We value your feedback. Please take a 1-minute survey to help us improve our Help Center. Click ‘Yes’ to participate.

Yes
✕
Start Strong
Sell Smart
Manage with Ease
Market to Success

Resolving Card Disputes with Dispute Alerts

Credit card disputes occur when cardholders question the validity or legitimacy of a transaction. Common reasons for disputes include unauthorized transactions, duplicate charges, or undelivered goods or services. In these situations, cardholders can file a dispute with their issuing bank. Merchants handling credit card disputes frequently encounter the following challenges:

  • Difficulty in Gathering Evidence: Merchants must provide detailed transaction records to support their case. Missing or incomplete records can make it challenging to validate the transaction.
  • Time Constraints: Merchants must respond to disputes within tight deadlines. Late responses can result in financial losses.
  • Complex Regulations: Dispute handling rules vary across card brands and issuing banks, and these rules are subject to frequent changes.

To help merchants navigate these challenges, SHOPLINE Payments offers merchants enhanced tools and services. In addition to integrating RDR (Rapid Dispute Resolution) and Collaboration through our pre-chargeback service, we now provide access to Ethoca's system with the introduction of our Dispute Alerts service.

 

 

About Ethoca Alerts

Ethoca, a subsidiary of Mastercard, specializes in helping merchants who process card-not-present (CNP) transactions prevent fraud and chargebacks. Ethoca Alerts provide near real-time notifications. When a card issuer informs Ethoca about a customer dispute, Ethoca immediately alerts the merchant. This allows merchants to take proactive steps, such as stopping order fulfillment or issuing a refund, to prevent potential chargebacks.

Ethoca Alerts is estimated to cover 95% of Mastercard transactions and approximately 30-40% of Visa and other card brand orders. Please note that this data is for reference only, as actual coverage may vary depending on the card issuer.

 

 

SHOPLINE Payments' Dispute Alerts vs. Ethoca Alerts

Ethoca Alerts recommends that merchants respond to dispute notifications within 24 hours, typically by issuing an immediate refund. Timely action within this timeframe can effectively prevent a dispute from escalating into a chargeback.  

SHOPLINE Payments' Dispute Alerts service builds upon the Ethoca Alerts workflow by automating key steps. When Ethoca forwards a dispute notification from the bank, our system automatically tracks the corresponding SHOPLINE Payments order and initiates a real-time refund. This proactive approach significantly minimizes the risk of the dispute escalating to a chargeback.

 

 

Benefits of Enabling the Dispute Alerts Service

  • Reduce Chargeback Rates: Automated refunds effectively prevent disputes from escalating into chargebacks, significantly lowering your chargeback rates.
  • Save Time and Costs: The automated refund process eliminates the need for merchants to manually handle disputes, saving time and reducing operational costs.
  • Improve Customer Satisfaction: By quickly responding to customer disputes and issuing timely refunds, merchants can enhance customer trust and satisfaction.
  • Reduce Operational Risks: Automated refunds minimize the risk of delays or errors, lowering the potential for chargebacks and reducing operational risks.

 

 

Enrolling in the Dispute Alerts Service

Ethoca Alerts uses the merchant's statement descriptor to identify merchants and link their transactions to issue alerts. Our operations team will assist you in enrolling in the Ethoca Alerts system by using the descriptor you provided when applying for SHOPLINE Payments. Once the application is successfully approved, you will receive an email notification.

Important Note: If you have used or are currently using the same statement descriptor on other e-commerce platforms or payment channels, it may trigger Ethoca alerts and incur associated fees. To avoid unexpected costs, ensure that the descriptor is exclusively used for transactions within your current SHOPLINE store. In other words, do not reuse the descriptor across other payment channels, platforms, or SHOPLINE stores. Using the same descriptor on other platforms will prevent successful enrollment and may result in you being responsible for any incurred fees.

 

 

Before and After Enrollment: Best Practices

Before Enrollment

  • Install the Dispute Automation App: To enable automated refund processing, install the Dispute Automation app from the SHOPLINE App Store. This app grants us the necessary permissions to query orders and initiate refunds within your store.

After Enrollment

  • Automated Refund Processing: If a customer disputes a transaction with their issuing bank and that issuer is connected to Ethoca, you will not immediately receive a chargeback. Instead, Ethoca will send an alert to our system. Upon receiving the alert, we will automatically match the order using the Acquirer Reference Number (ARN) and initiate a refund. We will then notify the issuing bank through Ethoca that the refund has been processed.
    Web Product Page - Product Flows - Alerts.jpeg
  • Retroactive Dispute Handling: If a dispute arises for a transaction associated with your enrolled descriptor, even if the transaction occurred before your enrollment, we will automatically initiate a refund as long as the dispute occurs after your successful enrollment.
  • Refund Failure Handling: If a refund fails due to insufficient account balance or other reasons, we will not attempt to re-process it to avoid potential issues. However, we will notify you by email. We recommend monitoring the email and manually initiating the refund if necessary. Additionally, due to limitations within the Ethoca system, there may be scenarios where we cannot process refunds automatically. In these cases, manual intervention will be required. Please refer to the following section for more details.

