue that would have otherwise been lost. This leads to increased profitability and a more positive bottom line. Moreover, by optimizing fraud prevention measures and reducing friction in the payment process, RDR helps enhance the customer experience, leading to higher conversion rates and more successful sales.

RDR Benefits For Issuers

RDR was designed to help all stakeholders involved in the transaction dispute, including issuers. Here are some of the key ways issuers benefit from Visa RDR:

• Customer retention – Thanks to RDR an issuer/s customers receive a full refund quickly and painlessly which makes it more likely they will continue using the issuer’s services.
• Seamless integration – Issuers can implement RDR without altering their transaction dispute process even a fraction, eliminating set-up costs and resource drain.
• Resolve cardholder disputes in real-time – RDR radically speeds up and simplifies the handling of cardholder disputes so issuers can deploy valuable resources to other revenue-generating parts of their business.
• Attract new customers – RDR provides a far better transaction dispute process for cardholders. Issuers can use this as a key selling point to win new customers and kick-start growth.

RDR Benefits For Merchants

Visa RDR offers several key benefits for merchants, aiming to streamline the dispute resolution process and improve their overall experience. Here are the key benefits of Visa RDR for merchants:

• Faster Dispute Resolution: Visa RDR reduces the time and effort required from merchants to address and resolve disputes. This helps merchants save valuable time and resources, allowing them to focus on their core business operations.
• Avoid Chargeback Liability – RDR-resolved transactions are not considered chargebacks, so merchants can avoid costly fees and issues with their payment processor.
• Real-time Notifications: Real-time notifications help merchants proactively manage disputes and minimize any potential negative impact on their business.
• Improved Efficiency: By leveraging automated processes, Visa RDR improves the overall efficiency of the dispute management process for merchants, reducing manual effort and the need for extensive paperwork.
• Enhanced Transparency: Visa RDR offers enhanced transparency throughout the dispute resolution process. Merchants can gain clear visibility into the status of disputes, track progress, and receive updates on the resolution timeline. This transparency helps merchants better manage their resources and plan accordingly.
• Reduced Financial Impact: The provision of instant provisional credit to the cardholder while the investigation is underway helps mitigate the immediate financial impact on the merchant. This ensures that merchants are not unduly burdened by chargebacks and can maintain their cash flow.
• Improved Customer Experience: By promptly addressing and resolving disputes contributes to customer satisfaction and loyalty. It also helps maintain positive relationships between merchants and their customers, leading to potential repeat business.

RDR Benefits For The Cardholder

Visa RDR improves the cardholder payment experience and satisfaction because they receive a refund decision virtually instantly. Here are some key benefits of Visa RDR for cardholders:

• Real-time Notifications: Visa RDR enables cardholders to receive real-time notifications about their card transactions. This helps them stay informed about their account activity and identify any potential unauthorized or fraudulent transactions promptly.
• Instant Provisional Credit: In cases where a dispute is filed, Visa RDR allows cardholders to receive instant provisional credit for the disputed amount. This means that the cardholder’s account is credited with the disputed funds while the investigation is underway, providing financial relief and minimizing the impact on their purchasing power.
• Expedited Dispute Resolution: Visa RDR aims to expedite the dispute resolution process, ensuring that cardholders receive a prompt resolution. It leverages advanced technology and automated processes to streamline the investigation and decision-making, reducing the time taken to resolve disputes.
• Enhanced Transparency: With Visa RDR, cardholders have access to enhanced transparency throughout the dispute resolution process. They can track the progress of their dispute, receive updates on the investigation, and have clearer visibility into the resolution timeline.
• Improved Fraud Protection: Visa RDR incorporates advanced fraud detection and prevention measures to protect cardholders from unauthorized transactions. By leveraging real-time transaction monitoring and notification systems, suspicious activity can be identified and addressed promptly, minimizing the risk of financial loss.
• Convenient Self-Service Tools: Visa RDR provides cardholders with user-friendly self-service tools and resources to manage their disputes. This empowers them to initiate disputes, submit relevant documentation, and communicate with their card issuer through online channels, enhancing convenience and accessibility.

Visa RDR benefits cardholders by providing them with real-time notifications, instant provisional credit, expedited dispute resolution, transparency, fraud protection, and convenient self-service tools. These features aim to enhance the overall cardholder experience, increase confidence in using Visa payment cards, and ensure a seamless and secure payment experience.

Potential Consequences Of Using RDR

While Visa RDR (Real-time Dispute Resolution) offers advantages for merchants, there are some potential drawbacks to consider:

• Limited Control over Dispute Resolution: With Visa RDR, the dispute resolution process is primarily handled by Visa and the issuing bank. Merchants may have limited control or influence over the outcome of disputes. This can be frustrating for merchants who prefer to actively participate in resolving customer issues.
• Potential Impact on Cash Flow: In cases where disputes result in refunds, merchants may experience a negative impact on their cash flow. Visa RDR aims to expedite the resolution process, but refunds can still take time to be finalized. This delay may tie up funds and affect the merchant’s working capital.
• False Positives and Increased Liability: While Visa RDR utilizes automated systems for dispute resolution, there is a possibility of false positives, where legitimate transactions are flagged as fraudulent. This can lead to unwarranted refunds for merchants, resulting in financial losses and increased liability.
• Reliance on Cardholder Cooperation: Visa RDR requires cardholders to provide accurate and timely information for the dispute process. However, not all cardholders may understand the process or be proactive in providing the necessary details. 
• Potential Impact on Customer Relationships: The dispute resolution process, even with Visa RDR, can be a source of frustration for customers. When disputes arise, it may impact the merchant-customer relationship, potentially leading to customer dissatisfaction or loss of trust. 

Merchants should assess their specific business needs, the volume of disputes, and customer dynamics to determine how Visa RDR aligns with their operations. Understanding the potential drawbacks and developing strategies to mitigate them will help merchants make informed decisions about utilizing Visa RDR for dispute resolution.

How Chargebackhit Can Help

A business with Rapid Dispute Resolution (RDR) can ultimately prevent numerous chargebacks by automating processes. The merchant only needs to define parameters to determine if they want to credit the client and avoid a chargeback.

Let us make things simpler for you with Chargebackhit Resolve. Our prevention tool with Rapid Dispute Resolution will activate automatic resolutions for routine disputes and help you manage chargebacks quicker. Focus on running your business and stop losing time and money over chargebacks that can be prevented with an automated response from our platform.

We have a set of other services that will cover many chargeback issues from prevention to recovery. Continue working on your revenue growth while we help you keep your chargeback ratio low.