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Education

Visa Rapid Dispute They also allow for associated transactions to be identified
in order to clarify the dispute and mitigate issues with
Resolution recurring transactions. With Pre-disputes, merchants can
utilize a new tool along with CDRN to further suppress
their chargebacks.
RDR versus CDRN

I mentioned earlier that Visa's chargeback dispute
threshold was lowered to 0.9 percent. This is a significant
change, and merchants need to heed the boundaries.
Exceeding this threshold will be excruciating and may
lead to dire consequences.

Many acquirers will close the merchant outright and
place the merchant on MATCH for excessive chargebacks.
Merchants with more tolerant acquirers face significant
and escalating fees (Visa does not call them fines). RDR
provides merchants a tool to lower their chargebacks.
Unlike CDRN, RDR is rule based. The exchange of
By Ken Musante information between the issuer and acquirer is automated
Napa Payments and Consulting and near real time.

n 2019, Visa lowered the chargeback threshold for Merchants can set rules based on their business type and
its Dispute Monitoring Program from 1 percent to native chargeback ratio. Larger purchases can be disputed,
0.9 percent. Coincidentally, that was the same year and because Visa's threshold is based on the number of
I Visa purchased Verifi. The threshold was lowered in chargebacks divided by the number of transactions, the
tandem with additional changes and features to the com- merchant can selectively determine the level at which they
pany's dispute resolution process which have made it sub- will engage in the dispute resolution process.
stantially easier for merchants to comply than when the
threshold was 1 percent. Visa, through Verifi, offers two Moreover, the issuer coverage is greater with RDR than
solutions that can help acquirers and merchants lessen with CDRN. I expect the disparity between RDR and
their chargebacks and stay under the thresholds. CDRN to grow as RDR is available to all Visa issuers.
CDRN issues The upside

Verifi has long had its Cardholder Dispute Resolution RDR can work with any merchant, but merchants with
Network (CDRN) solution. With participating issuers, the higher chargeback volumes should consider RDR to assist
service notifies merchants of a pending chargeback and them in lowering their chargeback percentage. Some
merchants have 72 hours to provide a credit to avoid the acquirers do look at the overall dissatisfaction ratio, which
chargeback. is the returns plus chargebacks, so merchants must respect
their acquirers' tolerance; however, once chargebacks are
Merchants with high percentages of Consumer Dispute lowered, they should petition their acquirer for a low-risk
Chargebacks (CDC) typically choose to issue a credit, as pricing schedule in recognition of their accomplishment.
they likely will incur an irrefutable chargeback if they
do not. This solution has reduced chargebacks; however, Many entities are reselling RDR. Merchant services
there are two issues. The first is that the solution is not professionals should be aware of the service and its benefit
fully embraced by issuers, so there is a coverage gap. to their merchants.
The second issue is timing. The process can take up to 72
hours, and when a cardholder has a dispute, they want it As founder of Humboldt Merchant Services, co-founder of Eureka
removed yesterday. Payments, and a former executive for such payments innovators as

The VCR initiative WePay, a division of JPMorgan Chase, Ken Musante has experience in
all aspects of successful ISO building. He has also served as an expert
In 2017, Visa introduced the Visa Claims Resolution (VCR) witness on numerous complex civil and criminal cases in payments,
initiative. The goal was to lubricate a litigious process. a service he provides, along with consulting on merchant services
VCR introduced a new stage, the pre-dispute (if only a and platforms, as founder of Napa Payments and Consulting, www.
spouse had such an indicator). Pre-disputes are meant to napapaymentsandconsulting.com. Contact him at kenm@napapay-
allow the parties to share details regarding the transaction mentsandconsulting.com, 707 601 7656 or www.linkedin.com/in/
before the dispute is initiated. ken-musante-us/.

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