Visa: Improved dispute resolution vital to e-commerce growth

Online transactions account for a growing proportion of the global economy.

Dispute resolution vital to e-commerce growth

While this gives consumers access to a much wider range of goods and services, it also brings an increase in the number of disputed transactions linked to fraud attempts, returned or mis-ordered goods, or processing and authorization issues.

The growth of online business means that there is an urgent need to improve both the process and outcomes relating to disputed transactions, including chargebacks, to maintain the ease and low friction consumers expect at online checkout.

“Disputes will cost European banks and merchants $2 billion a year by 2026.”

Disputes and chargebacks occur in a range of scenarios: when consumers are hit by fraud, when customers claim not to have purchased goods and services, or when processing and authorization errors are suspected.

Last year Payments Cards & Mobile reported that disputed transactions are set to cost European banks and merchants around $2 billion by 2026[1] as e-commerce continues to grow in importance to the continent’s economy, while Visa’s own data shows a 30% rise in disputed transactions between 2019 and 2022[2].

“Resolving disputes relating to online transactions can often be more complex than at physical point of sale”, says Nathan Cushnie, Director of Post-Purchase Solutions Europe at Visa.

“This is especially true in cross-border e-commerce, where identical quality of data may not always be available from all parties in a transaction.

Furthermore, as account-to-account and instant payments grow rapidly over the next five years, dispute resolution looks set to become even more challenging.”

Better dispute resolution improves brand loyalty

Challenges aside, there’s also good news: if banks and merchants can resolve disputed transactions rapidly, customers are more likely to do more business with them online.

That’s according to a study from McKinsey[3], which argues that rapid and smooth resolution of online disputes improves brand loyalty for banks and merchants.

To help banks better manage the dispute resolution process, Visa has introduced its own Dispute Management Service, VDMS.

This solution is designed to optimize recovery of funds in the dispute process, cut the cost of disputed transactions for banks and free up resources for banks to focus on enhancing customer relationships and improving the resolution experience for its customers.

Visa’s VDMS service gives banks access to experts with more than 500 years of combined experience in dispute resolution, as well as Visa’s Resolve Online (VROL) portal, which provides banks with monthly summaries of how many disputes have been resolved alongside easy access in one location to information about each individual case.

VROL access enables banks to track and benchmark their performance in dispute resolution against industry averages, while the VDMS service as a whole reduces the time and money banks have to allocate to managing disputed transactions.

To find out more about Visa’s VDMS dispute management service, download further information now.

[1] Payments Cards & Mobile, 16 October 2023. “The burgeoning growth of chargebacks”

[2] Visa Dispute Management Service, Percentages are illustrative only and may vary depending on the circumstances of each dispute

[3] Payments Cards & Mobile, 27 September 2022. “Banks don’t focus enough on customer satisfaction in dispute management”

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