In an age of quick processing for digital payments, transaction disputes can still take weeks for a resolution or chargeback — an unacceptable time frame for e-commerce. To hasten dispute resolution, some vendors are beginning to offer financial incentives to merchants that agree to speed up the process.

Merchants across the entire market have a dismal chargeback record, which in part is attributable to the time it takes for a dispute to come to a conclusion and the lingering use of static data and manual dispute processes in an age of high card-not-present fraud and social communication that can feed a consumer's dispute with a merchant.

Verifi plans to offer financial incentives via its Authorized Reseller Program, which it launched to make direct investments in resellers through performance-based marketing development funds. The goal of this strategy is to encourage merchant adoption of its Cardholder Dispute Resolution Network.

The structure and size of these investments is situational but Verifi is dangling extra funds to push for quick resolutions of disputes of card not present payments, and potentially avoiding card chargebacks altogether.

"The resellers that have been good partners to us are being recognized for that," said Matthew Katz, CEO of the Los Angeles-based Verifi. "We're providing marketing dollars to them."

Midigator, which is part of Verifi's reseller network, contends that by making resolution more proactive, time can be cut from the process.

"Typically there's a labor-intensive process that involves getting an alert and going into the CRM system and issuing the refund," said Corey Baggett, CEO of Midigator, a chargeback reporting and management company that has developed technology to remove time from disputed payment resolution.

Midigator integrates with merchant CRM systems to match an alert to an order and attempt to resolve a disputed payment in real time. "There's a time sensitivity to these alerts to resolve before it gets to a chargeback."

The American Fork, Utah-based Midigator's technology analyzes disputed transaction alerts to find trends or tendencies in chargebacks to shorten what is typically a five-week process in which the disputed payment is resolved with the consumer, merchant and financial institution.

Baggett said his company has "mapped" the data around alerts to look at information such as market, country, price, BIN and other factors to produce a preemptive, faster reconciliation.

As payments become more digital, disputes become more complex, according to Katz, saying the traditional manual payment processes allowed more time to consider disputes or come to a resolution.

"The big pressure on chargebacks is to make handling them easy, which does also mean bringing speed. However a good chunk of the speed part is in the hands of consumers and banks, which makes that hard to control," said Rick Oglesby, president of AZ Payments Group.

"Therefore chargebacks still take time on the calendar," Oglesby said, "but there are lots of automation services, and processors have gotten better at managing them fully online, which makes it easier and easier for merchants to manage chargebacks quickly and easily through any digital channel."

Writing for PaymentsSource, Srii Srinivasan, CEO of Chargeback Gurus, said the increasing use of customer reviews and social tools, and the overall complexity of fraud in a CNP environment, was making it harder for a merchant to decide to dispute a chargeback, much less come up with a strategy.

In such an environment, a wider data source of data that's integrated more directly with CRM and payment records, such as Midigator's model, can give a merchant more information on a dispute much faster.

"This really highlights that rising CNP fraud is top of mind for merchants of all sizes, so the ability to tackle the problem as early in the chargeback lifecycle as possible is increasingly important," said Julie Conroy, a research director at Aite Group. "Early notification of a chargeback can give merchants the opportunity to address the dispute directly with consumers and potentially deflect the chargeback by issuing a refund."

It can also give the merchant an early heads up about potential fraud to stop shipment of goods, Conroy said, adding it's a win-win to reduce the cost and workload associated with chargebacks for both the issuer and the merchant.

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