In this modern era of digital transactions, payment cards have become an integral part of our daily lives. While these cards offer convenience and security, occasional discrepancies, and disputes can arise between cardholders and merchants. So, what is card dispute and why does financial organizations need an effective card dispute management software? Is it worth investing in such a a dispute resolution system? Let’s delve into it here.
What is a card dispute management software?
The basics. Card dispute is a disagreement between a cardholder and a financial institution or a bank regarding a specific transaction made with the cardholder’s credit or debit card. A card dispute management software or commonly called a dispute resolution system can automate and streamline the processes involved in managing and resolving card disputes.
It provides a centralized platform for financial institutions, card issuers, and related stakeholders to handle disputes efficiently.
A card dispute management software could include several key features such as:
Dispute case management where users can create and manage dispute cases, access all the details, transaction records, supporting evidence and other important documents.
Rich communication channels for exchanging information among the stakeholders such as secure messaging, real-time chats, email notifications, etc.
Automation of workflows to reduce manual efforts with the help of predefined templates and to ensure each step is followed systematically.
Secure storage for documents like dispute forms, transaction receipts, etc to ease the investigation process
Compliance features to protect sensitive customer data – It could include user access controls, encryption audit trails – and to adhere to regulatory requirements.
When can a charge be disputed
It is always best to raise a dispute as soon as it is seen. However, there’s a timeframe of atleast 60 days for the cardholder to dispute a charge. On circumstances like:
Unauthorized transactions: When the cardholder notices charges on their statements that they did not authorize or recognize. These could be a result of stolen card information or fraudulent activity.
Billing errors: Mistakes could happen for any reason, a technical glitch, a human error or even a system malfunction could be pricey for a customer. Whether it is a double charge or errors in the billing amount for a particular transaction, the cardholder has the right to file a dispute.
Non-receipt of goods/services: The cardholder makes the payment but never receives it as promised. Undelivered packages, cancelled reservations, or failure to provide the agreed-upon services are disputable.
Defective items: When the cardholder receives the product that is wrong, damaged, or significantly different from what was described by the merchant at the time of purchase.
Dissatisfaction with products/services: If the cardholder is not satisfied with the standards of the items or services, they can seek a resolution for the dispute.
How does a card dispute work?
First, let’s understand what is chargeback.
Consider a scenario. A customer purchases a mobile phone through a credit card but receives the item in a damaged state. The customer requests a refund to the merchant but he is denied. Now, this customer can approach his card issuer to reverse the transaction and provide a refund. Chargeback is a form of consumer protection that allows cardholders to dispute unauthorized or fraudulent charges, billing errors, or dissatisfaction with the product/service received.
The card issuer initiates the chargeback on behalf of the cardholder, and the disputed amount is temporarily credited to the customer’s account while an investigation takes place. The merchant is then notified of the chargeback and has the opportunity to provide evidence or dispute the claim. Once the chargeback is finally determined valid, the merchant could be levied a penalty, and the customer’s amount is retained. .
A chargeback is a type of dispute resolution process that a cardholder’s bank initiates with his credit card company or bank. While this may look like a simple process, it is quite complex when carried out manually.
A card dispute management system is required for several reasons. Here, we list down the top five reasons:
Challenges of card dispute management
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Challenge: Time consuming process
For a financial institution or a bank, manual dispute management involves a lot of paperwork. Starting with collecting the documents like invoices, emails, etc. all that substantiate the dispute claim. Then, there is an investigation process that may again require additional papers or sharing physical copies. Plus the communication lags, if relying on phone calls, postal mails, etc. and what if the parties are in different time zones, adding to the woes.
AI-enabled solutions can minimize the manual task to a great extent. It can help in:
Automated documentation:
Forget about manual chaos in a sea of papers. An intelligent card dispute management system can automatically collect, analyze, and organize the data, including relevant communication records and transactional data.
Effortless dispute submission:
Your customers can raise a dispute just from a simple application or even a mobile app. They can submit all the essential information and submit records electronically.
Automated communication:
Notify your customers about important updates on time by setting up automated alerts. Streamline communications and reduce delays
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Challenge: Inconsistent handling
Manual systems may result in inconsistent handling of disputes due to decision makers with varying levels of expertise and experience, leading to inconsistent outcomes and customer dissatisfaction.
Solution: When an AI-powered card dispute management system is deployed, it applies predefined rules and algorithms consistently, ensuring fair and standardized treatment of disputes. This leads to more consistent outcomes and improved customer trust.
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Challenge: Limited scalability
There could be seasonal peaks of card disputes, which may be difficult to handle manually. Hiring and training additional staff could not be a cost-effective solution for your organization.
Solution: AI-enabled card dispute management systems are scalable, capable of processing large volumes of transactions and disputes efficiently. They can handle increased workloads without compromising on speed or accuracy, ensuring effective management of disputes even during busy periods.
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Challenge: Lack of real-time monitoring
Monitoring every transaction in and out to detect fraudulent activities is likely impossible when handling with papers and emails.Chances are any disputed transaction could go unnoticed util a customer raises the issue, leading to potential loss and customer dissatisfaction.
Solution: AI systems can continuously monitor card transactions in real-time and flag any suspicious or unusual transactions or activities. This enables organizations to proactively identify and respond to potential fraudulent transactions or disputes promptly.
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Difficulty in data analysis:
Manual systems often lack the capability to analyze large volumes of transaction data effectively. This hinders the identification of patterns, trends, and root causes of disputes, limiting the ability to implement proactive measures for prevention and improvement.
Solution:AI-enabled solutions leverage machine learning algorithms to analyze vast amounts of data quickly and accurately. They can identify patterns, trends, and root causes of disputes, providing valuable insights to financial organizations for implementing preventive measures and improving processes.
Conclusion
Lastly, operational costs, human errors, and compliance requirements are also considered major pain points. Automation solutions like an AI-enabled card dispute solution streamlines the process, offering faster, more accurate, scalable, cost-effective dispute management processes. With built-in audit trails and reporting functionalities, financial organizations can meet the regulatory requirements and adhere to industry standards. More