 

 

Limitations of Ethoca Alerts

Due to inherent limitations within the Ethoca system, some scenarios may prevent us from implementing automatic refunds. These include, but are not limited to:

Important Note: Ethoca charges fees based on the number of alerts received, regardless of whether an automated refund is processed.
  • Missing ARN: If the Acquirer Reference Number (ARN) is missing from the Ethoca alert (which can occur if the issuing bank does not provide it), we cannot accurately match the alert to a specific order in your store, thus preventing us from initiating a refund.
  • Duplicate ARN: To increase coverage, Ethoca aggregates notifications from multiple sources. As a result, there may be instances where multiple alerts are sent for the same dispute. If the ARN, amount, and currency are identical, the second alert will be considered a duplicate and no automated refund will be processed.
  • Unmatched ARN: If the ARN in the alert does not match any order in your SHOPLINE Payments history, the system cannot process an automated refund. Please be noted given that it typically takes about four to five working days for SHOPLINE Payments to receive an ARN from the acquiring bank after a transaction is paid successfully, if your customer raise a dispute before the bank shares ARN it will be impossible for us to match and hence refund the order to prevent chargebacks. 

If you encounter frequent unmatched ARNs, review whether your statement descriptor is being used on other platforms or payment channels.

  • Prior Refunds or Chargebacks: If the order associated with the alert has already been refunded or charged back, the system will not initiate another refund to avoid duplicate payments. You will need to review and decide whether to manually initiate the refund.
  • Currency Mismatch: If the currency in the Ethoca alert does not match the original transaction currency, the system cannot determine the correct refund amount. You will need to manually calculate the refund amount based on current exchange rates.
  • Incorrect App Installation: If the Dispute Automation app is not installed correctly from your SHOPLINE store, we cannot access the necessary information to process automated refunds.

You will receive email notifications for all scenarios above where automated refunds are not possible. These notifications will provide you with the necessary information to investigate and manually resolve the issue if required. To ensure effective chargeback prevention, closely monitor the Risk control notification email address associated with your SHOPLINE Payments account and address any issues promptly.

5.0_EN.png

 

 

Understanding the Service Costs

On the 1st of each month, we will consolidate your alert records from the previous month and send an email to the designated Funds and billing email address associated with your SHOPLINE Payments account.

6.0_EN.png

The corresponding service fee will be deducted from your SHOPLINE Payments balance within three working days. For details on the specific charges for each alert, please reach out to your account manager.

Note: The charge mentioned here does not include any fees incurred from the refunds.

 

 

Comparing Dispute Alerts and Pre-Chargeback

Similarities

  • Shared Goal: Both services aim to prevent chargebacks through early intervention and refunds, safeguarding your revenue and profits.
  • Reduced Manual Effort: Both services leverage automated or semi-automated processes to minimize manual effort merchants need to put into the dispute resolution process.

Differences

  • Underlying Services:
    • Dispute Alerts Service: Relies on Ethoca Alerts, covering an estimated 95% of Mastercard transactions and approximately 30-40% of Visa and other card brand transactions.
    • Pre-Chargeback: Utilizes Visa's RDR and Mastercard's Collaboration programs, each covering more than 95% of transactions within their respective networks.
  • Refund Rules:
    • Dispute Alerts Service: Generally, each alert that matches an order triggers an automatic refund.
    • Pre-Chargeback: Involves a defined refund threshold. Disputes exceeding this threshold may require different handling procedures depending on the specific tool.  
  • Record Access:
    • Dispute Alerts Service: Currently, you cannot query dispute alert records in the SHOPLINE admin. However, all records from the previous month will be sent via email on the 1st of each month.
    • Pre-Chargeback: You can check the corresponding records in the transaction records of your SHOPLINE Payments account.

We'll recommend the most suitable service based on your business needs and risk profile. While enabling both services simultaneously is possible, there's a slight chance of duplicate charges if a disputed order falls within the coverage of both systems. However, the likelihood of this occurring is minimal.

 

 

Understanding the Chargeback Risk After Refund

While real-time automated refunds significantly reduce the likelihood of a dispute escalating to a chargeback, the final decision ultimately rests with the card issuer. In rare instances, issues such as information synchronization problems or system anomalies within the card issuer's systems may still result in a chargeback despite the timely refund.

In cases of abnormal scenarios, where you do not follow the email reminders or fail to act promptly, the risk of chargeback increases. We recommend closely monitoring email notifications and responding in a timely manner to reduce this risk.