Smart Dispute Resolution (SDR) is a dispute prevention service integrated with Subotiz Payments that uses Verifi RDR and Ethoca to identify and address potential disputes before they escalate into chargebacks. By resolving eligible disputes early, SDR helps merchants reduce chargeback rates and associated risks, 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 increase dispute handling costs and can affect how payment processors and card networks assess merchant risk. Merchants with persistently high dispute rates may also be placed in card network monitoring programs.
SDR integrates Verifi RDR and Ethoca to identify eligible disputes before they enter the formal chargeback process. Depending on the service and applicable processing rules, disputes can be resolved automatically or require merchant action. This early intervention helps reduce chargeback-related costs, manual processing, and payment risks.
Note: SDR helps reduce chargeback rates and associated risks but does not guarantee that all chargebacks can be prevented or that every dispute will be successfully resolved.
Benefits
SDR provides merchants with the following benefits:
- Reduce chargeback rates and associated risks: Resolve eligible disputes before they escalate into formal chargebacks, reducing the number of disputes entering the chargeback process.
- Lower manual processing costs: Automate the handling of eligible disputes based on applicable rules, reducing the time and resources required for follow-ups, communication, and preparing dispute evidence.
- Improve dispute resolution efficiency: Identify and address potential disputes earlier, shortening the resolution time for eligible cases.
- Maintain payment stability: Reduce the risk of elevated chargeback rates affecting payment processor assessments or triggering card network monitoring programs.
- No additional integration required: Verifi RDR and Ethoca are integrated with Subotiz Payments, eliminating the need for merchants to connect to these services separately.
Dispute Resolution Process
SDR uses Verifi RDR and Ethoca to identify and address eligible disputes before they enter the formal chargeback process. Each service follows a different dispute handling mechanism.
- Dispute initiation: A cardholder disputes a transaction with their issuing bank.
- Dispute identification: Relevant dispute information enters the applicable resolution process through Verifi RDR or Ethoca.
- Rule evaluation: The system evaluates the dispute against the applicable service requirements and processing rules to determine eligibility and the appropriate action.
- Dispute resolution: Verifi RDR automatically resolves eligible disputes according to predefined rules, including through automatic refunds. Ethoca provides dispute alerts that can be processed automatically under applicable rules or require further merchant action to help prevent escalation into formal chargebacks.
Verifi RDR and Ethoca
SDR integrates two dispute prevention services, Verifi RDR and Ethoca. Although both help merchants address disputes before formal chargebacks occur, they use different processing mechanisms.
Verifi RDR |
Ethoca |
|
|---|---|---|
Primary coverage |
Visa |
Visa and Mastercard |
Core mechanism |
Automated pre-chargeback dispute resolution |
Pre-chargeback dispute alerts |
Processing method |
Automatically resolves eligible disputes based on predefined rules, including through automatic refunds |
Provides dispute alerts that can be processed automatically under applicable rules or require merchant follow-up |
Verifi RDR
Verifi RDR (Rapid Dispute Resolution) is an automated pre-chargeback dispute resolution service provided by Verifi, a Visa company. It primarily supports Visa card transactions.
When a cardholder disputes a transaction with their issuing bank, including fraud-related disputes, RDR evaluates the dispute against predefined rules and automatically resolves eligible cases, including through automatic refunds.
Disputes successfully resolved through RDR do not proceed to the formal chargeback process, helping merchants reduce chargeback rates and manual dispute handling costs.
Ethoca
Ethoca provides dispute alerts that notify merchants of eligible transaction disputes before they escalate into formal chargebacks.
When an Ethoca alert is received, the system can automatically process eligible transactions according to the applicable refund rules. For alerts requiring additional action, merchants can review the transaction and dispute details and take the appropriate steps.
For service configuration, refund rules, and alert management, refer to Subotiz Payments | Configuring and Managing Smart Dispute Resolution.
Service Activation and Management
SDR is available to merchants using Subotiz Payments. Service activation, configuration, and management permissions depend on the merchant type.
Subotiz MOR Merchants
SDR is included as part of the Subotiz Merchant of Record (MOR) payment service.
For Subotiz MOR merchants, SDR is enabled and managed centrally by Subotiz. Merchants do not need to apply for or configure the service separately and cannot independently enable, disable, or modify its settings.
Subotiz manages the applicable services and processing rules based on each merchant's business profile, dispute activity, and risk management requirements.
Non-MOR Merchants
Non-MOR merchants can enable SDR and configure Verifi RDR, Ethoca, and the corresponding refund rules based on their business needs.
If a merchant's dispute activity, fraud exposure, or other risk factors require additional risk management measures, Subotiz may enable SDR or adjust the relevant settings in accordance with applicable rules.
For activation and configuration instructions, refer to Subotiz Payments | Configuring and Managing Smart Dispute Resolution.
Fees
SDR fees vary depending on the dispute prevention service and applicable billing rules.
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 financial records.
*Actual fees and billing conditions are subject to Subotiz's officially published rates, the applicable merchant agreement, or the rates displayed in the Subotiz admin.
Frequently Asked Questions
Is Smart Dispute Resolution enabled by default?
For Subotiz MOR merchants, SDR is enabled and managed centrally by Subotiz. No additional activation or configuration is required.
Non-MOR merchants can enable SDR independently. In certain risk scenarios, Subotiz may also activate the service or adjust its settings according to applicable risk management rules.
What is the difference between Verifi RDR and Ethoca?
Verifi RDR is an automated pre-chargeback dispute resolution service provided by Verifi, a Visa company. It primarily supports Visa transactions and automatically resolves eligible disputes according to predefined rules, including through automatic refunds.
Ethoca provides pre-chargeback dispute alerts for Visa and Mastercard transactions. Eligible alerts can be processed automatically according to applicable refund rules, while others require merchant review and follow-up.
Does Smart Dispute Resolution automatically issue refunds?
Some eligible disputes can be resolved through automatic refunds, depending on the service and applicable processing rules.
- Verifi RDR: Automatically resolves eligible disputes based on predefined rules, including through automatic refunds.
- Ethoca: Supports automatic processing of eligible dispute alerts based on applicable refund rules. Other alerts require merchant action.
Whether an automatic refund is issued depends on the service used and the refund rules currently in effect.
Can merchants configure their own refund rules?
Non-MOR merchants can configure refund rules for Verifi RDR and Ethoca based on the available product functionality.
For Subotiz MOR merchants, refund rules and related settings are managed centrally by Subotiz and cannot be modified independently.
Can Smart Dispute Resolution be disabled?
Subotiz MOR merchants cannot independently disable SDR because the service is centrally managed by Subotiz.
Non-MOR merchants can manage SDR through the available settings in the Subotiz admin.
Note: Changes to service activation, deactivation, or refund rules may take up to one week to take effect.
Can chargebacks still occur after Smart Dispute Resolution is enabled?
Yes. SDR identifies and addresses eligible disputes before they enter the formal chargeback process, but not all disputes qualify for resolution through Verifi RDR or Ethoca.
Enabling SDR reduces chargeback exposure but does not eliminate the possibility of formal chargebacks.
Smart Dispute Resolution integrates Verifi RDR and Ethoca with Subotiz Payments to help merchants address eligible disputes before they escalate into formal chargebacks. By enabling earlier dispute resolution, SDR helps reduce chargeback rates, minimize manual processing costs, and support more effective payment risk management. Service activation and management depend on the merchant type, available product functionality, applicable rules, and merchant agreements.