Sign up to save your podcasts
Or
Share PSCU Talks Dispute Management of the Future
Share to email
Share to Facebook
Share to X
Share to email
Share to Facebook
Share to X
Or
PSCU Talks Dispute Management of the Future
The dispute management 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.
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 RileyRiley 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.
U.S credit card volume will approach $5 trillion by 2022, with nearly 70 billion transctions
And the situation is only getting worse. Riley pointed out that
overall volume is rising, which means that the number of disputes will rise as
well, especially with ecommerce becoming more popular.
Another important trend is that the widespread adoption of
EMV chip technology has made card-present fraud harder to get away with. In
response, criminals are increasingly looking toward the cyberspace for
vulnerabilities to exploit. From fraudulent transactions to account takeovers,
hackers are leveraging technology and exploiting new fraud vectors.
Such a world is causing leaders in the payments industry to
reconsider their approach to disputes and fraud prevention. Companies now need
to ask themselves, “How do we handle account takeovers and electronic fraud in
the dispute process?” said Lynch. They need to know what tools are needed to
fight back.
Utilizing technology
in the dispute process
As the nature of fraud is changing and credit card volumes
are rising, Lynch and Riley agreed that companies need to utilize technology to
keep up. Lynch detailed two important aspects of leveraging technology in the
dispute process.
First, when a company receives a dispute and identifies it
as fraud, the company needs to feed that data into its analytics and fraud
strategies. This helps keep models up-to-date, thereby making it easier to
identify fraud in the future.
The second part consists of leveraging technology to provide
the consumer with more information related to the transaction. That helps
reduce the amount of friendly fraud, which is instances when the consumer is
contesting a purchase they did indeed make. This often results out of
confusion; perhaps the customer doesn’t recognize the name the merchant billed
under. Also common is that someone else in the household made the purchase
without the cardholder’s knowledge.
By providing more information to contextualize the purchase,
financial institutions can help customers realize a purchase is legitimate and
avoid having that transaction enter the dispute process, explained Lynch.
The importance of
real-time capabilities
Given how fast-paced the world is, consumers have come to
expect instantaneous information. “They want to know how things are going,”
said Lynch. “And I think that actually applies to the dispute process.”
He explained that it’s crucial for companies to allow
customers to both dispute a transaction immediately and also be kept abreast of
developments in a timely manner. If the company knows that the transaction was
fraudulent, it should immediately alert the customer, enter that information
into its fraud system, and make sure the customer feels good about the
experience.
For example, the company can promptly issue the consumer
another card, or extend a provisional line of credit.
Even if it’s not clear-cut fraud, real-time messaging can
improve the experience for everyone involved. If a company acts fast enough, it
can sometimes resolve the dispute prior to the dispute entering the official
chargeback process.
Lynch explained that PSCU offers a solution that connects
with merchants to resolve the complaint prior to the formal dispute process
when possible. And if the dispute does end up entering the dispute ecosystem,
the customer should be kept in the loop as the issuer works with the merchant
to resolve it.
PSCU and its partners
are “future-proofing” the dispute process
To bring about the capabilities covered above, PSCU has
selected Lean Industries to deliver an optimized disputes management platform. Specifically,
Lean’s AdjustmentHub™ and NetworkHub
products are the cornerstone of PSCU’s dispute management services.
PSCU also recently partnered with NICE, utilizing NICE’s
Actimize ActOne Extend to provide direct connectivity and real-time analytics.
NICE solutions are fully compatible with the Lean products.
Lynch also stressed that PSCU’s approach is “future-proof,”
meaning that it is nimble and dynamic enough to respond to changing market
forces and emerging technologies. Fraud is constantly changing and new
solutions are coming to market at a rapid pace, so it’s important to be able to
keep up without having to scrap everything and rebuild from scratch.
For example, in its engagement with NICE, PSCU is pursuing
robotic process automation (RPA), which has many use cases.
“It’s incumbent upon all of us in the industry to continuously look across all of our channels, putting in multi-layered approaches, where it makes sense to help fight fraud.”
Jack LynchBy reforming the dispute process and offering robust fraud
prevention tools, PSCU is doing just that.
