What is Ethoca?
Ethoca is a subsidiary of Mastercard that facilitates real-time collaboration between card issuers and merchants. It is designed to prevent disputes from escalating into chargebacks by enabling proactive communication and resolution efforts.
Key Features:
Early Dispute Notifications: Merchants receive alerts within hours of a cardholder initiating a dispute, allowing merchants to address potential issues swiftly and reducing the likelihood of chargebacks.
Action Window: Merchants have the opportunity to take immediate action, such as issuing a refund or resolving the dispute, before a chargeback is officially filed.
Broad Coverage: Ethoca boasts impressive coverage, with approximately 95% of Mastercard transactions being supported by its services. This extensive reach ensures that merchants can benefit from Ethoca's capabilities across a wide array of transactions.
Reduced Chargeback Ratios: Resolved alerts through Ethoca do not contribute to a merchant's overall chargeback ratio.
How it Works:
The process begins when a cardholder disputes a transaction with their bank, indicating dissatisfaction with the purchase.
The bank, upon receiving the dispute, promptly forwards the relevant information to Ethoca for processing.
Ethoca then notifies the merchant about the dispute, providing them with the necessary details to take action.
In response, the merchant can issue a refund or address the dispute directly, effectively resolving the issue before a formal chargeback is initiated.
What is Rapid Dispute Resolution (RDR)?
Rapid Dispute Resolution (RDR) is a service offered by Visa, facilitated through Verifi, that automates the resolution of disputes based on rules defined by the merchant. This service aims to streamline the dispute resolution process, thereby enhancing efficiency and reducing the burden on merchants.
Key Features:
Automation: The RDR service eliminates the need for manual intervention, allowing refunds to be processed automatically in accordance with the merchant's predefined rules, saving time and reducing the potential for human error.
Visa Coverage: RDR covers approximately 97% of Visa transactions, ensuring that a vast majority of disputes can be resolved.
No Chargeback Fees: Disputes that are resolved through RDR do not affect the merchant's chargeback ratios nor do they incur standard chargeback fees.
How it Works:
The process begins when a Visa cardholder disputes a transaction, signaling a potential problem with their purchase.
RDR then evaluates whether the dispute aligns with the merchant's predefined rules, such as automatically refunding transactions under a certain threshold, for example, €50.
If the dispute meets the specified criteria, the system processes the refund automatically, ensuring a swift resolution.
As a result, the case is effectively closed before a formal chargeback can be filed.