Dispute Response

By September 17, 2018Industry Terms

Dispute responses allow merchants to challenge illegitimate disputes. The purpose of a dispute response is to prove the validity of the original transaction and recover the revenue that the dispute revoked.

What is Involved in a Dispute Response?

When a cardholder disputes a transaction, the issuer sends the dispute to the merchant’s acquirer via the card network. The acquirer notifies the merchant of the dispute.

If the merchant wishes to challenge the dispute, a dispute response can be submitted within the allotted time frame (usually anywhere from 3 to 20 days).

Each dispute response must include compelling evidence—documents and other information that prove the transaction was authorized and goods or services were provided as promised. The dispute reason code dictates which pieces of evidence are applicable. If the merchant doesn’t have sufficient compelling evidence, the dispute can’t be challenged.

Dispute response packages are compiled by the merchant and submitted to the issuer via the acquirer. The issuer will review the dispute response and issue a verdict. If the issuer finds the response validates the original transaction, the dispute is overturned. Funds are returned to the merchant and the cardholder is charged a second time. If the issuer deems the dispute response isn’t compelling, the dispute stands.

Manual vs. Automated Dispute Responses

There are two ways to create and submit a dispute response: manually or automatically.

Because manually creating and submitting responses is a labor-intensive, time-consuming, error-prone process, many merchants don’t bother. They simply accept the dispute and sacrifice the revenue.

However, automation offers a valuable alternative to manual processes. Benefits include:

  • Elimination of errors
  • Reduction in costs
  • Better win rates and more revenue recovered
  • Higher ROI
  • In-house teams focused on growing the business

If merchants work with Midigator, the entire dispute response process can be automated. Midigator has the best success (highest win rates) of any other solution.

Note: Mastercard and Visa often use different terms to express the same concept. Visa uses the term “dispute response””, but Mastercard uses “representment”.

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