There's so much guidance for merchants out there: what about for issuers? In starting Recase, we spoke to over 50 issuers and acquirers to understand the card dispute process from both sides of the card networks. We have evaluated the processes of small neobanks to larger legacy banks to paint a picture of how dispute management varies in the industry.

Neobanks vs Legacy Banks

Startup neobanks typically manage their disputes via simple systems, such as Excel spreadsheets. It's an unstructured process of tracking, reconciling, and submitting disputes all via different systems, but manageable due to their small volume. Many of them aren't connected to scheme portals (Visa Resolve Online or MasterCom), and instead send everything to a Banking as a Service partner.

As the neobank grows in payment volume, they invest in automated systems. They typically have an in-app form submitted by the cardholder, which can accept or deny a dispute in real time. Dispute analysts are in the back office reviewing the evidence and investigating fraud claims, but with more automation, they can run leaner. One employee can handle ~50-100 cases per day.

Legacy Banks often have a degree of automation, but seem to run on systems built decades ago. Some use software provided by FIS or Pega, which too are older but powerful platforms for managing disputes. Outsourcing is also common to these companies or to centers based in India or the Philipines. One employee handles ~20-35 cases per day.

In-app vs Phone

Neobanks' customer base is younger and is less likely to want to speak to a human to resolve their disputes. They can therefore afford to allow cardholders to submit disputes in-app via a form. However, one issuer told us this led to a spike in dispute claims by 200%. Neobanks must therefore be careful with the amount of friction in their dispute process.

Legacy banks are more likely to keep a human in the loop for all queries. Valuable customers tend to be older and therefore expect the white-glove service that comes from having a person on the phone walking you through the process. Often, information is collected by a support team, but then reviewed and handled by a different team, leading to a slower resolution time for the cardholder with multiple back-and-forths.

In-house vs Outsourcing

Issuers with the best processes and win-rates typically keep disputes in-house. They have tenured employees who are happy and understand the dispute process wholly (often with advanced training from Visa). They treat each case with care and know exactly what information the schemes are looking for with each reason code. The technology they use is also built in-house, with a case management system that's integrated with their key databases. Very few of them have integrated directly into schemes (VROL / MCOM APIs).

Outsourcing is operationally easier for an issuer but leads to a worse cardholder experience. Turnover rates at outsourced teams are high, and the degree of care with each chargeback submitted is lower.

The best issuers

The issuers with the best cardholder experience, lowest operational burden, and best win rates do the following:

• Keep dispute analysts in-house

• Have a variety of channels for their cardholders, to cater to varying demographics and severity.

• Introduce the right level of friction into the dispute process to not overwhelm the number of claims, and have a good policy for write-offs and denies.

• Have automated systems and forms that can make decisions on disputes in real-time (as well as track and update dispute status to cardholders).

We're building Recase to enable issuers to achieve this best-in-class experience with a fraction of the investment. Please reach out to us if you're interested in talking about what we've learned!