Why do you need chargeback automation?

Backspace Tech
5 min readApr 21, 2023
Chargeback Automation

Today, the world is digitally transforming in every conceivable aspect possible. Starting right from the way we interact to transact; almost everything has its digital footprint. Still there are some areas especially in the financial ecosystem, that are yet to experience this sort of phenomenal transformation and we often come across them at some point in our daily lives.

Given the ever-fluctuating regulatory landscape, floating operations teams, myriad of merchants and bankers being an issuer and acquirer, the world of payments does have some components that has a touch of mystery always and is yet to be digitized.

And one such pain point in this mysterious terrain is the area of disputes and chargebacks. This blog is all about what we came across as pain points from the many stakeholders of the ecosystem such as customer, merchant, issuer, acquirer and network when raising or handling a dispute. It also describes the possible approaches to those problems.

Finally answering the question, why do you need chargeback automation?

Perspectives:

Customer:

Who is it? Well, it can be me or you.

Challenge:

All of us are customers in one way or the other and quite familiar with the painful process of conversing with an Interactive Voice Response (IVR) or waiting for a customer service executive to listen to the dispute request, provided the call doesn’t get cut. If not, the whole process is on repeat, until a request is filed.

Approach:

Skipping IVR and CSR interaction with automated dispute protocols available within the banking mobile application and internet banking dashboard is a great start.

Issuer:

Who is that? Issuer is the bank who issues the credit/debit card to the customer

Challenge:

When raising a dispute, most issuers usually ask the customers to directly reach out to the merchant, as it is easier to resolve, and chargeback related expenses can be avoided. This translates to the fact that the customer has to wait for an extended period of time leading to a strain in customer retention.

As the customer is unaware of these internal processes, they might keep calling customer service to resolve their complaint, but it also leads to situations where the chargeback may be filed with the wrong reason code.

So, when there is sudden spike in number of disputes, say during a season sale, the issuer will be unable to handle as it is completely a manual process from start to finish.

Approach:

Why wait? When it can be done simultaneously.

Issuers can automate this scenario effortlessly. When the refund is not processed at the end of the wait period, a dispute will be automatically filed in the system. And this notification can be promptly sent to the customer to keep them updated about their issue.

Also, handling seasonal spikes with technology is much easier, affordable and the dispute team’s productivity doesn’t take a hit.

Acquirer:

Who is that? In short, they are the merchant’s banker.

Challenge:

Compelling evidence, Credit processed (refund scenario), invalid dispute and others are the key factors in deciding whether the chargeback should be ruled in favor of the merchant or customer. Currently, acquirers and merchants are caught in a tedious cycle where the document collection, compilation, verification and validation are completely manual. Matching the right document, once the dispute is filed is another obstacle, as analysts have to toggle between multiple tabs to map the data.

Next collecting the disputes from network is another pain point where the process just like with merchants happens to be entirely manual.

Approach:

Systematic technical approach is the key here. If the system is equipped to seamlessly converse between the acquirer and merchant & acquirer and network, it makes document collection and mapping easier for both sides. By setting controls and timeline for each dispute use case or collecting details via API triggers or in-built settings, it will help in reducing the effort and cost involved.

Let’s get to the general problem statement, that is present in every single interaction between these parties.

Challenges:

Communication:

Communicating and responding to a dispute is not easy as it seems, it is quite a nightmare for acquiring banks to do it manually as it is their responsibility to address the chargeback as soon as possible. There are too many teams within the acquiring bank to handle different facets of chargeback like document collection, image verification, dispute filing teams and so on.

Real-time response:

Networks like Visa and MasterCard have already bought systems to handle disputes in real time, but banks and merchants are not equipped with the right technology to embrace and implement the same. Moreover, there is a rule that restricts the number of chargebacks that can be raised in a card’s lifetime. Ignorance of this rule often leads to fraudulent customers taking advantage of the system and exploiting human errors that lead to malicious profit and penalty for non-compliance for the person on the receiving end.

What if I tell you that there is a solution to all of this?

And it is Unified Dispute Management!

Here’s a sneak peek of how UDM interacts with every stakeholder in the dispute ecosystem and resolves disputes while keeping an eye on your bottom line.

Customer:

UDM will send notifications to the customer that keeps them updated about their chargeback. Be it chargeback request or decision, the end customer is apprised. This helps both issuer and merchant to maintain optimal customer retention rate.

Issuer:

Manual processes are eradicated, and efficiency of the team is enhanced as UDM automates the complete chargeback filing. Right from collecting disputes through multiple ways to filing it with the right reason code, every step is effortlessly executed. UDM will even file the dispute in the VROL database in real-time.

Acquirer:

No more back and forth with merchants. Be it apprising merchants about the chargeback or compelling evidence compilation, all communications sync along with timely notifications to the merchant reminding them to respond within the turnaround time. Here UDM also automatically submits the required representment package to the network within the SLA.

Get in touch with us today to know more about UDM and how it can help regulate, tailor and modernize chargeback process and responses.

--

--

Backspace Tech

Backspace Tech offers Fintech-as-a-Service to automate,simplify, and disrupt the payment industry by handling chargeback requests through a plug-and-play model.