Taking Control of Chargebacks with Visa's Rapid Dispute Resolution

updated: 28/11/2024

Chargebacks can be costly for merchants, and they can damage their reputation if customers feel their claims were not resolved adequately or in a timely manner. Similar to the Mastercard Collaboration initiative, Visa's Rapid Dispute Resolution (RDR) is an automated chargeback dispute resolution program designed to address chargebacks quickly and easily, saving merchants time and money. Despite being introduced 3 years ago, there are still many online merchants that are not aware of it and its benefit to their business. That’s why in this article will discuss why RDR is important for merchants, how it works, and the benefits of using it, as well as tips for making the most of RDR and how payment service providers (PSPs) can help with the process.

1. What is Visa's Rapid Dispute Resolution?
2. Why Is RDR Important for Merchants?
3. How Does RDR Work?
4. Benefits of Using RDR
5. Tips for Making the Most of RDR
6. How PSPs Can Help with RDR

1.What is Visa's Rapid Dispute Resolution?

Visa's Rapid Dispute Resolution (RDR) is an automated chargeback dispute resolution program that was introduced by Visa in 2019 to help merchants process chargebacks faster and more efficiently than ever before. Visa RDR works by providing real-time data and insights about disputed transactions to merchants, enabling them to quickly identify the root cause of the dispute and take immediate action to resolve it. This can help reduce the overall number of disputes, lower costs, and improve customer satisfaction.

Here is an high-level overview of RDR scope:

1. Real-time data: RDR provides merchants and PSPs with real-time data about disputed transactions, including the reason for the dispute, the amount in question, and the timeline for resolution.
2. Automated alerts: RDR also sends automated alerts to merchants and PSPs when a dispute occurs, providing them with the information they need to respond quickly and effectively.
3. Insights and analysis: RDR provides merchants and PSPs with insights and analysis about the root cause of disputes, helping them identify patterns and trends that may be causing disputes and take steps to address these issues.
4. Collaborative resolution: RDR enables merchants and PSPs to work together to resolve disputes quickly and efficiently, helping to reduce the time and resources required to manage disputes.

2.Why Is RDR Important for Merchants?

Chargebacks can be costly for merchants, as chargeback fees are often deducted from the merchant's account. The estimated average chargeback cost is $191, with merchants taking the majority of the hit. By end of 2023, it is projected that the total Chargeback cost will exceed $100 billion. Not only that, but chargebacks can also damage a merchant's reputation if customers feel their claims were not resolved adequately or in a timely manner. Along with other ways to reduce chargebacks, With Visa's RDR, merchants have access to an automated dispute resolution system that is designed to address chargebacks quickly and easily, saving them time and money. 

3. How Does RDR Work?

RDR allows merchants to submit chargeback disputes online through the Visa Merchant Portal (VMP). Once the dispute has been submitted, it will go through an automated review process using advanced analytics. The chargeback dispute will then be routed to the issuer or acquirer for resolution. The entire process typically takes one to three days, which is much faster than the traditional chargeback dispute resolution process.

The flow of the Visa Rapid Dispute Resolution (RDR) process can be divided into three main stages: initiation, review and resolution. Here's a more detailed explanation of each stage:

1. Initiation: This is the first stage of the RDR process and it starts when a cardholder disputes a transaction with their issuing bank. The issuing bank then notifies the acquiring bank, which is the bank that processes payments for the merchant. The acquiring bank then notifies the merchant of the dispute.
2. Review: In this stage, the merchant reviews the dispute and determines if they will accept or contest it. If the merchant accepts the dispute, they refund the cardholder and the process ends. If the merchant contests the dispute, they provide evidence to support their case, such as transaction receipts or other relevant documentation. The acquiring bank then sends the evidence to the issuing bank for review.
3. Resolution: This is the final stage of the RDR process and it involves the issuing bank reviewing the evidence provided by the merchant and making a final decision on the dispute. The issuing bank then notifies the acquiring bank of the decision, and the acquiring bank notifies the merchant. If the merchant wins the dispute, the process ends. If the merchant loses the dispute, they must refund the cardholder and may also be charged a fee.

