Proof is Power — Supporting Documents for Payment Disputes

· Is it written on paper?

· Do you have a record of it somewhere?

· Does the document have the names of both parties?

A standard question asked by anyone whenever you land yourself in a spot of trouble. Because a document, that simple piece of paper is what proves your innocence/claim/action at the end of the day.

So, no matter the problem, you need a piece of paper to prove your side of the story. And when it comes to a payment dispute, these papers are known as Supporting Documents.

When a customer files a dispute, they need to present a supporting document to justify their claim. Likewise, so does a merchant when he contests that claim, through compelling evidence or representment, another kind of supporting document.

And not every dispute requires a document per se before we get into that, let’s understand the why for who:

Customer

In the aspect of the customer, supporting documentation stands for authenticity, meaning the dispute claim is legit.

Issuer

For an issuer, collecting supporting documents against a dispute offers two benefits. As friendly fraud accounts for most of the card disputes, having a document to back up your customer’s claim reduces that risk. Also, every card network has its own stipulations based on reason codes.

Furthermore, there is a concept of threshold that details how many disputes can a customer raise in their lifetime. So, if a customer is a serious repeater of friendly fraud, mandatory collection of supporting documents will thwart that behavior.

Most card networks levy a fee when the issuer raises an invalid dispute, having necessary documentation will help in avoiding that fee.

Merchant

The merchant is the customer of an acquirer and for them getting the right compelling evidence (for fraud-related disputes) and representment (for other disputes) is important. Because lack of compelling evidence can result in a merchant losing the dispute and their reputation. Too many dispute losses also land them in the high-risk category accompanied by heavy financial losses.

Acquirer

If an acquirer faces too many disputes stemming from a single merchant, they will be penalized by the card network and end up losing customers. So, it becomes the duty of the acquirer to present the right compelling evidence (in case of fraud) to increase their win probability.

Categories of Supporting Documents

Supporting documents can be divided based on the type of dispute lodged by the customer. As a standard practice, there are four different categories of disputes like processing errors, consumer disputes, authorization, and fraud.

In cases of processing errors and consumer disputes, there is intentional participation of the customer, which classifies the supporting documents into need-to-have and nice-to-have categories.

But for fraud and authorization disputes, the customer has no knowledge of the transaction initiation, thereby making it a category that does not require any supporting document.

Need-to-have

Many networks require supporting documents from the issuer to substantiate a dispute regarding processing errors, particularly in cases of incorrect transaction amounts or payments made through alternative means. In both scenarios, customers must provide readily available evidence, such as screenshots or photos demonstrating multiple payment methods being charged, or proof of the correct transaction amount.

With this evidence presented, the dispute’s legitimacy cannot be refuted.

Nice-to-have

Most card networks do not require mandatory documents for consumer disputes at the initial stages, but they become mandatory during the subsequent stages of pre-arbitration and arbitration. Additionally, networks do not allow issuers or acquirers to introduce new documents after the pre-arbitration stage; in other words, no new evidence will be considered. Therefore, it is crucial to submit all potential documents early in the chargeback lifecycle. Within the consumer disputes category reason codes, there are numerous beneficial documents to have on hand.

Examples of consumer disputes include misrepresentation where the product or service description does not match what was advertised, or the customer receiving a defective product, and so on.

No-need-to-have

In cases of fraud and authorization-related disputes, customers are not required to provide documents. This is because, in instances of fraud, customers are often unaware of how the transaction occurred, making it unlikely for them to possess any relevant documentation to back up their claim. At the same time, card networks also do not expect customers to provide evidence. However, acquirers must present compelling evidence if they dispute the chargeback or any stage of the dispute process.

For authorization disputes, only transaction data is typically required for investigation. Nonetheless, acquirers cannot refute claims without sufficient evidence. Unlike acquirers, issuers are not obliged to submit evidence to support their claims, as the transaction itself serves as proof of authenticity.

Well, now that you have come this far, there might be a question lurking as to why this blog has been written.

Why, why, why?

Here is the answer!

It is impossible for an issuer or acquirer to educate millions of consumers and merchants spread across the globe. Just imagine the costs and operational logistics that need to be arranged to create such powerful financial educational campaigns for dispute-related actions. But a technological shift helps banks to increase the adoption of submitting a document when there is a dispute.

And that’s where we come in and by, we I mean Unified Dispute Management (UDM), an AI-coupled dispute management tool, that helps both issuers and acquirers alike to handle the disputes end-to-end minus the operational workload.

Here’s a sneak peek of how it works:

When a customer uses their mobile banking, calls up customer care, or visits the branch in person to launch a dispute, UDM prompts the customer, CSR executive, or RM to collect the right supporting document based on the dispute reason code.

Likewise, with the acquirer, UDM collects the required representment or compelling evidence documents through merchant comfortable channels of text, email, or IMs.

It becomes easier for both sides to collect information whenever and wherever necessary without compromising on the experience part of banking. So, if you are a bank looking to automate their dispute management, then let’s have a chat!