Learn what a chargeback is, why cardholders dispute transactions, and how it relates to fraud concerns.
Disputes ensure the integrity of card brand networks by providing a consistent, fair, and equitable process to resolve disputes for all parties in the payments ecosystem. By giving the cardholder the option to file a chargeback, cardholders feel protected when completing a transaction and merchants are provided with a safeguard against fraudulent activity.
Unfortunately, the chargeback process often costs merchants far more than the value of the transaction in question. Every step of the dispute process comes with fees, fines, and added operational expense. On average, it costs $74 for a merchant to resolve a single chargeback.1 Ignoring disputes has far-reaching and severe financial impacts—if merchants receive too many disputes, they risk acquirer mandated enrollment in card brand chargeback monitoring programs and potential termination of their merchant account.
Interception
Pre-dispute: a notification of a pending dispute before a chargeback initiates
Responding to chargebacks doesn’t have to be complicated. With the introduction of Verifi’s card brand agnostic Cardholder Dispute Resolution Network (CDRN) solution, merchants have the opportunity to quickly and easily resolve disputes at the pre-dispute stage, before a dispute is submitted to card brands as a traditional chargeback.
How does CDRN work?
Verifi's CDRN is a network of issuers and merchants that allows merchants to receive near real-time notifications when a cardholder attempts to dispute a transaction with their issuing bank.
CDRN Alert
When a cardholder calls the issuer to file a chargeback, the issuer is alerted that the transaction is for a merchant enrolled in CDRN.
Pre-dispute
Instead of the inquiry escalating to a dispute, Verifi routes a pre-dispute notification to the participating merchant.
72 hours
The merchant has 72 hours to decide how they would like to handle the pre-dispute.
Refund
They can proactively refund the pre-dispute to avoid a chargeback and make the cardholder satisfied.
Chargeback flow
Or allow the dispute to follow the traditional chargeback flow, giving the merchant the opportunity to defend the charge and respond through their acquirer or processor to retain the funds.
Cancelled shipment
If goods have not yet been shipped, the CDRN notification also gives the merchant the ability to stop shipment on goods the cardholder has already filed a dispute on.
