How a pre-dispute alert works
The cardholder contacts the issuer. An issuer that takes part in an alert network sends the case there first, and the network matches it to the merchant by the descriptor and the transaction's identifiers.
The merchant receives the alert through an API or a portal, refunds the payment, cancels the subscription or holds the shipment, and reports the outcome. The issuer closes the case without a chargeback.
Two networks carry most alerts: Verifi, owned by Visa, and Ethoca, owned by Mastercard. Verifi's page for its CDRN alerts gives the merchant 72 hours to start the credit, and its Rapid Dispute Resolution service makes the same decision automatically. Only participating issuers send alerts, so some disputes still arrive unannounced.
What a pre-dispute alert costs and saves
The sale is refunded and the alert carries a fee, so the revenue is lost either way. What is saved is the chargeback fee, the goods if they have not shipped, and a mark against the merchant's dispute ratio: Verifi states that disputes resolved before a chargeback is initiated do not count against Visa's dispute ratio.
The practical risk is a double refund, when a merchant has already refunded the customer and then accepts the alert as well. Alerts therefore have to be matched against refunds before they are answered.
Pre-dispute alert or chargeback notification?
- Chargeback notification
- Reports a dispute that has already been filed. The money has moved, and the choice is to accept or to contest.
- Fraud notification
- Reports that an issuer has recorded a payment as fraud. No refund is asked for and no dispute need follow.
- Order Insight
- Sends order details to the issuer and the cardholder. An alert asks the merchant for a refund.
Where a pre-dispute alert shows up in a platform
Modules that do the work
- Fraud & riskReal-time fraud scoring, limits and case management, with the risk engines you already trust.
- Card acquiringCard acceptance on the phone, in store and online, through the acquirer you choose.
- NotificationsEmail, SMS, push and in-app messages in your brand, through the providers you choose.
- BackofficeOne console to run the platform: customers, money, risk, content and staff permissions.
Platforms that need it
Where it is written
The laws and standards this page's facts come from.
General information, not legal advice: what applies to you depends on your services and your market.