The post PSCU Talks Dispute Management of the Future appeared first on PaymentsJournal.
View all episodes
By The PaymentsJournal PodcastThe dispute management 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.
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 RileyRiley 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.
U.S credit card volume will approach $5 trillion by 2022, with nearly 70 billion transctions
And the situation is only getting worse. Riley pointed out that
overall volume is rising, which means that the number of disputes will rise as
well, especially with ecommerce becoming more popular.
Another important trend is that the widespread adoption of
EMV chip technology has made card-present fraud harder to get away with. In
response, criminals are increasingly looking toward the cyberspace for
vulnerabilities to exploit. From fraudulent transactions to account takeovers,
hackers are leveraging technology and exploiting new fraud vectors.
Such a world is causing leaders in the payments industry to
reconsider their approach to disputes and fraud prevention. Companies now need
to ask themselves, “How do we handle account takeovers and electronic fraud in
the dispute process?” said Lynch. They need to know what tools are needed to
fight back.
Utilizing technology
in the dispute process
As the nature of fraud is changing and credit card volumes
are rising, Lynch and Riley agreed that companies need to utilize technology to
keep up. Lynch detailed two important aspects of leveraging technology in the
dispute process.
First, when a company receives a dispute and identifies it
as fraud, the company needs to feed that data into its analytics and fraud
strategies. This helps keep models up-to-date, thereby making it easier to
identify fraud in the future.
The second part consists of leveraging technology to provide
the consumer with more information related to the transaction. That helps
reduce the amount of friendly fraud, which is instances when the consumer is
contesting a purchase they did indeed make. This often results out of
confusion; perhaps the customer doesn’t recognize the name the merchant billed
under. Also common is that someone else in the household made the purchase
without the cardholder’s knowledge.
By providing more information to contextualize the purchase,
financial institutions can help customers realize a purchase is legitimate and
avoid having that transaction enter the dispute process, explained Lynch.
The importance of
real-time capabilities
Given how fast-paced the world is, consumers have come to
expect instantaneous information. “They want to know how things are going,”
said Lynch. “And I think that actually applies to the dispute process.”
He explained that it’s crucial for companies to allow
customers to both dispute a transaction immediately and also be kept abreast of
developments in a timely manner. If the company knows that the transaction was
fraudulent, it should immediately alert the customer, enter that information
into its fraud system, and make sure the customer feels good about the
experience.
For example, the company can promptly issue the consumer
another card, or extend a provisional line of credit.
Even if it’s not clear-cut fraud, real-time messaging can
improve the experience for everyone involved. If a company acts fast enough, it
can sometimes resolve the dispute prior to the dispute entering the official
chargeback process.
Lynch explained that PSCU offers a solution that connects
with merchants to resolve the complaint prior to the formal dispute process
when possible. And if the dispute does end up entering the dispute ecosystem,
the customer should be kept in the loop as the issuer works with the merchant
to resolve it.
PSCU and its partners
are “future-proofing” the dispute process
To bring about the capabilities covered above, PSCU has
selected Lean Industries to deliver an optimized disputes management platform. Specifically,
Lean’s AdjustmentHub™ and NetworkHub
products are the cornerstone of PSCU’s dispute management services.
PSCU also recently partnered with NICE, utilizing NICE’s
Actimize ActOne Extend to provide direct connectivity and real-time analytics.
NICE solutions are fully compatible with the Lean products.
Lynch also stressed that PSCU’s approach is “future-proof,”
meaning that it is nimble and dynamic enough to respond to changing market
forces and emerging technologies. Fraud is constantly changing and new
solutions are coming to market at a rapid pace, so it’s important to be able to
keep up without having to scrap everything and rebuild from scratch.
For example, in its engagement with NICE, PSCU is pursuing
robotic process automation (RPA), which has many use cases.
“It’s incumbent upon all of us in the industry to continuously look across all of our channels, putting in multi-layered approaches, where it makes sense to help fight fraud.”
Jack LynchBy reforming the dispute process and offering robust fraud
prevention tools, PSCU is doing just that.
The post PSCU Talks Dispute Management of the Future appeared first on PaymentsJournal.