Disputes occur when customers contact their credit card companies and request a charge be forcibly reversed when a refund has been denied. Visa, Mastercard, Discover, and American Express all offer their cardholders the ability to open a dispute whenever they think that a purchase has been made fraudulently or a merchant has failed to deliver on their end of a transaction. Unfortunately, the traditional dispute response process available to merchants is slow, tedious, and sometimes difficult. Today, new tools, like IRIS CRM Dispute Responder, are changing that, helping merchants beat disputes in a fast, efficient manner. 

Disputes come in a couple of different forms – namely, chargebacks and retrieval requests. A chargeback is a direct request from a customer to have a transaction reversed. When a chargeback is requested, the card company will evaluate the customer’s claim and decide if it meets the conditions necessary to initiate the process. There are time limits within which requests must be made, the customer must have a compelling reason for making the request, and a traditional refund must have been pursued and denied by the merchant. A chargeback is the final remedy a wronged customer has at their disposal, and once one has been initiated, the card companies tend to favor the cardholder unless the merchant can provide a strong response with clear proof that the transaction was both legitimate and fulfilled. 

Retrieval requests, also known as “soft chargebacks,” are information requests from the card companies regarding transactions a customer has identified as suspicious or unrecognized. If a merchant can provide information to ease the customer’s concerns, the dispute will go no further. Otherwise, the customer is likely to upgrade their retrieval request to a full chargeback. 


How Disputes Impact Merchants

Chargebacks are a reality of doing business, and a few here and there won’t cause any major problems. But, when chargebacks start to pile up, they can have a significant negative impact on a merchant’s business, finances, and relationships with their payment processing partner and the card companies. 

Lost Revenues:

When a merchant is nailed with a chargeback, the relevant credit card company refunds the cardholder and claws back the money from the merchant’s account. Small transaction reversals are manageable, but when large transactions are reversed or a series of chargebacks happen in rapid succession, it can have a very destabilizing effect on the merchant’s cash flow. 

Lost Inventory:

Because a chargeback is an extreme measure pursued only when customer service and the traditional refund process have failed, in many cases, the merchant not only loses the revenue, but also never recovers the inventory as well. As a result, on top of the revenue, the merchant is also out the cost of goods sold, increasing the negative financial impact of the chargeback. 

Reputation Damage:

A less immediate but equally damaging consequence of chargebacks is the impact they have on a merchant’s relationship with their processing partners. Chargebacks are bad for everyone involved in payments, and when a transaction is reversed, the independent sales organization and payment processor the merchant partners with also lose out on their transaction fees. Too many chargebacks also increase the risk a merchant represents to the card companies. As a result, a merchant with chargeback problems will face consequences ranging from higher fees to denial of certain services like next-day funding and, in extreme cases, may lose their processing services altogether. 


How Merchants Handle Disputes

While some disputes are legitimate and filed by customers who deserve their money back, in some cases, the chargeback process is abused by people either overreacting to a situation or looking to fraudulently get a refund. Many merchants simply ignore disputes, and chargeback abusers often bank on that fact in hopes their claims will go unchallenged. However, whether it’s exercised or not, every chargeback provides the merchant with the opportunity to counter the customer’s claims and provide evidence demonstrating that they held up their end of the bargain and deserve to keep the revenue.

To respond to a dispute, a merchant must determine the reason the dispute has been filed and how long they have to file a defense – both provided through the chargeback’s “reason code.” The merchant then must compile and submit what the card companies refer to as “compelling evidence” that the chargeback is invalid. Each reason code requires a specific kind of evidence, and if the merchant can meet the burden of proof and get everything in before the clock runs out, the card company will overturn the chargeback, and the merchant will keep the revenue. It isn’t necessarily a complex process, but it is time-consuming. It also isn’t uncommon for merchants to misinterpret the reason code and submit incorrect evidence, rendering the entire process moot and guaranteeing a loss. 


IRIS CRM Dispute Responder

Unfortunately, many merchants choose to ignore disputes rather than deal with the time-consuming and headache-inducing process of fighting them. And, in many cases, merchants don’t even find out about a dispute until well after the clock has started running down due to the slow nature of the notification process. In those cases, even if a merchant wanted to fight a chargeback, they might not have time to. Luckily, there is now a better way for merchants and their ISO partners to quickly and efficiently respond to every dispute that can be won – IRIS CRM Dispute Responder. 

Dispute Responder is a tool designed to make dispute notification instant, compiling the right evidence simple, and managing the entire response process frictionless. It’s built directly into IRIS CRM – the payments industry’s top customer resource management platform – ensuring that both the merchant and their independent sales organization can easily manage the process and never have to suffer the consequences of unfair or fraudulent chargebacks. 

Just some of the benefits Dispute Responders offers merchants and ISOs include:

  • Instant Dispute Notification: Merchants and ISOs receive immediate “day zero” notification as soon as a chargeback is filed. Reminders go out automatically on day one and day three, ensuring no dispute ever slips through the cracks. 
  • Easy Checklist-Based Evidence Management: When a dispute comes in, Dispute Responder checks the reason code and automatically compiles a checklist outlining the evidence required and action steps. Merchants and ISOs using Dispute Responder never have to waste time looking up or interpreting reason codes, and they can rest assured they’ll submit the right evidence every time. 
  • Paperless Online Response Process: Dispute Responder offers a totally web-based, end-to-end dispute management process. Merchants and ISOs can handle an entire dispute response, from initial notification to evidence compiling to submission to monitoring, all without ever having to leave the CRM. 
  • Advanced Reporting: Once a dispute response has been filed, merchants and ISOs need to keep an eye on its progress to ensure they don’t miss any requests for additional information. Dispute Responder’s analytics dashboard enables users to access complete data on all ongoing and historical disputes in a matter of seconds.

Dispute Responder empowers merchants to quickly and easily challenge every winnable dispute. It also enables ISOs to handle the process themselves in the event a merchant isn’t responding, protecting the ISO and opening up a potential new service and source of revenues.

To find out more about how Dispute Responder works and how it can help your ISO and your merchants beat more chargebacks, schedule a free guided demonstration of IRIS CRM today.