The dispute process—the means by which a consumer can
contest a credit card charge—is a vital aspect of the payments industry.
Handling disputes takes time and money, and if it’s not done effectively,
consumer satisfaction can be negatively impacted and merchants and issuers
could lose money.

With money and customer satisfaction on the line, companies need
to ensure that their dispute management process is efficient and responsive. This
is especially true going forward, as credit card volume is expected to rise;
rising credit card volume means more disputes.

To learn how to improve the dispute management process for
the future, PaymentsJournal sat down with Jack Lynch, SVP and chief risk
officer at PSCU and president of CU Recovery. Joining us in the conversation
was Brian Riley, director of the Credit Advisory Service at Mercator Advisory
Group.

During the conversation, Lynch and Riley discussed how PSCU
is approaching dispute process reform, the role of real-time communication, and
what it means to “future-proof” a credit union’s member experience. They also
unpacked key data related to disputes.

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A broad overview of
disputes and credit card volume

“Disputes play an important part in the credit card industry because what’s really essential in this business is that transactions have to be irrefutable.” Brian Riley

Riley kicked off the discussion by summarizing the
importance of disputes. “Disputes play an important part in the credit card
industry because what’s really essential in this business is that transactions
have to be irrefutable,” explained Riley. In order for people to have
confidence in their financial institutions, they need to know that the charges
on their account are liable for their payment.

However, consumers also need a mechanism to contest a
charge, especially if they believe they were not the ones who made it. This
need gives rise to the dispute resolution process.

Fraud losses increased across products, but credit card fraud is now above 10 basis points

Each year, there’s an estimated 25 million credit card
disputes in the United States, according to Mercator Advisory Group. With over
70 billion credit card transactions occurring annually, 25 million disputes do
not account for a massive percentage of total volume. However, resolving 25
million disputes a year takes a considerable amount of time and money.