What is Rapid Dispute Resolution (RDR)? A Beginners Guide

I’m always on the prowl for ways to keep chargeback rates low. After reading about Rapid Dispute Resolution (RDR), I've found a solution.

I’ll use this guide to explain what RDR does, the results it can produce, how to use it, and other important information.

Let's reduce those chargeback rates.

Key Takeaways

• RDR lets merchants auto-refund problematic orders to avoid chargebacks.
• It usually prevents 50 to 70% of Visa chargebacks.
• Costs vary by merchant category code; lower-risk codes pay less.
• Set rules to refund orders (e.g., by chargeback reason code).
• 97% of US and 83% of global issuers have adopted RDR.
• Acquirers handle refunds for sellers.
• You can get RDR setup in 5 days using Chargeback.io

What Is Rapid Dispute Resolution?

Rapid Dispute Resolution (RDR) is a Verifi platform that automates Visa transaction dispute resolution. It quickly settles issues between merchants and cardholders before they become chargebacks.

The acquirer will handle the refunds. This means that you don’t need to do anything.

Platforms like Stripe would handle it for you.

Verifi launched this service in April 2021. Some issuers had to use it by October 2021.

These alerts help prevent fraud and non-fraud chargeback reason codes.

They cover 97% of Visa card transactions. But no other card networks.

That's where the Cardholder Dispute Resolution Network (CDRN) helps. It covers more networks. RDR is the newer version of this.

I’ll compare the differences later.

Let’s see how this technology works.

Summary: It lets merchants auto-refund issues based on set rules.

How Does It Work?

As a seller, you’ll first set rules for when to automatically refund transactions.

For instance, if you want to automatically refund orders under $25, do that. Or you could accept liability for all fraud disputes.

“Accepting liability” means you agree something's wrong with the order and will refund. Accepting liability will not count toward your chargeback rate.

You can also define rules around the following:

• Dispute condition code: Reason for the dispute (e.g., unauthorized purchase, item not received).
• Category: Type of the dispute (e.g., fraud, billing, product).
• Purchase identifier: Transaction ID (e.g., order number, reference ID).
• Currency code: 3-letter code for the currency (e.g., USD, EUR).
• Transaction amount: Total of the disputed order.
• Order date: When the order was placed.
• Issuer Bank Identification Number (BIN): 6-digit prefix of a credit card number, indicating the issuing bank.

Verifi has a (long) seminar on selecting rules:

https://www.youtube.com/watch?v=Zuuem_S_OUs&t=5s

You can change these rules anytime. But new rules may take a week to start.

These rules help you avoid refund losses while keeping dispute rates low.

I digress:

From there, we’ll see this process:

1. Customer reports an issue to their RDR-enrolled bank.
2. The issuer submits the case to Visa Resolve Online (VROL).
3. RDR checks your filters to decide on a refund.
   1. The case pauses for 72 hours during the check.
4. If the order fits, your acquirer refunds the customer.
5. Case closed.

Here’s an image of how it works:

Source: Verifi

What happens if a case doesn’t meet your rule criteria?

I hate to say it, but...

You’ll go through the Visa dispute process. We explain how this goes in a separate piece.

But what happens if RDR stops a dispute in its tracks?

Summary: Merchant sets rules. If an order satisfies those rules, the acquirer will refund customers.

What Happens After Dispute Resolution?

Refunded orders don't count as chargebacks.

The issue never reaches the dispute stage, so there's nothing to contest.

These cases aren't “resolved disputes” either.

When an issuer sends an acquirer a Visa TC15 code, it’ll come with a RDR identifier.

TC15 typically means that a dispute was resolved. But with the RDR tag, the acquirer will see that this case went through RDR.

The acquirer then tells you about the refunded order.

Now:

You will need to update the following in your order management system (OMS) or customer relationship manager (CRM):

• Cancel ongoing services.
• If the order was a part of the subscription, cancel future charges.
• Note of the debited amount.
• Update your blacklist (if you use one).
• Block access to disputed digital products.
• Don’t fulfill the merchandise if you didn’t already send it.

