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How your Credit Card Company Processes Payment Disputes
By Imon Rashid
(All Rights Reserved)
In our digital world, credit card payment disputes happen quite often. These disputes occur when a cardholder questions a transaction, asserting it was either unauthorized or inaccurately described. This triggers a complex process involving various parties: the cardholder, the merchant, and the card issuer.
This exploration will dive into the details of credit card payment disputes, covering everything from the initial filing to the final resolution. We'll examine the key participants, the frequent causes of disputes, and the resolution process.
So the following diagrams should be taken as illustration only, as they are not done to scale, and kept vague not to coincide with real life process.
Understanding Credit Card Payment Disputes
1) Issuer Processing Dispute
In this flow, the issuer directly handles the dispute process.
Dispute Intake: The cardholder initiates the dispute through one of several channels, such as a call center, mobile app, or web portal.
Create Dispute Case: The dispute information is sent to the Issuer Dispute System/Gateway, which creates a dispute case with the provided details.
Dispute Request to VROL/MasterCom: The Issuer Dispute System/Gateway sends a dispute request to Visa Resolve Online (VROL) or MasterCom (the Mastercard equivalent) through a Dispute Request API.
Process Dispute Request: VROL/MasterCom processes the dispute request and sends the information to the acquirer or merchant for review.
Process Response: VROL/MasterCom responds to the Issuer Dispute System/Gateway through the Dispute Response API, confirming that the dispute request has been processed.
Update Cardholder: The issuer’s system updates the cardholder with the dispute status, notifying them that the case is under review.
2) 3rd Party Processing Dispute
In this flow, a third-party processor manages the dispute process on behalf of the issuer.
Dispute Intake: The cardholder initiates the dispute, using a call center, mobile app, or web portal as before.
Create Dispute Case: The dispute information is sent to the third-party processor, who creates the dispute case. The third party may also perform a Transaction Inquiry or gather Transaction Details as part of the case creation.
Dispute Request to VROL/MasterCom: The third-party processor sends a dispute request to VROL or MasterCom using a specific Request API.
Process Dispute Request: VROL/MasterCom processes the dispute request and forwards it to the acquirer or merchant for review.
Process Response: VROL/MasterCom sends a response back to the third-party processor through the Dispute Response API, confirming that the dispute request has been processed.
Update Cardholder: The third-party processor relays the dispute status back to the issuer, which then updates the cardholder, confirming that the case is being handled.
Key Differences
In the Issuer Processing Dispute flow, the issuer’s own system manages the dispute.
In the 3rd Party Processing Dispute flow, a third-party processor handles the dispute case creation, inquiries, and communication with VROL/MasterCom on behalf of the issuer.
Both processes ultimately aim to resolve the dispute by involving VROL/MasterCom and notifying the cardholder, but they differ in whether the issuer or a third-party processor handles the dispute case.
You can read more here how MasterCard processes disputes in this link.: