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Payments fraud doesn't begin and end with stolen credit cards. There are sophisticated international networks of criminals who dedicate their entire lives to scheming and scamming merchants and consumers for every cent that they can extract. But there are also experts in the payments fraud field who are actively fighting back. True Fraud features real-life stories of the battles that are raging across the world, one transaction at a time.
Welcome to True Fraud. This is your host, Pablo Torres. We are here again with our friend, Vinay Shiriwastaw from Dispute Help. This is, you know, that kind of that second part episode. So Reach is partnering with Dispute Help.
Pablo Torres:And as we're talking about the, you know, the cost of the representment and the cost of just, you know, having somebody assigned to filing evidence for disputes and so on, what is Dispute's Dispute Help's role in in all of this? You know, what kind of products do you guys offer?
Vinay Shiriwastaw:You know, it's a great question. So as technology has changed, we've talked about very static representment. A process that is that is been around for a long time and hasn't seen much modernization during the time it's been around. That being said, there are new tools that have been brought forward. These tools have been brought forward by 2 primary organizations, as we mentioned.
Vinay Shiriwastaw:Verifi, which is now owned by Visa, and Ethoca, which is owned now by Mastercard. It is possible for somebody like Reach or anybody else to go and acquire these products from these companies directly. It is a 100% possible. The inherent problem, like a lot of things, is these products are all disparate products. They are disparate APIs.
Vinay Shiriwastaw:They're multiple APIs. There's a contracting aspect. There's an integration aspect. You have a development team that would need to be brought up to go manage a full integration and build to these tools that are now in place. And that's very hard to do.
Vinay Shiriwastaw:You know, that is not your core business. That is not what you want to be in business for. That is not what your founder designed your business to do. But it is a service you need to provide for your use cases and your customer base. And the question then becomes for you as you make those decisions, well, do I build it or do I partner?
Vinay Shiriwastaw:And and you have a dependency, you have a use case, and your decision was to partner. But that's where we come in. Right? We we take these technologies these APIs and we aggregate them and we create a platform. And in your particular case, we've created a white label product for you to utilize these tools that you want to utilize for your use cases, and and we aggregate it and we bring it to life for you.
Vinay Shiriwastaw:That's what dispute help does. Right? And those those pieces of technology in particular that that you and your competitor base use, to help on the chargeback and representment process are primarily, most widely consumed pre chargeback alerts. Rapid dispute resolution or RDR as it's known by Verify by Visa, and Ethoca alerts or Mastercard collaboration, which is the Mastercard product. And and those particular products are alerts sent out by those companies saying, I know or I think or I know an event is about to take place between the consumer and the issuing bank, and there's gonna be a problem.
Vinay Shiriwastaw:Problem. We might we're gonna have a problem. We send it out before that representment process even fully starts, the one we mentioned in the last episode that has all those multiple gates that it has to go through. The precharge back alert is quickly sent out, and consumed and given to the merchant to say, do you want to do something about this? We know something detrimental is going to happen from a chargeback perspective.
Vinay Shiriwastaw:Do you want to take some action here? Do you want to stop shipping a good? Do you want to stop somebody's membership? Or do you just wanna refund the transaction? Because of that financial impact to you is gonna be very high, and you're trying to keep your business intact and clean.
Vinay Shiriwastaw:So pre chargeback alerts, in addition to those products, a couple of others there, order insights by by, again, Visa Verifi and Consumer Clarity by Mastercard. And and, essentially, what those products are just at a very simple level is, I'm a consumer. I don't recognize the transaction. Hey, mister Merchant. Can you send me additional data so I can recognize this transaction?
Vinay Shiriwastaw:So those APIs go out. They call into the merchants ecosystem, the merchant, we retrieve data, we send it back to the issuing bank, and it gets propagated at a call center level or at the online banking portal so a consumer can see additional details about their transaction and hopefully don't follow through with the chargeback. It's designed to obviously deflect, right, that chargeback. And then the final, you know, there is more technology, but the the the the final one I'll get into details about is is the newest which is compelling evidence 3.0 by Verifi It's going to have a sister product by Mastercard called First Party Trust.
Vinay Shiriwastaw:And again, just to reiterate, you know, this these are products that at at the most basic level, say there's a relationship between the consumer and the merchant. I know based on data. Right, and and those are things like device ID, IP from where the transaction existed, the fact that there's multiple transactions in a span of time Yep. Right, that happened at the merchant level between the consumer and the merchant. I know that because these things are here and because it's a clean relationship, there hasn't been a problem in the past.
Vinay Shiriwastaw:I'm gonna send this data to the issuer. And, mister issuer, I am not gonna allow that consumer to issue that chargeback. Or what I should say, it the more proper term is the liability shifts for that back to the issuer. Mhmm. And then the issuer can decide, you know, is it on me as the issuer or do I have to, you know, take some action with my consumer Mhmm.
Vinay Shiriwastaw:Because I'm not going to allow that chargeback to happen. So those are the predominant tools that we aggregate and we put together. Right? And that our partnership is is built on. And obviously, we're we are just honored and excited to be able to offer that and partner with with with Reach to to have that for your clients and your use cases.
Pablo Torres:Yeah. No. We're we're super happy about that too. You know, when as I was learning about these products and and sort of the the case, the use case for them, I I kept thinking of how does this as a product fit for everyone. And then I learned about how the flexibility of you setting up rules, let's say, for, you know, like the the amount of the transaction or, you know, if you want to target a specific currency, etcetera.
Pablo Torres:You know, I I think we should talk a little bit more about that because we were talking about the the cost associated with dealing with all of these disputes. And then, you know, you're getting a chargeback for $15. Is it really worth it for me to fight it? But then if you don't have these products, then you have that chargeback that's gonna come in. And you're probably gonna say, you know what?
Pablo Torres:I'll just take, absorb that loss because it's $15 And fighting it is going to cost me a lot more. But then you have a product like this where you can avoid this type of chargebacks and actually don't make them count towards your threshold. So why don't you tell us a little bit more so that we can talk about, you know, we get that picture of this is what counts towards your monthly ratio, and this is how you avoid that.
Vinay Shiriwastaw:Yeah. I think, you know, where I would go with it is we all have to answer to somebody. I'm speaking to, the head of risk right now. Right? Mhmm.
Vinay Shiriwastaw:And and you, as the head of risk, must protect your business. You are also answering to your partners, and and you are protecting your business at at they may be your bank partners, they might be, you know, other partners in the ecosystem, but they're also wanting and in particularly in the ecosystem when you have processors, merchants, they are all answering to ultimately risk and underwriting folks that are monitoring, right, the ecosystem. We can't continue to proliferate and have bad actors across the ecosystem, and those chargeback rates go northward, north of 1%, 2%. Right? It is a heavy impact on the ecosystem in general.
Vinay Shiriwastaw:So these tools allow you, right, to protect your business and allow those chargeback rates to be manageable because you are also answering to somebody. If you are a independent sales organization, you might have a sponsor bank that you are answering to. I would even go as so far as to say if you're JPMorgan, you're answering to the powers that be at the banking level. You know, you have a board there. They're managing risk.
Vinay Shiriwastaw:You have a head of underwriting. And we never talk about the folks that are on the risk and underwriting side enough because they are working to protect this entire ecosystem. And technology like this, when brought forward, provides the entire ecosystem where it matters at the merchant level, at the acquiring level, right, at the processor level. It allows them to use these tools to keep our risk and underwriting teams happy and stay in ratios that are manageable for our entire ecosystem of business. Because when those things exacerbate, you have big problems.
Vinay Shiriwastaw:Right? Things get shut down. We're not built as a society to handle a tremendous amount of risk. We must protect against risk and abuse. So these tools, right, these pre chargeback alerts that we've mentioned, we've mentioned compelling evidence, order insights, CDRN, Mastercard, these tools allow for managed control of risk.
Vinay Shiriwastaw:And and that is the most important thing to recognize. We must be able to control risk. We must be able to manage it, right, at the issuing side, consumer side, merchant side, processor side. And these tools are are brought forward to do that. And and we're we're we're happy to to fulfill that need.
Vinay Shiriwastaw:Right? Bringing these tools forward for companies like yourself and and others. So it's it's an important thing, and it's very needed, obviously, to to maintain the safeguards that we're required to maintain as as actors and players in in the in the in the credit card processing world.
Pablo Torres:Yeah. Absolutely. I think, you know, as as we move forward with these these products and with all the changes that are coming up, I think, one of the very relevant topics that we should also touch base on is what's coming up in April of 2025, which is the Visa Acquire Monitoring Program. There's changes that Visa is implementing towards those ratios that we're talking about. Right?
Pablo Torres:So why don't you tell us a little bit more about that? Because, you know, these all of these tools that we're talking about in these products are going to have a great deal of impact on them. Right?
Vinay Shiriwastaw:They are. Yeah. It's really you know, when you think about the the Visa acquiring monitoring program, it's bringing 2 programs together. And and whereas the ecosystem, I think, was focused on monitoring at a merchant level, this is this program now is now also gonna be looking at the acquirer itself. Right?
Vinay Shiriwastaw:And it is gonna put in stipulations that those chargeback ratios need to say stay below certain thresholds. And if they don't, there's gonna be a financial impact Mhmm. To the processor, to the merchant. So 2 programs brought together. One program to look at more so now, look at the acquirer.
Vinay Shiriwastaw:Make sure the acquirer is doing the right things to protect their merchants and their portfolio of business. And then the second piece of the program is obviously still looking at the merchants where you have those thresholds that merchants need to reside under so they don't get into financial impact and fined by the associations, Visa, Mastercard, respectively. Well, in this case, Visa because it's a Visa's program. And we're sure Mastercard will do when one does one, the other tends to follow suit. Mhmm.
Vinay Shiriwastaw:But the program now coming up in next year will look at the acquirer and the merchant. And it is designed to put in tighter stipulations that exist today. So it's gonna be non fraud disputes looked at in in conjunction with using the tools. Rapid dispute resolution. If if, chargebacks are resolved by rapid dispute resolution, if they're resolved by compelling evidence, if they're resolved by CDRN, if a chargeback is resolved before it becomes a chargeback, they will not count toward the ratios.
Vinay Shiriwastaw:So, you know, while the stipulations are gonna be tighter controls against the acquirer and the merchant base, If you use these tools that have been put forward to mitigate chargebacks, you will be able to stay within those threshold. Or the goal is to use these tools to try to stay within those thresholds, and that's where this, new program is is going.
Pablo Torres:Yeah. Absolutely. Yeah. I think, you know, speaking of the use of these tools and in previous episodes, we have actually talked about how there is the same way that there's an abuse side of filing chargebacks and with the proliferation of friendly fraud. There's also this side of things where I personally see that there could be an abuse on this type of product, right?
Pablo Torres:And in previous episodes, we have talked about how you as a merchant should be using this as a tool, not the tool to manage chargebacks. There should be, risk and fraud, management strategy
Vinay Shiriwastaw:Mhmm.
Pablo Torres:Mitigation tools on the back end. And the way that these these products or these tools are going to help you is to just buy you a little bit of time while you implement the changes that you need to make in order to mitigate that fraud, right? And then you as a merchant at the same time, if you're noticing a spike in chargebacks or a spike in RDR alerts or Ethoca, then you can manage and you can take care of what's causing that spike. I think that's something that, I try to mention it often on this podcast because it's part of that educational part, you know. I think the same, you can abuse something just for so long before it becomes kind of, you know, it it's it's not effective, I guess.
Vinay Shiriwastaw:Yeah. I mean, I I think it's exactly right. Right? You know, you see the chargeback numbers increasing year over year. And those numbers, as put forward aren't going down anytime soon.
Vinay Shiriwastaw:Right? So a 30, 40% increase, through 2026 from today's levels. So those numbers are massive. But to what you're saying is it is all part of a layered approach. There is so many different types of fraud and abuse that happens in the ecosystem.
Vinay Shiriwastaw:And any merchant, what we're talking about are post settlement or post authorization tools. But there's the front end, account takeover. There there needs to be, you know, in flight fraud technology. Right? Pre auth fraud technology.
Vinay Shiriwastaw:That's one piece. In flight, you have tools that put together that in flight piece. Right? Then you have, you know, the settlement side, post settlement side, and it's all a layered approach. And and you're right.
Vinay Shiriwastaw:I think talking about it is the absolute right thing, and and most merchants, especially the mega merchants, realize this. They have a multiple point approach. They can afford to do that. They have the luxury to do that. But all merchants need to be provided a set of tools, and have a layered approach so they can protect their business.
Vinay Shiriwastaw:I absolutely agree. I think that's that's spot on in in the way we need to move forward and educate the merchants and and and drive forward the ecosystem. Absolutely.
Pablo Torres:So before we wrap this up, is there anything else that you would like to add?
Vinay Shiriwastaw:No. I think the you know, it's, it's great to be here and and be a partner to to you, and your team. I think that, obviously, there are a prolific number of new payment methods arising as we look to the future, and and those are very exciting. You think about, you know, UPN UPI in India and its rise there. You think about PIX in Brazil and others.
Vinay Shiriwastaw:You think about, you know, pay by bank. But the main thing is, you know, each as each rises, both merchants and consumers need to be protected.
Pablo Torres:Mhmm.
Vinay Shiriwastaw:And what will be the future technologies that propagate and and proliferate those new methods of payment to protect both the merchant and the consumer? Technology can do a lot of things, make things easy to buy, you know, make your life frictionless. We want quick biometric type processes to check-in and out. But we always need to have safeguards in place to put to protect consumers, to protect merchants, to protect acquirers, to protect reach. And hopefully, you know, we continue to partner to drive some of those things forward.
Pablo Torres:Absolutely. Vinay, thank you so much for joining us, and, you know, I look forward to to the next time. Absolutely. Thanks so much for listening. Stay tuned for the next episode, and, yeah, yeah, see you soon.
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