Verifi: 2021 Was the Year of Redefining

Verifi CEO Matthew Katz says it’s time to redefine the dispute process to reflect the new digital reality — empowering merchants and consumers to resolve problems without lengthy, costly chargebacks. Read his thoughts in the PYMNTS eBook, “In a Word: 50 Thought Leaders Sum Up 2021.”

Ever since the introduction of the Fair Credit Billing Act in 1974, credit card dispute regulations have been set to prioritize consumer protection; however, the emergence of card-not-present transactions puts merchants at a major disadvantage when it comes to managing disputes. During the pandemic, the growth in disputes outpaced the growth of digital transactions with an increase of 24% from 2019 to 2021.1* To maintain a healthy ecosystem, it’s essential to retain the highest level of fair practice for all parties involved, so that in 2021, we continued innovating and redefining the dispute process to involve merchants as early as possible.

In a recent study conducted by the Merchant Risk Council, friendly fraud (first-party misuse) was the top fraud concern for merchants, with nearly 40% of respondents reporting that their company had experienced this type of fraud.2

First-party misuse happens when consumers dispute legitimate charges — simply because they either don’t recognize the charge, or they opportunistically realize they can get free services by disputing the charges months later. The presence of the transaction receipt through Order Insight gives transaction context to both the consumer and the issuer, which stops many disputes at the point of inquiry by redefining them as legitimate transactions and reducing confusion over whether the charges are fraudulent.

To help merchants manage legitimate disputes, we redefined the dispute process to include a “pre-dispute” phase, which gives merchants the opportunity to issue an automatic refund before an actual dispute takes hold with the use of our Rapid Dispute Resolution (RDR) solution. When consumers see improper charges on their billing statement, up to 76% bypass the merchant and file a dispute with the credit card issuer before ever reaching out to the merchant to give them a chance to address the issue.3 RDR puts merchants back in the driver’s seat by allowing them to resolve and refund inquiries in seconds, rather than wade through the dispute process that can take weeks to resolve. The outcome benefits the whole ecosystem by lowering merchant and issuer operational expenses and giving customers the most expedient refund possible. In October 2021, we expanded our RDR solution globally. Now, merchants can resolve up to 71% of their Visa disputes automatically, avoiding downstream operational expenses and revenue loss.4

*Coverage is subject to change as Visa works to engage in RDR adoption directly with issuers to drive coverage and participation of RDR across all regions globally
2 Merchant Risk Council 2021 Global Fraud Report https://www.cybersource.com/content/dam/documents/campaign/global-fraud-report-2021.pdf
3Javelin, The Chargeback Triangle
4 Visa internal reporting.