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Self Service for Cards Dispute Resolution – A means to increase profit margins and customer satisfaction

by Vinod Nag

A “dispute” in the context of credit cards pertains to questioning the validity of a card transaction. Most dispute complaints begin in a similar fashion - the card holder communicates with the card issuer bank through one of the channels – telephone, e-mails, direct mail (posts) etc. The customer service representative will then collect the necessary details and determines how this enquiry has to be dealt with.

It is common for dispute cases to be processed by the back office, which involves identification of appropriate reason codes, analyzing validity of dispute, requesting additional documentation, processing chargeback and re-billing, finally closing the dispute case or taking it to arbitration. Back office agents spend a good amount of time resolving disputes, however, they sometimes ends up forwarding cases to another agent for analysis and closure. Banks aim to minimize excess fund spent on resolution, charges/fees and write-off disputed amounts in favor of their customers. It is seen that a huge number of small value write-offs totals to a big amount which is a loss to the issuer bank. Similarly, the time spent on dispute investigation and fees/charges paid to a third party for transaction retrieval and document processing will also account for a reduction in profit margin. It’s been a challenge for banks to minimize write-offs and reduce the dispute resolution time to increase profits.

At the same time, a card holder who has raised a dispute will be not sure of processes and reversal of disputed amount. He will be in a fear of losing dispute case and unaware of the prevailing status of the dispute case. Thus any unclear communication or delays caused can irritate the customer and become concerns for customer experience.

On the other hand, the merchant involved in a disputed transaction is required to furnish details/documents if he thinks the presentments (bills produced to the Issuer bank through merchant bank called Acquirer) are correct. In such a situation, the merchant need to spend time in verifying reason codes, transaction details, related documents etc and represent them to his bank to stand by his initial presentment. Merchants are at a risk of losing the disputed amount if representments are not made on time and details verified are incorrect. The merchant then not only loses the disputed amount, but he will end up paying a service fee/penalty to the acquirer. He will also have the risk of fraudulent transactions and cases getting ended up in arbitration.

While attempting to please all the parties involved in disputes case processing, is it not a good idea for banks to expose some of the dispute resolution processes to card holder and merchants? Online dispute processing can work smoothly for onus-onus transaction wherein a bank is acting as an Issuer and acquirer for a given disputed transaction. Enabling online processing may be a challenge if the merchant bank is different from the issuer bank as he will be represented by his acquirer bank.

Following is a representation of what steps/processes can be exposed to the card holder:


Issuer banks can invite card holders to submit their disputes on a secured portal. This portal can be supported by integrating with the existing CRM system with a little customization for case management for tracking and update purpose. To help a card holder respond to the required questions, forms should be made available on the portal which should be driven by a decision engine for foolproof data entry and assignment of correct reason codes.  There should also be a facility to upload documents and images supporting dispute. With this, a customer can easily raise a dispute case, continuously monitor the status and respond as required. The back office will review this and request the customer for more details, decide whether the card holder is liable and if otherwise, route it to merchant for chargeback.  The merchant with a notification would review and respond quickly. This would also minimize his paper work and the time spent in correspondence with his acquirer.

Listed below are a few benefits that might set banks thinking on the lines of externalizing some of the steps involved in dispute resolution and increase its satisfied cardholders segment.

Benefits to Issuer

• Reduced time for data capture, analysis, validation, routing and decisioning
• Elimination of misinterpretation during data capture
• Increase in back office productivity of
• Efficient communication and correspondence system
• Reduces expenses on documentation processing and management
• Satisfied customers
• Increased customer trust with the issuer bank
• Reduced number of write-offs
• Controlled number of Chargeback initiation
• Possibility of externalizing the back office tasks (off shoring or sub contractors)

Benefits to Card holder/ Merchant

• Customer understands the importance and relevance of the data being furnished
• Card holder knows what went wrong better than analyst – a feeling that he was able to express his concerns completely
• Provides clear and required details even for low value disputed transactions
• Cost and time saved as case is created electronically – no posts, re-posts, confirmations etc.
• Transparent processes appreciated by card holder
• Right status at any time across all communication channels (email, web, telephone…)

With an online support system, it is possible to fast track dispute cases, reduce the time and money spent on dispute investigation, reduce write-offs and minimize cases getting into arbitration, and increase customer satisfaction and loyalty. Will such a provision for interaction not be beneficial to both cardholder and merchant besides improving customer experience?

About the Author

Vinod anchors the Chordiant Centre of Excellence within the Enterprise Solutions unit, besides being involved in presales. He has managed offshore delivery of projects for major North American banks, achieving high customer satisfaction in these engagements. He has also been active in initiatives for competency development. Vinod will blog on marketing, campaign management, and various aspects of CRM.


Vinod, a nice suggestion.

Key points to ponder:

1. Is the cost of this solution lower than the value of such transactions in an year?

2. IT Security restrictions create complex user authentication interfaces. Would this affect the adoption by user/merchant?


Sai, thank you for sharing your views and point of concerns.
I have proposed this solution considering any bank that is involved in credit cards business would have a CRM application. The solution recommends reusing existing CRM platform for Disputes resolution automation with simple to moderate customization and integration to other required enterprise systems like document processing, image storing etc. This may require little investment on components that a bank may not have like a decision management or work flow engine.
So, in my opinion, the cost of this solution will be much lower than implementation cost of an isolated dispute management system. The advantage of this solution will provide agents a 360 deg view through CRM suite that may help agent utilize inbound communication effectively and offer other products say fraud protection which will be triggered by a decisioning system that advises agents to do so…
The solution, not only is cost effective but also leads to improved customer retention, cross/up sell and thereby increasing bank’s business.
On your second point, what I propose for user authentication is a secured web access to a bank portal. Well user may already have such facility provided by their banks. With implementation of disputes, another value added services link will be available on this portal for the users to log dispute cases. Card holders and Merchants can use the portal to access dispute cases and bank dispute agents would directly work with CRM system to resolve cases. The agent’s authorization can be controlled based on their specialty (sales, fulfillment, disputes etc).

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