Rapid Dispute Resolution — or RDR — Can Help You Prevent Disputes & Keep Customers Happy

No merchant likes product returns. That said, a return is better than a chargeback, any day.

With Rapid Dispute Resolution (RDR), you now have the opportunity to issue credits to customers automatically and in real-time. This means customers get a permanent resolution in seconds. For you, that means avoiding a lot of disputes that might otherwise devolve into costly Visa chargebacks.

Learn more about Visa chargebacks

RDR is currently live and available to all Visa sellers and acquirers. As of April 19, 2021, RDR is active for all Visa issuers as well, unless they opt out by submitting a form through Visa Resolve Online (VROL).

What is Rapid Dispute Resolution?

Rapid Dispute Resolution

[noun]/rap • əd • dis • pyo͞ot • rez • ə • lo͞o • SHən/

Rapid Dispute Resolution (RDR) is a merchant dispute product from Verifi. RDR allows merchants to create rules and set parameters that dictate which disputes they’d like to automatically accept and provide funds back to the cardholder, thereby preventing a chargeback for these transactions at the pre-dispute stage.

Rapid Dispute Resolution is a platform intended to help merchants and issuers enhance the customer experience, reduce disputes, and improve operations. The goal is to make it easier for banks to serve their clients in a quick, effective manner by automatically resolving disputes and issuing refunds according to preset rules.

Since Visa’s acquisition of Verifi in 2019, Visa has spent some time overhauling its available dispute resolution platforms. Their goal is to provide banks, merchants, and consumers with more comprehensive resolution methods. 

RDR is an improved chargeback prevention tool available through Visa systems. It allows issuers and acquirers to resolve disputes automatically which, in turn, keeps merchant chargeback rates low and customer satisfaction high. 

How Does RDR Work?

When an RDR-participating issuer submits a dispute for an eligible transaction with an RDR-participating merchant, that inquiry is at a stage called a pre-dispute. This is because the case hasn’t yet escalated to a chargeback. It’s at this pre-dispute stage that one of three things happens:

• Auto-decision rules resolve the dispute automatically.
• The merchant reviews and credits the customer manually.
• The pre-dispute proceeds to a standard dispute.

When a pre-dispute is resolved with RDR, a credit goes to the cardholder using Visa's existing dispute financial messaging. In essence, there is no dispute because you accept liability. Any transaction resolved with RDR will be identified as an RDR-resolved transaction, not as an actual dispute, meaning your dispute ratio will not be negatively impacted.

Does RDR Actually Help Reduce Chargeback Costs?

The short answer is “yes.” Although a Rapid Dispute Resolution exchange can happen without merchant involvement, implementation can be a big help to you as a merchant.

The most obvious benefit to RDR is that it can help reduce chargeback issuances. To illustrate, let’s assume a customer disputes a transaction. Rather than going directly to the chargeback process, the RDR decisioning engine checks the dispute against a preassembled rule set (determined by you). This lets the system determine if you should accept liability for the dispute and provide a credit. If you accept liability, then the case is closed, and you avoid the chargeback permanently. You still have to return the funds, but you avoid a chargeback fee, and it doesn’t count against your chargeback ratio.

The rules you use to determine which disputes to refund are highly customizable. You can base them on a variety of factors, including:

• Transaction value
• Original transaction date
• Chargeback reason code
• Currency code
• Card issuer BIN

To illustrate, let's say you want to automatically credit any dispute for transactions under $10 in a certain currency code (like US Dollars). You can create that rule and let the system automatically carry out that function. Another benefit of RDR is the near-touchless experience; you can effectively "set and forget" these rules. You won’t have to touch them again unless you decide they need an adjustment.

Using these rules, RDR can automatically refund the transaction on your behalf, letting you avoid a chargeback. This will make it easier to avoid breaching Visa chargeback thresholds.

In this way, RDR is a great innovation, particularly if you’re concerned about potentially exceeding Visa’s allowable chargeback limit. Even if you’re already in violation of Visa’s chargeback thresholds, RDR will let you get your chargeback situation under control in a very short period of time.

Benefits of RDR:

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RDR: A Key Function of a Multilayered Strategy

As we constantly remind merchants, the best chargeback prevention strategies are multifaceted, meaning you should have more than one preventative measure in place at all times. To accomplish this, Visa promotes a variety of tools to assist you at every stage of the dispute cycle. 

Beyond Rapid Dispute Resolution, Visa also offers tools like Order Insight and the Cardholder Dispute Resolution Network (CDRN). These tools can work together with RDR as complementary components of you chargeback prevention strategy.

Many merchants are confused by the ever-broadening set of acronyms. To ease that confusion a bit, we’ll explain the differences between each program and how they work together to fight chargebacks.

RDR would come in at the last moment to prevent a chargeback if CDRN and Order Insight had both been attempted.

As we can see, these platforms focus on the same topic (Visa dispute prevention), but each performs a different function. They’re not redundant, though; these dispute resolution platforms work best in tandem with each other.

5 Steps to Get Started With RDR

Rapid Dispute Resolution can be extremely beneficial for merchants when used correctly. As mentioned above, RDR can help merchants lower their overall chargebacks ratio, improve customer service, and decrease revenue loss. But to do so, you need to know how to use it and when. 