For example, if a cardholder disputes a transaction because they don’t recognize the merchant’s name on their statement, the merchant can use RDR to provide additional information about the transaction to the cardholder, such as the date and time of the transaction, the location of the merchant, and the name of the product or service that was purchased.

source: Verifi.com
4. Benefits of Using RDR

There are several benefits for merchants who use Visa Rapid Dispute Resolution (RDR) to manage chargebacks and disputes:

1. Real-time insights: RDR provides merchants with real-time data and insights about disputed transactions, enabling them to quickly identify the root cause of a dispute and take immediate action to resolve it. This can help merchants reduce the overall number of disputes and minimize the impact on their business.
2. Faster resolution: RDR facilitates faster dispute resolution by providing merchants and payment service providers (PSPs) with a collaborative process for managing disputes. This can help reduce the time and resources required to manage disputes, enabling merchants to focus on their core business activities.
3. Improved efficiency: By automating the dispute management process and providing real-time data and insights, RDR can help improve the efficiency of the chargeback management process. This can help merchants save time and money, and improve their overall payment processing performance.
4. Reduced costs: By minimizing the number of disputes and facilitating faster dispute resolution, RDR can help merchants reduce costs associated with chargebacks, such as fees and penalties. This can ultimately help merchants improve their profitability and bottom line.
5. Enhanced customer satisfaction: By resolving disputes quickly and efficiently, RDR can help improve customer satisfaction and loyalty. This can lead to repeat business and positive word-of-mouth, which can help drive revenue growth for merchants.

5. Tips for Making the Most of RDR

To make the most of Visa Rapid Dispute Resolution (RDR), merchants should consider taking the following steps:

• Gather evidence: Be sure to gather evidence such as transaction receipts, order forms, and other relevant documentation to support your case. This can help you prove your point in a dispute if it goes to resolution.
• Monitor chargebacks: Make sure to monitor chargeback activity closely and keep an eye out for any suspicious or unusual chargeback patterns. This can help you identify potential fraud or abuse before it becomes a larger problem.
• Stay organized: Keep track of disputes and chargeback activity by creating a centralized system for managing data. This can help you stay organized during the dispute process so you can provide evidence quickly and efficiently.
• Communicate with customers: Make sure to communicate with customers throughout the chargeback process, including keeping them informed about the progress of their dispute. This can help build customer trust and loyalty.

6. How PSPs Can Help with RDR

Payment Service Providers (PSPs) can play a critical role in helping merchants manage chargebacks and disputes through Visa Rapid Dispute Resolution (RDR). Here are a few ways that PSPs can help:

1. Education and training: PSPs can provide merchants with education and training on how to use RDR to manage chargebacks and disputes. This can include training on how to recognize and prevent fraudulent transactions, as well as best practices for managing disputes through the RDR process.
2. Real-time monitoring and alerts: PSPs can monitor transactions in real-time and provide alerts to merchants when a dispute is initiated. This can help merchants respond quickly to disputes and provide evidence to support their case.
3. Dispute management services: PSPs can offer dispute management services to merchants, including dispute resolution, evidence collection, and chargeback representment. This can help reduce the burden on merchants and ensure that disputes are managed effectively and efficiently.
4. Data and analytics: PSPs can provide merchants with data and analytics on their chargeback performance, including insights into the root causes of disputes and trends over time. This can help merchants identify areas for improvement and take action to reduce the overall number of disputes.
5. Collaboration with other stakeholders: PSPs can collaborate with other stakeholders in the payment ecosystem, including issuing banks, acquiring banks, and card networks, to facilitate faster and more efficient dispute resolution. This can help ensure that disputes are resolved in a timely and effective manner, minimizing the impact on merchants.

Overall, PSPs play a critical role in helping merchants manage chargebacks and disputes through Visa Rapid Dispute Resolution (RDR). By providing education and training, real-time monitoring and alerts, dispute management services, data and analytics, and collaboration with other stakeholders, PSPs can help merchants reduce costs, improve customer satisfaction, and improve their overall payment processing performance.

7. RDR and Visa’s Acquirer Monitoring Program (VAMP)

With the upcoming changes to Visa’s Acquirer Monitoring Program (VAMP) in 2025, the importance of tools like Rapid Dispute Resolution (RDR) becomes even more evident. VAMP’s stricter thresholds for disputes and fraud will require merchants and acquirers to adopt proactive measures to stay compliant. Disputes resolved through RDR are excluded from VAMP’s ratio calculations, making it a powerful tool for merchants to address disputes effectively while reducing the risk of exceeding compliance thresholds. By incorporating RDR into their dispute management strategies, merchants can not only minimize chargeback costs but also strengthen their standing under VAMP’s rigorous monitoring framework.

Conclusion 

In conclusion, Visa RDR is a powerful tool that merchants and PSPs can use to manage chargebacks and refunds. By providing access to real-time data and insights about disputed transactions, RDR can help merchants identify and address issues that may be causing disputes, while also reducing the overall number of disputes. Working with PSPs like Catalystpay can also help merchants leverage RDR and other tools to manage disputes effectively and protect their businesses from potential losses. Contact us to learn more.