Visa announced their acquisition of Verifi on June 28th, about three months after MasterCard announced their acquisition of Ethoca. Both organizations offer issuer alert services that notify merchants of potential disputes before they become chargebacks. Visa’s acquisition comes over a year after overhauling their dispute process while MasterCard is in the process of doing the same.
Visa’s acquisition of Verifi is a continuing trend in the card associations’ investments to better control and reduce chargebacks or cardholder disputes. Visa’s overhaul of the chargeback process that took effect in April 2018 was intended to reduce the dispute volume by increasing rules or criteria for filing disputes, and created more opportunity for collaboration and resolve with Visa Merchant Purchase Inquiry (VMPI), that cuts down on “Does Not Recognize” chargebacks.
Verifi’s Cardholder Dispute Resolution Network, or CDRN, is a network of card issuers that enables the service to provide notifications to merchants on disputes to address before it becomes a chargeback. This is what The Fraud Practice defines as an Issuer Alerts service, like Ethoca Alerts from Ethoca who was acquired by MasterCard.
In addition to the CDRN, Verifi offers chargeback representment services and transaction risk screening. Following MasterCard’s acquisition of Ethoca, however, Visa’s acquisition seems more focused on stronger ownership of the post-transaction risk management and reducing the operational strain from the growing number of chargebacks. According to estimates from the Aite Group, there were 81 million chargebacks in the US totaling $6.1 billion in volume, and this is expected to grow to 115 million chargebacks and $8.6 billion in volume by 2021.
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