Let’s go over that process, step by step. 

According to Verifi, enrolling in RDR is pretty straightforward. Just contact your relationship manager or customer support representative to get started. This may be Verifi, if you work with them directly, or it may be your bank, or a third-party facilitator.

CDRN clients can simply sign an addendum to the Seller’s CDRN Agreement. All other Verifi clients can set up a new contract for RDR.

To initiate set-up, sellers have to complete an enrollment form that identifies their BIN/CAID(s) and the unique acquirer identifiers (your acquiring bank). Next, the seller will define decision rules and parameters, and provide them to Verifi to enter into the system. Once completed, the seller will have full implementation of RDR.

RDR is a semi-automated dispute response platform. It’s designed to intervene and respond to certain disputes and accept — or deny — liability on your behalf. To that end, the platform grants your acquirer permission to debit your account for funds in the event of a disputed transaction.

This means the platform will intercept and respond to disputes in real-time. It will issue automatic refunds for the disputed amount customers, assuming the transaction meets a pre-selected set of rules chosen by you. Of course, this also means that you are allowing RDR to assume agency for that transaction on your behalf, which is why you should choose your ruleset very carefully.

To illustrate, you may set a rule to accept liability for all disputed transactions under $50, if the category code indicates fraud, or billing errors, etc. You can add the following factors to your ruleset:

• Issuer BIN
• Transaction date
• Authorization date and time
• Transaction amount
• Transaction currency code
• Purchase identifier
• Dispute category
• Dispute condition code

Once you’ve selected your criteria, each dispute will be compared against this ruleset. It will either be refunded or advanced to the chargeback stage. By this method, you can avoid most chargebacks that happen due to merchant or processing errors.

RDR works in the background to keep your dispute responses timely and tidy. The program is designed to kick in before a chargeback is filed. Essentially, when a customer disputes a charge with a participating bank, their bank will first communicate through Visa Resolve Online (VROL). This is a bank-facing platform which lets the issuer recall information to potentially resolve inquiries before a dispute.

Once the case has been recalled through VROL, the bank will look to see what (if any) dispute resolution platforms are available. If you use Order Insight, for instance, that platform will assume the next steps. Otherwise, the dispute will be submitted to RDR, and act according to your predetermined dispute response ruleset.

Dispute notices will be sent to your acquirer, and then your acquirer will notify you. Once liability has been accepted for the dispute and your account has been debited for the amount, it’s time to record the activity in your CRM or order management system.

Visa’s reporting process for RDR activity is very similar to their reporting process for chargebacks. Dispute notices are sent to your acquirer, who then notify you of the automatic debit.

Analyzing the data you gain access to through RDR is perhaps the most important step in this process. Data analysis is a crucial element for any business, particularly if you’re frequently targeted by disputes and chargebacks. The information cleaned through complex data analysis can be invaluable on several levels.

Analyzing dispute data can help you:

• Diagnose dispute triggers
• Identify and resolve dispute patterns
• Calculate ROI
• Optimize best practices

Are There Any Potential Drawbacks of Using RDR?

Rapid Dispute Resolution can be a great asset for you as a merchant. And, while there aren’t any real downsides to its use, there are a few things to consider.

First, there are some disputes which you may want to progress to the chargeback stage. If an illegitimate dispute (i.e. first-party “friendly” fraud) progresses to the chargeback phase, you have the opportunity to fight back. You can recover your revenue through the representment process.

If a friendly fraud claim gets refunded through RDR, there’s no opportunity to challenge the buyer’s claim because there’s no chargeback to represent. And, with the benefit of reporting, you can enhance fraud screening by blocking future uses of the associated card.

Also, you’ll receive daily updates on refund information from Visa. This data can't help you recover money from transactions that have already been overturned. However, it will be useful to help adjust your rules for the future. Pay close attention to this information, and remember to make periodic changes as needed.

You also need to ensure that you're capable of reconciling this new refund data if you’re using a CRM or legacy system to manage customer data. Transactions cannot be credited through RDR and then resubmitted as a dispute. However, if data is handled improperly on your end, it could result in double refunds or other mistakes.

Making RDR Work for You

Rapid Dispute Resolution can be a great asset in the fight against chargebacks. This is especially true if you fall into any of the following categories:

• You’re close to breaching — or have already breached — the Visa chargeback threshold.
• You’re currently enrolled in the Visa Dispute Monitoring Program.
• You operate in a high-risk vertical or sales model.
• A significant share of your transactions are for low-ticket items.

You need to carefully consider which rules you want to apply for those automatic refunds if you decide to take advantage of RDR. You can’t fight a dispute that has a legitimate basis in criminal fraud or merchant error, so it’s best to refund these. This requires customized rule sets that are tailored to your unique needs as determined by your own transaction data.

Even after entering the program, it would be wise to keep tabs on your refund rate. If you see refunds start to spike and exceed your comfort level, and you’re not at immediate risk of exceeding chargeback thresholds, you should refine your RDR rules.

You could also consider working with a third party to help make RDR work for you.

Chargebacks911® are certified Visa RDR facilitators. Our experts have decades of experience navigating complex industry regulations and practices. We can help you optimize your Visa Rapid Dispute Resolution rule sets to prevent chargebacks while avoiding unnecessary refunds.

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