Updating this information ensures that the customer won’t get access to the product free of charge. It also keeps you on top of your bookkeeping.

From there…

Study your data. Find out why the issue happened.

For instance, if you noticed a surge in shipping-related issues, use that data to improve your processes. You’ll also want to consider adding a more robust return policy.

Also use this data to help refine your rules.

Should you take on more or less liability?

Which price points lead to disputes?

Do certain currencies cause more issues?

If needed, change your rules and move on.

Then pat yourself on the back. Though, you lost money through refunds and processing fees. RDR saved your business from a chargeback.

Has RDR shown any results? Yep.

Summary: Close the loop and ensure the customer doesn’t have access to the product anymore. Then use the RDR data to refine your filters.

Does Rapid Dispute Resolution Really Prevent Chargebacks?

Some chargeback analysts suggest that RDR can reduce Visa chargeback rates by 50 – 70%. Some platforms estimate that RDR will stop around 90% of Visa chargebacks [1].

3% of issuers in the US and 17% of them globally haven’t adopted RDR.

Thus:

If a customer files an issue with those banks, they won’t go through RDR and will become chargebacks.

Then there’s the burden that you share.

You set the rules. And unless you refund every case, there’s bound to be some chargebacks that’ll break through.

It’s not a magic bullet. But it’ll get rid of a good number of chargebacks.

We provide a guide on what else you can do (aside from alerts) to reduce dispute rates. Check it out.

Everything has a cost. As do RDR alerts.

Summary: Lowers Visa chargeback rates by 70% or more.

How Much Does Rapid Dispute Resolution Cost?

Rapid Dispute Resolution alert costs will vary by merchant category code (MCC).

Here are examples of what you’d pay [2]:

• MCC Tier 1: $5 per alert
• MCC Tier 2: $20 per alert
• MCC Tier 3: $35 per alert

And here are examples of what tiers various merchant category codes would fall under:

This information isn’t from Verifi. They don’t disclose how much you’ll pay per alert.

Supposedly, 90% of merchants on Stripe will fall under MCC Tier 2. You’ll need to see your MCC to gauge what you’d pay.

You’ll need to compare pricing among different chargeback alert providers.

I recommend looking for someone who offers volume-based pricing (like us). Meaning, the more alerts you receive, the less you pay.

This sounds almost too good to be true. What are the downsides?

We’ll check that out now.

Summary: Sellers pay per alert. The price depends on their MCC.

Pros & Cons of Rapid Dispute Resolution

Pros:

• Saves time: No need to gather proof to fight disputes.
• Better for customers: Solve issues in days, not months.
  • Because chargebacks usually take 30 or more days.
• Saves money: No disputes mean no chargeback fees or staff costs.
• Quick setup: Resellers give you alerts within 10 days.
• Cheaper for low-risk sellers: They pay less per alert than other services.
• Fine-tuned control: Choose which transactions to auto-refund.
• Less friction: Fewer fraud checks slow down your sales funnel.
• Stops chargebacks: Handles disputes before they escalate.

‍

Cons:

• Not for everyone: Sellers with few chargebacks gain less.
• Costs per alert: The cost per alert can eat into your margins.
• Payment processing fees remain: Gateways won't refund these fees.
• Friendly fraud risk: Auto-refunds mean you can't fight first-party fraud.
  • Sellers win 43.82% or more of friendly fraud disputes.

RDR, and chargeback alerts in general, aren’t ideal for all industries and business types.

First off.

If you lose chargebacks a lot, Rapid Dispute Resolution alerts are a godsend since you won’t need to fight chargebacks. Since you’ll deflect most of them in the pre-dispute stage.

