Purchase data as part of your dispute defense strategy

The world of payments has become highly efficient at processing payment transaction data. It is surprising how much data about a transaction is captured, stored and relayed throughout the payment clearing & settlement process. In fact, a card transaction message carries a great many distinct data elements. While much of this data is useful to the parties involved in the payment process, it is often not enough when those payments are disputed by cardholders. For example, most transaction data does not contain information about the actual purchase itself. Rather, it contains the expected data elements about the merchant, the amount, date & time of purchase, the way in which the purchase was authorized, the terminal that accepted the card, the type of card used, and so on. It does not contain the fact that, for example, a cardholder purchased some Chinese take-out.

Why "transaction not recognized" starts as a data problem

Transaction data is summarized and displayed in simple formats and made available to consumers through online statements rendered through digital banking channels or paper statements. However, "transaction not recognized" is one of the primary reasons cardholders dispute their payments. This is often caused by unclear transaction descriptions or merchant/company descriptions. In other instances, the cardholder may recognize the merchant description, but claim ignorance of the purchase because he or she does not recall receiving goods or service from that merchant.

Ironically, this type of "clarification" service has been available for several decades. For those of you familiar with a "Retrieval Request" or "Request For Copy," you will know that these are requests made by issuers of merchants or their acquirers to supply a copy of the receipt related to a purchase. These are often ordered after a claim has been raised, at the point when a back-office dispute analyst is performing research and investigation. The merchant is not obligated to fulfill the request, and the fulfillment may take weeks to move through the payment ecosystem. The idea is great, but the constraints of timeliness, cost and consistency have degraded the utility of this model.

Purchase data at the point of enquiry

The question therefore becomes: how can purchase data, in conjunction with transaction data, be supplied to consumers in real time when they need it most? If purchase data could be supplied to consumers before they ever contact their card issuer, it would drastically reduce errant dispute claims and calls to the issuer's call center or branch network. In other words, if a cardholder sees on their mobile banking app that a purchase was made at "ABC Enterprises" for $14.99 last Tuesday and does not recognize it, but then is immediately able to see that the transaction was the purchase of a "Large Moo Goo Gai Pan" it would prevent that cardholder from contacting the issuer to raise a claim.

What an avoided dispute saves

The economic impact of reducing the number of dispute claims and instances of customer contact is significant. Handling a disputed transaction costs an issuer far more than the processing fee, once labor, mail and third-party fees are counted.

Several FinTech companies are starting to offer such services, including Verifi, Ethoca, and Visa. The challenge is to incorporate the purchase data exchange service as a built-in part of the consumer engagement and servicing model, in other words, making the data available simply and in real-time before the consumer ever raises a servicing request. In addition, and at a minimum, the purchase data exchange service should be available to customer service personnel to facilitate a conversation with the consumer with the hope that the information will jog that consumer's memory.

At Lean Industries, we specialize in delivering highly automated dispute management solutions to card issuers and retail banks. Our tools supply an engaging dispute intake service that can be used by customer service personnel and incorporated into a bank's digital banking environment. AdjustmentHub works with Ethoca Consumer Clarity and Verifi Order Insight, which put merchant purchase detail in front of the cardholder and the agent, to help drive down the problem of growing disputed payment volumes and their associated costs. Interested in providing a more engaging and informative experience to your customers? Talk to a dispute specialist.