Real-Time Merchant Dispute Resolution via API
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Solution Overview
Problem
Current dispute resolution systems are time-consuming and costly, requiring acquirers and merchants to prove the validity of disputed charges, and do not allow issuers and merchants to notify each other about remedial actions, leading to potential dual refunds to account holders.
Innovation Solution
A merchant-integrated dispute resolution system that enables real-time communication between issuers and merchants through a platform, allowing for the retrieval of transaction information and providing APIs for secure communication, which can avoid the formal dispute resolution process and prevent dual refunds.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a formal dispute resolution process is used, then transaction validity can be proven, but the process takes 45 to 90 days and is costly
Solution Approach 1:
The system performs preliminary actions by establishing real-time communication channels between issuers and merchants before disputes occur. The platform pre-configures API connections and authentication mechanisms, enabling immediate information exchange when disputes arise, thus avoiding the need for lengthy formal processes while maintaining reliability in proving transaction validity
Solution Approach 2:
The dispute resolution platform acts as an intermediary between issuers and merchants, facilitating real-time communication and information sharing. This mediator enables direct verification of transaction details through standardized APIs, eliminating the need for prolonged formal dispute processes while ensuring reliable validation of transactions
2Ease of operation
If issuers and merchants do not communicate about remedial actions, then each party acts independently, but this leads to dual refunds being issued to account holders
Solution Approach 1:
The system implements feedback mechanisms where the platform notifies both issuers and merchants about remedial actions taken by either party. When a merchant issues a refund, the platform communicates this to the issuer, who can then prevent issuing a duplicate refund. This feedback loop maintains operational independence while preventing harmful dual refunds through real-time information sharing
Solution Approach 2:
The dispute resolution platform serves as an intermediary that coordinates between issuers and merchants regarding remedial actions. It receives notifications from both parties about refunds or chargebacks and manages the information flow to prevent duplicate payments, thus eliminating dual refunds while preserving the ease of independent operation for each party
3Loss of time
If real-time communication is established between issuers and merchants, then dispute resolution time is reduced to under 10 seconds, but system complexity increases
Solution Approach 1:
The dispute resolution platform provides universal, standardized API interfaces that can be implemented by multiple issuers and merchants using common protocols. This multi-functionality allows real-time communication across different participants without requiring custom complex integrations for each party, achieving rapid dispute resolution while controlling system complexity through standardization
Solution Approach 2:
The system changes key parameters by implementing standardized communication protocols and authentication mechanisms that enable real-time data exchange. By establishing fixed time thresholds (e.g., 10 seconds for resolution) and using standardized API parameters, the system achieves rapid dispute resolution without proportionally increasing complexity, as the parameter changes create predictable, manageable interaction patterns
Data Source
AI summary
When an account holder contacts the issuer of the account to dispute a transaction conducted with a merchant using the account, the issuer may request additional transaction details, such as purchased item level details, from the merchant via the merchant integrated dispute resolution platform. A real-time purchase inquiry sent to the merchant may request purchase information or transaction information (e.g. purchased item details, order information, order history, shipping and delivery information, etc.) associated with the transaction. The merchant may send a real-time response to the merchant integrated dispute resolution platform which may forward all or a portion of the received information to the issuer in real-time. The entire communication between the issuer, the merchant integrated dispute resolution platform and the merchant may be a sessionless (or stateless) communication, i.e. all communication among the parties may occur in a single session which may last 10 seconds or less.