Here are use cases I’d recommend using RDR:

• Lower average transaction values: You’d lose more refunding shoppers by auto-refunding them.
  • Having a lower average transaction value (ATV) is more suitable.
• High-risk merchants: You’ll need every tool you can to keep dispute rates low.
• Low-risk MCCs: RDR fees cost less than chargeback fees.
• Those without chargeback staff: It's less strain on your team.
• High chargeback rates: You need this if your rate is near 1%.
• Frequent chargeback losers: If your win rate is below 50%.
• You’re in the Visa Dispute Monitoring Program: You must exit this fast.

I provide more details on whether you require an alert tool in my CDRN versus Ethoca and RDR piece.

You might have heard of other chargeback alerts. How does RDR stack up to those?

How Is RDR Different From Ethoca & CDRN?

RDR, a Visa product, automates refunds for Visa transactions. CDRN covers multiple card brands but requires manual refunds. Ethoca, by Mastercard, handles many card brands with manual refunds.

Here’s the coverage different providers cover:

Moreover:

CDRN only covers transactions from US customers. Ethoca and RDR alerts will work with international and US shoppers.

Then, if you use CDRN and Ethoca simultaneously, the coverage could overlap. Resulting in duplicate charges in many cases.

I do a more thorough breakdown of the differences in a separate piece. Check it out.

Why not just use all 3 alert providers?

That is a viable strategy so long as your chargeback rate is above 1%. Otherwise, you’re losing money even though your chargeback rate is acceptable.

We should also talk about Verifi’s other tool, Order Insight.

This allows you to share key details about a transaction with a customer to help them remember their purchase. And if a shopper remembers their purchase, they’re less likely to open a case.

Thus, preventing 45 – 70% of eligible disputes.

I mentioned this tool because it works in tandem with RDR and CDRN.

If Order Insight doesn’t work, then chargeback alerts come in.

Are you a merchant who wants to use RDR? Let’s find out how.

Summary: RDR automates refunds and only works with Visa orders. CDRN and Ethoca offer broader card brand coverage and require manual refunds.

How Do I Use Rapid Dispute Resolution for My Business?

You have 2 main choices:

1. Work with Verifi directly.

Contact a Verifi customer support representative or a relationship manager and tell them you want to use RDR.

From there, you’ll need to give them these details:

• CAID
• BIN

Then, you’ll set your rules and such.

This option only gives you Order Insight, RDR, and CDRN access.

That said, you need to sign a contract with them and pay a fixed amount every month. 

If you don’t get more than 2500 chargebacks per month I would not recommend working directly with Verify.

What if you wanted access to Ethoca Alerts and don’t have that many chargeback?

2. Use a chargeback alert solution.

These providers offer platforms to manage RDR, CDRN, and Ethoca alerts together. You won't need to talk to customer service reps.

Some offer full chargeback solutions with extra features. These can cost thousands monthly.

Alert-focused solutions charge per alert, which suits smaller businesses better. Some also offer volume pricing (which Verifi allegedly doesn’t).

Chargeback is an excellent player in this field because they offer:

• Integrations with major platforms (e.g., Stripe and PayPal).
• Will deal with CDRN refunds for you.
• Easy-to-read dashboards.
• Quick setup.

See how we can reduce your chargeback rates.

If Chargeback is missing an integration that you have, you might want to consider Chargeblast.

I explain what areas Chargeback is better in a separate guide.

Let’s finish this off with some FAQs.

Summary: Contact Verifi’s customer service or go with a reseller. Resellers typically offer better pricing.

FAQs

What Percentage of Banks Participate in Rapid Dispute Resolution?

Around 97% of US issuers and 83% of global issuers have adopted RDR.

Wrapping Up

Rapid Dispute Resolution can reduce chargeback rates by 70% or more. It’s not for everyone. However. It can reduce your workload while allowing you to delegate staff elsewhere.

The most time-consuming part is implementation.

That’s where we come in to help. Chargeback only needs a couple details and can help you get started with RDR alerts quickly.

Try us out and lower your chargeback rate.

Sources

• [1] RDR. Kount.
• [2] Verifi Beta. Stripe.