Rapid Dispute Resolution (RDR) is a powerful risk management tool. The solution can automatically resolve disputes before they become chargebacks — which can have a significant impact on your VAMP ratio.
But is RDR a good fit for your business?
Let’s review both the pros and cons of this chargeback prevention solution so you can make an educated decision.
If you’re looking for an overview of what RDR is and how it works, check this article.
PROS
What are the benefits of using RDR?
There are several chargeback prevention solutions — RDR, prevention alerts, Order Insight, Visa CE 3.0, and others. All of these solutions provide the same valuable benefits.
- Lower your VAMP ratio. In this day and age, keeping chargeback activity to a minimum is critical because there are dozens of consequences if your ratio gets too high — especially since VAMP took effect. RDR is a proven-effective way to resolve disputes before they become a liability. Many merchants sign up for RDR because of this benefit alone.
- Solve problems quicker. RDR notices are issued in real time — which is much quicker than the 2-5 weeks it takes to be notified of a chargeback. This advanced warning can help you identify and solve the underlying cause for disputes much quicker so you can stop future chargebacks from happening.
- Save on the cost of goods. Again, RDR notices come in quickly — possibly before you’ve had the chance to fulfill your orders. If you can stop order fulfillment for disputed transactions, you won’t lose both revenue and your merchandise.
- Reduce processing fees. Risk (fraud and chargeback ratios) is one of the most influential factors in determining processing rates. The riskier your business, the more you’ll be charged. But if you can lower your chargeback ratios, your processor or acquirer might offer lower processing fees.
- Get more merchant accounts. New markets usually require new merchant accounts. For example, if you want to start selling in Europe, you should get a European merchant account. But before giving you a new account, a processor or acquirer is going to look at how well you managed risk on the accounts you already have. If you have a history of keeping risk in check, there is a greater chance of your application getting approved.
- Enter new markets safely. All markets have unique threats, and you might not know what those threats are before you start selling to a new group of customers. Chargeback prevention solutions like RDR can help you proactively protect against risks you aren’t anticipating. Otherwise, your business could be toppled by the unexpected.
Those are some pretty valuable benefits!
And there’s good news.
RDR offers even more perks that other solutions can’t always provide.
- Trust a guarantee. If you resolve a dispute via RDR, Visa guarantees a chargeback won’t be filed. And that’s a nice promise. With other solutions, there’s a (small) chance that a dispute could inadvertently advance to a chargeback (but you’d get a credit if this happens).
- Automate your dispute resolution strategy. RDR can be fully automated. The issuer files a dispute, Visa intercepts the dispute and issues a refund on your behalf, and the chargeback is prevented. You don’t have to do anything to resolve the dispute. Check our RDR guide to learn more about how this solution works.
- Pay less than a chargeback fee. Both RDR fees and chargeback fees can vary from one merchant to another. But for most merchants, the per-case fee for RDR costs much less than a chargeback fee.
- Get the best results possible. RDR, as a Visa solution, is available to all Visa issuers. So the solution could theoretically prevent nearly all Visa chargebacks. Other solutions don’t have such widespread issuer adoption, so the percent of chargebacks prevented is a bit lower.
CONS
What are the drawbacks of using RDR?
There are a couple aspects of RDR that are less than ideal. However, the benefits usually outweigh any potential drawbacks.
- You might have to manually reconcile your CRM. If you refund a transaction, you’d manage the process in your customer relationship management (CRM) or order management system. But if RDR refunds a disputed transaction, the entire process is automated through your merchant account. So you either have to manually reconcile your CRM to reflect the refund or you’ll have to find a solution provider that can automate the process — like AltoShield.
- The onboarding process isn’t as simple as other solutions. Other solutions can be activated with minimal amounts of information — like just your billing descriptors. But RDR is a bit more technical. However, once the solution is active, you can rest easy.
- The solution only resolves Visa disputes. So you’ll only be able to address about half of your disputes. But half is better than nothing!
TL;DR
In summary…
Bottom line: Do the pros outweigh the cons? Should your business use RDR to prevent chargebacks?
Let’s review.
PROS
CONS
- Lower your VAMP ratio — and keep it low.
- Identify and solve hidden issues.
- Reduce COGS.
- Lower your processing fees.
- Get approved for more merchant accounts.
- Protect global sales.
- Guarantee success.
- Automate your strategy.
- Save money.
- Get the best results possible.
- Add manual tasks (if you don’t automate).
- Wait a couple of days for onboarding.
- Resolve Visa disputes only.
PROS
- Lower your VAMP ratio — and keep it low.
- Identify and solve hidden issues.
- Reduce COGS.
- Lower your processing fees.
- Get approved for more merchant accounts.
- Protect global sales.
- Guarantee success.
- Automate your strategy.
- Save money.
- Get the best results possible.
CONS
- Add manual tasks (if you don’t automate).
- Onboarding will take a couple of days.
- Only resolve Visa disputes.
Think RDR might be a good fit for your business? Ready to lower your VAMP ratio — and keep it low? Let’s get started!
Reach out to the AltoShield team today. Our experts will review your current chargeback management strategy and offer suggestions on how to optimise it for the best results possible.
AUTHOR
Jessica Velasco
For more than a decade, Jessica Velasco has been a thought leader in the payments industry. She aims to provide readers with valuable, easy-to-understand resources.
