Visa Resolves Charge Disputes With Web-based System

When an inaccurate charge is listed on a credit card bill, it's not just the customer who sees red. Settling a disputed charge is one of the costliest components of a credit card company's business.

At Visa U.S.A. Inc. in Foster City, Calif., a new back-office infrastructure will reduce the time and labor required to handle a customer-disputed charge by creating an online, automated process. The company expects that the system will help it save as much as $1 billion over the next five years.

"We've implemented the first two releases of the Resolve Online infrastructure, and already we've achieved savings in excess of $200 million systemwide," says Scott Thompson, Visa's CIO and project leader.

The Visa Resolve Online project, now in its final stage, is a Web-enabled application used to facilitate changes to the re-engineered disputes process. The greatest benefit of the project has been to simplify the current process by eliminating most paper documentation, reducing the time required to resolve disputes and eliminating unnecessary steps in the process, Thompson says.

This Web-based tool gives member banks, merchants and customer support representatives at member banks real-time access to transaction data through secure browser screens or Visa's private IP network, known as Direct Exchange.

"It evolves our back-office infrastructure into a real-time, cardholder-centric system," Thompson says.

Avivah Litan, an analyst at Gartner Inc. in Stamford, Conn., says handling consumer chargebacks can cost merchants as much as $50 each. Card-issuing banks and acquiring banks (the banks that back merchants) lose as much as $25 each. Litan says an online dispute resolution system is "one of the most time-saving, productive features" that a credit card company can implement.

"With a chargeback, [credit card companies] have to produce documentation, get back to the acquiring banks, and the acquirer has to get back to the merchant," Litan says. "Now [Visa] just puts everything in the system and everyone sees it."

Visa's original dispute resolution process relied heavily on paper and the postal system to communicate with cardholders. In 1999, Visa formed a working group with card issuers and some merchants to re-engineer the exception rules, processes and systems. The Visa Resolve Online project began in November 2001, and the first version went online in June 2002.

Scott Thompson
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Scott Thompson, CIO of Visa U.S.A. Inc.
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Subsequent releases of Visa Resolve included the ability to create and transmit chargebacks, attach images and supporting documentation and transmit large volumes of images relevant to disputes.

The fourth release of the online product is expected in October and will provide access to Visa's copy request service, fraud reporting and a set of revised dispute rules. The Visa Resolve project has reduced customer service training time, standardized information exchanged between Visa and its bank and merchant customers, improved quality control with regard to internal processes and cut the time it takes to resolve disputes.

What Visa didn't figure into the projected payback was increased customer satisfaction, which Thompson says was cited by member banks as the biggest benefit.

"It has been projected that upon full implementation of Visa Resolve Online in October 2004, disputes will be at least 20% less expensive to process," Thompson says. "Some members believe this number to be closer to 50%."

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Visa U.S.A. Inc.

www.visa.com

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Business: U.S. consumers hold an estimated 345 million Visa-brand credit and debit cards.

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Project champion: Scott Thompson

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IT department: 2,600

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Project payback: A back-office infrastructure cuts the time and labor required to handle disputed charges, saving Visa an anticipated $1 billion over the next five years.

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