Chargeback Prevention: Alerts vs. RDR

In a perfect world, you would provide a fantastic experience that leaves all your customers completely satisfied. If a customer doesn’t have a great experience, then that person would tell you about the problem so you can fix it.

But as we all know, reality rarely matches the ideal situation. Sometimes customers are unsatisfied — and they contact the bank instead of you.

That’s when chargebacks happen.

If you get too many chargebacks, there are consequences. So various industry members have come up with ways to resolve payment issues without chargebacks — even if customers go to their bank instead of you.

Here’s a list of some of the most commonly implemented solutions for dispute resolution:

• Order Insight
• Consumer Clarity
• Ethoca alerts
• Verifi Cardholder Dispute Resolution Network (CDRN)
• Rapid Dispute Resolution (RDR)

Of those, Ethoca alerts, Verifi CDRN, and RDR are currently the most popular. They are easy to implement and have a proven record of success.

Let’s take a look at how they can be used to prevent chargebacks.

Prevention alerts and prevention RDR intercept payment disputes before they turn into chargebacks. By interrupting the chargeback process, these solutions give you a chance to refund the disputed transaction to resolve a customer’s complaint.

While prevention alerts and prevention RDR achieve the same outcome, the way they go about doing it is slightly different.

There are a couple different integration options for both solutions. We’ll explain how alerts and RDR work with the most cost-effective and efficient option — full automation via AltoPay.

When a transaction is disputed, the issuing bank — if integrated with an alert vendor — can send an alert instead of a chargeback.

AltoPay will receive the alert on your behalf. We’ll refund the transaction, update your CRM, and respond to the alert vendor. We’ll also add the case to our detailed reports in the AltoPay platform.

The alert vendor will notify the issuer that the dispute has been resolved and a chargeback is not necessary.

The entire process works like this:

When an issuer files a Visa dispute, the case is intercepted by RDR. Visa will consult your preset rules. If rules apply, your merchant account will be debited and the transaction refunded.

Visa will let both your acquirer and AltoPay know about the RDR case.

Upon receiving the notice, AltoPay will update your CRM, note the RDR case, and add the case to the detailed reporting in our platform.

Both prevention alerts and prevention RDR have valuable benefits you don’t want to miss. These are usually the most noteworthy, but you can view a complete list of benefits here.

• Lower chargeback rates. This first benefit is usually the biggest and most obvious draw. If you can stop chargebacks from happening, you’ll help improve the reputation of your business and enjoy more stable, reliable payment processing.
• Solve problems quicker. A lesser known benefit of prevention solutions is the gift of time. Chargeback notices usually take 2-5 weeks to reach you. But alert and RDR notifications happen in near real time. So you can identify and solve the underlying reason for disputes much faster, helping to eliminate future chargebacks that would otherwise be inevitable.
• Save the cost of goods. Again, alert and RDR notices come in quickly. Sometimes, they are quick enough to stop order fulfillment before your valuable merchandise is shipped out to fraudsters.

Each solution has its own unique features, which — depending on your business — might be considered benefits.

Usually, there isn’t a single solution that can solve all chargeback challenges. For most merchants, a multi-layer strategy is best — using multiple solutions to resolve as many disputes as possible.

For most merchants, we recommend a comprehensive chargeback prevention strategy — using both alerts and RDR to minimize risk.

Here’s what that would look like.