Smart Dispute Resolution (SDR) is a dispute prevention service in Subotiz Payments that integrates Verifi RDR and Ethoca to identify and address potential disputes before they escalate into chargebacks. SDR helps merchants reduce dispute rates and chargeback risk, improve dispute resolution efficiency, and lower dispute handling costs.
Service Overview
When a cardholder disputes a transaction with their issuing bank, the dispute may escalate into a formal chargeback. Chargebacks can increase dispute handling costs and affect how payment processors or card networks assess merchant risk. Persistently high dispute rates may also result in merchants being placed in card network monitoring programs.
SDR uses Verifi RDR and Ethoca to receive dispute information before eligible disputes escalate into formal chargebacks. The system then processes eligible transactions based on the relevant dispute prevention service and processing rules. By addressing disputes earlier in the process, merchants can reduce formal chargebacks, manual dispute handling costs, and payment risk.
Note: SDR helps reduce dispute and chargeback risk but does not guarantee that all chargebacks can be prevented or that every dispute can be successfully resolved.
Benefits
Enabling SDR provides merchants with the following benefits:
- Reduce dispute rates and chargeback risk: Process eligible transactions before disputes escalate into chargebacks, reducing the number of disputes that enter the formal chargeback process.
- Reduce manual handling costs: Process eligible disputes based on applicable rules, reducing the time and resources spent on manual follow-up, communication, and preparing dispute responses.
- Improve dispute resolution efficiency: Address potential disputes earlier, reducing the time between detection and resolution.
- Maintain payment stability: Reduce the risk of high dispute rates affecting how payment processors or card networks assess merchant risk.
- Avoid additional integrations: SDR is integrated with Subotiz Payments, so merchants do not need to integrate separately with Verifi RDR or Ethoca.
Dispute Resolution Process
SDR uses the following process to address disputes before they escalate into formal chargebacks:
- Submit a dispute: A cardholder disputes a transaction with their issuing bank.
- Receive a dispute alert: Relevant dispute information is sent to Subotiz Payments through the Verifi RDR or Ethoca network.
- Evaluate processing rules: The system determines how to process the transaction based on the dispute prevention service and relevant processing rules.
- Process the dispute: Eligible transactions are processed according to the relevant rules, reducing the risk of escalation to a formal chargeback.
Verifi RDR and Ethoca
SDR integrates Verifi RDR and Ethoca, two dispute prevention services that use different dispute resolution mechanisms. Together, they help merchants address potential disputes before formal chargebacks occur.
Service |
Primary Coverage |
Processing Method |
|---|---|---|
Verifi RDR |
Visa |
Automatically processes eligible disputes according to applicable refund rules |
Ethoca |
Visa, Mastercard |
Provides dispute alerts before formal chargebacks occur and processes eligible disputes based on applicable refund rules or merchant action |
Verifi RDR
Verifi RDR (Rapid Dispute Resolution) is Visa's dispute resolution service for Visa card transaction disputes.
When a dispute is received, RDR automatically processes eligible transactions according to the applicable refund rules. Qualifying disputes can therefore be resolved before entering the formal chargeback process, helping merchants reduce dispute and chargeback risk for Visa card transactions.
Ethoca
Ethoca provides dispute alerts for eligible transactions before disputes escalate into formal chargebacks.
When an Ethoca alert is received, the system can process eligible transactions according to the applicable refund rules. For alerts that require additional action, merchants can review and handle them based on the transaction and dispute details.
For service configuration, refund rules, and alert handling, refer to Subotiz Payments | Configuring and Managing Smart Dispute Resolution.
Enabling Smart Dispute Resolution
SDR is available to Subotiz Payments merchants, but how the service is enabled and managed depends on the merchant type.
Subotiz MOR Merchants
SDR is part of the Subotiz MOR payment service.
For Subotiz MOR merchants, SDR is enabled and managed centrally by the Subotiz platform. Merchants do not need to apply for or configure the service separately and cannot enable, disable, or modify the related settings themselves.
Subotiz manages the relevant services and processing rules based on the merchant's business profile, dispute activity, and risk management requirements.
Non-MOR Merchants
Non-MOR merchants can enable SDR and configure RDR, Ethoca, and the relevant refund rules based on their business needs.
If Subotiz determines that additional risk management measures are required based on a merchant's dispute activity, fraud activity, or other risk factors, Subotiz may enable SDR or adjust the relevant settings in accordance with its risk management requirements.
For enablement and configuration instructions, refer to Subotiz Payments | Configuring and Managing Smart Dispute Resolution.
Fees
SDR fees are charged for each dispute alert.
Service |
Fee* |
|---|---|
Verifi RDR |
USD 15 per alert |
Ethoca |
USD 20 per alert |
Applicable fees are charged through Subotiz Payments and can be viewed in the corresponding transaction or funding records.
*Actual fees are subject to the rates officially published by Subotiz, the applicable agreement between the parties, or the rates displayed in the Subotiz admin.
FAQs
Is Smart Dispute Resolution enabled by default?
For Subotiz MOR merchants, SDR is enabled and managed centrally by the Subotiz platform. Merchants do not need to enable the service themselves.
Non-MOR merchants can enable SDR. In certain risk scenarios, Subotiz may also enable the relevant services or adjust related settings based on its risk management requirements.
What is the difference between RDR and Ethoca?
RDR primarily handles Visa card transaction disputes and automatically processes eligible disputes according to the applicable refund rules.
Ethoca supports Visa and Mastercard card transactions. It provides dispute alerts before formal chargebacks occur and allows eligible disputes to be processed according to applicable refund rules or merchant action.
Does Smart Dispute Resolution automatically issue refunds?
Some dispute alerts that meet the applicable refund rules can be processed automatically. Whether a refund is issued automatically depends on the dispute prevention service used and the refund rules currently in effect.
Can merchants configure their own refund rules?
Non-MOR merchants can configure refund rules for RDR or Ethoca.
For Subotiz MOR merchants, the relevant settings are managed centrally by the Subotiz platform and cannot be modified by merchants.
Can Smart Dispute Resolution be disabled?
Subotiz MOR merchants cannot independently disable SDR when the service is centrally managed by the Subotiz platform.
Non-MOR merchants can manage SDR based on the available product functionality. Changes to service enablement, service disablement, or refund rules may take up to one week to take effect.
Can formal chargebacks still occur after Smart Dispute Resolution is enabled?
Yes. SDR is designed to identify and process eligible potential disputes before formal chargebacks occur, but not every dispute can be handled through RDR or Ethoca. Enabling SDR therefore does not guarantee that all formal chargebacks will be prevented.
SDR integrates Verifi RDR and Ethoca to help merchants identify and address potential disputes before they escalate into formal chargebacks. By resolving eligible disputes earlier, merchants can reduce dispute rates and chargeback risk while lowering dispute handling costs. Service enablement and management vary by merchant type and are subject to available product functionality, relevant rules, and agreements.