Using Rapid Dispute Resolution (RDR) to Resolve Chargebacks

Rapid Dispute Resolution (RDR)
Josh Phelps
October 25, 2022

UPS recently released findings of a global survey of online shoppers. 80% of consumers who responded say they expect a retailer to offer them free returns. Rapid Dispute Resolution can help your business accomplish this, while helping you resolve chargebacks.

Customers are not always satisfied with a product or service, and merchants may or may not want to refund the money. Merchants also do not want to spend an exorbitant amount of time battling billing issues.

In comes Rapid Dispute Resolution to the rescue!

To better understand how RDR works and how it can save you time and money, keep reading this article. The benefits alone are worth the read!

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What Is Rapid Dispute Resolution?

Verifi, a Visa Company, provides RDR. This enables merchants to use pre-defined rule sets to automate dispute resolutions. It is essentially a system with rules-driven decision-making.

It triggers cardholders with qualified disputes to receive credit. Merchants can allocate a lot of time and resources to resolving disputes, so RDR reduces efforts, expediting the refund process. This helps Visa cardholders to improve their customer experience.

Due to Visa’s success with its program, MasterCard is looking to catch up. They are collaborating with Ethoca . Reports show they are announcing a pre-dispute stage to their process on July 17, 2022.

What is a Chargeback?

A cardholder will ask their bank to reverse a charge they made on their credit card and that posted to their account. Whereas a refund is money directly returned from a merchant, the bank issuer is the one who handles the chargeback.

Customers request chargebacks for many reasons. Some common reasons include:

Merchants should take preventative measures to stop some of these issues as standard good business practices. Regardless, these issues can still occur when you are a merchant.

It is technically possible to reverse a chargeback, but it is extremely difficult. Unfortunately, the odds are usually not in favor of the merchant.

RDR for Chargebacks

As a merchant, you may not like the idea of triggering an automatic refund. However, remember the true cost of a chargeback. Between fees and overhead, it can be twice the amount of the original transaction.

Not only that, if you fight the chargeback and win through a representative, it costs you. Plus, winning the dispute is never a guarantee.

Each time you get a chargeback, it will raise your chargeback rate, resulting in significant negative consequences. Your payment processor may even drop you.

Using Rapid Dispute Resolution to resolve chargebacks helps merchants tremendously. In fact, a dispute cannot turn into a chargeback because the refund is an automatic transaction.

Plus, when a dispute has a credit because of RDR, it will not go against the merchant for their dispute-to-sales ratio.

How Does Rapid Dispute Resolution Work?

By default, the response to an RDR takes liability on behalf of the merchant for the dispute. It will then refund the cardholder. The rules set a definition of what disputes you will allow to be a chargeback.

You can fight them, though, and recover money. If a merchant allows all Rapid Dispute Resolutions to refund, then their chargeback rate will be impressively low. But friendly fraudsters can make a big financial impact too, and a negative one at that.

Enrolling in RDR means each bank will route a dispute differently. They may not trigger a chargeback immediately. Instead, they will handle them in one of two ways.

If it triggers a dispute with a card that is not a Visa, the dispute goes on pause for up to 72 hours. This gives the merchant time to respond.

The merchant receives an alert. The merchant can accept the chargeback, or they can start a refund so that they can end the dispute.

When the RDR gets a dispute regarding a Visa transaction, then it consults the rule set instead. This can include multiple elements of data from the transaction to set up definitions for their automatic refund rules.

The rule set given by the merchant can include details regarding:

If it “accepts,” the issuer receives an immediate credit. If there is a “decline,” the dispute will move forward to the chargeback phase.

If they find a dispute to be “unqualified,” it routes back to the merchant using Verifi CDRN. The merchant must refund the purchase in the merchant’s payment gateway or manually. Another option is that the merchant could allow the alert chargeback but use a representative to fight the chargeback.

Benefits of RDR

Now that you know more about how it works, you can see why Rapid Dispute Resolution offers significant benefits to merchants, issuing banks, and customers alike.

When a customer receives immediate credit, they are happy. The issuing bank is happy that their customer is happy.

They resolved the dispute before an alert even goes out. The acquiring bank is happy, too, because their merchant account is compliant.

They eliminate duplicate alerts and chargebacks.

The merchant eases manual processes that can be time-consuming related to chargebacks, so RDR frees up their time. Also, the merchant is delivering a superior customer experience, meaning that they can work with the customer again in the future.

All around, everyone wins.

We Help Merchants Be Successful

At Zen Payments, we understand the trenches. We know you may not receive kind treatment from payment processing service providers when you are at high risk.

We welcome your business, and we will give you the respect you deserve. For more details on Rapid Dispute Resolution and how we can help you with your chargebacks, contact us now . Time is money!

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Zen Payments

Our merchant service specialists are the best in the business and will work with you from start to finish to get your account approved!

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Josh Phelps is an experienced sales professional with eight years of expertise, including four years in payment processing. Throughout his career, Josh has successfully secured approvals for thousands of businesses, demonstrating his skill in navigating and optimizing the payment processing landscape.

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