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Set Up Dispute Alerts (Playbook)

TL;DR
  • Week 1: Enroll with Ethoca (Mastercard-focused, global) and Verifi CDRN (Visa-focused, US)
  • Week 2: Configure notifications (API or email), define auto-refund rules (under $50, digital goods, no tracking)
  • Go live: Response SLA under 24 hours, track match rate + prevention rate
  • Expected results: 20-40% chargeback reduction, 30-50% alert match rate
  • ROI math: $25-40/alert vs. $30-100 chargeback fee + ratio damage

Dispute alerts let you refund transactions before they become chargebacks. A $25/alert fee beats a $30+ chargeback fee plus the ratio damage. This playbook gets you connected to Ethoca, Verifi, and RDR in 1-2 weeks.

Timeline: 1-2 weeks. Most time is waiting for provider onboarding.

Workflow Overview​

PhaseKey Tasks
EnrollmentChoose approach (direct, processor, aggregator), enroll Ethoca + Verifi
IntegrationConfigure notifications (API or email), define auto-refund rules, test E2E
LaunchEnable alerts, monitor errors, track ROI
OperateDaily pending alerts check, weekly metrics review, monthly ROI analysis

Prerequisites: Business docs, descriptor list, processor MIDs, refund capability, budget for per-alert fees.

Trigger Criteria​

Use this playbook when:

  • Chargeback ratio above 0.5% and climbing
  • You want to prevent chargebacks proactively
  • You're in or approaching a monitoring program
  • Customer disputes are coming from recognizable transactions
Prerequisites

Before starting, ensure you have:

  • Business bank account and legal entity docs
  • Descriptor(s) used on card statements
  • Processor MID(s)
  • Ability to process refunds via API or manually
  • Budget for per-alert fees ($15-40/alert typical)
  • Understanding of chargeback metrics and current ratio

Understanding Alert Services​

The Three Services​

ServiceNetworkHow It WorksBest For
EthocaMastercard-ownedAlert when cardholder initiates disputeFraud disputes, faster notification
Verifi CDRNVisa-ownedAlert network with issuer participationVisa-heavy merchants
Verifi RDRVisaAuto-resolve disputes based on rulesHigh-volume, automated resolution

How Alerts Prevent Chargebacks​

Traditional path:
Customer disputes → Issuer files chargeback → You lose

With alerts:
Customer disputes → Alert sent → You refund → No chargeback filed

Expected Results​

MetricTypical Impact
Chargebacks prevented20-40% reduction
Alert match rate30-50% of disputes
Response window24-72 hours
ROI breakeven1-2 months typically

Week 1: Enrollment​

Step 1: Choose Your Approach​

OptionProsCons
Direct enrollmentLower per-alert costMore integration work
Through processorFaster setupHigher per-alert cost
Through aggregatorSingle integration for allHighest per-alert cost

Recommendation: If your processor offers bundled alerts, start there. Faster to live.

Step 2: Ethoca Enrollment​

  1. Apply at Ethoca (or through processor/aggregator)
  2. Provide business documentation
  3. Submit descriptor list (exactly as appears on statements)
  4. Configure notification endpoint or email
  5. Wait for approval (3-7 business days)

Checkpoint: Ethoca account active, descriptors registered.

Step 3: Verifi CDRN Enrollment​

  1. Apply at Verifi (or through processor/aggregator)
  2. Provide MID list and descriptors
  3. Choose notification method (API, email, portal)
  4. Configure response workflow
  5. Wait for approval (3-7 business days)

Checkpoint: Verifi CDRN account active, connected to your MIDs.

Step 4: Verifi RDR Setup (Optional)​

RDR auto-resolves disputes without manual intervention. Good for high volume.

  1. Enroll in RDR through Verifi
  2. Define resolution rules:
    • Always refund under $X
    • Always refund if digital goods
    • Always refund if no tracking
  3. Set liability acceptance threshold
  4. Test with small segment first

Checkpoint: RDR rules configured and active.

Week 2: Integration and Testing​

Step 1: Configure Notifications​

// Example webhook handler for Ethoca/Verifi alerts
app.post('/alerts/webhook', async (req, res) => {
  const alert = req.body;

  // Look up original transaction
  const transaction = await findTransaction(alert.transactionId);

  if (transaction && shouldAutoRefund(alert, transaction)) {
    await processRefund(transaction);
    await respondToAlert(alert.id, 'REFUNDED');
  } else {
    await queueForManualReview(alert);
  }

  res.status(200).send('OK');
});

Email/Portal (Lower Volume)​

  1. Configure alert emails to operations inbox
  2. Set up monitoring for alert emails
  3. Define SLA for response (under 24 hours)
  4. Create manual refund workflow

Step 2: Define Auto-Refund Rules​

ConditionRecommended Action
Transaction under $50Auto-refund (ROI positive)
Digital goodsAuto-refund (hard to prove delivery)
No tracking availableAuto-refund (can't win dispute anyway)
Subscription (canceled)Auto-refund
Known friendly fraud patternReview before refund
High-value physical goodsReview, may have proof

Step 3: Test the Flow​

  1. Process a test transaction
  2. Simulate an alert (if provider has test mode)
  3. Verify notification received
  4. Process refund
  5. Confirm alert response sent
  6. Verify chargeback not filed

Checkpoint: End-to-end flow tested and working.

Go Live Checklist​

  • Ethoca active and receiving alerts
  • Verifi CDRN active and receiving alerts
  • Notification workflow configured
  • Auto-refund rules defined
  • Manual review queue set up
  • Response SLA defined (under 24 hours)
  • Metrics tracking enabled

Ongoing Operations​

Daily Tasks​

  1. Check for pending alerts
  2. Process manual review queue
  3. Verify auto-refunds completing

Weekly Metrics​

MetricTrack
Alerts receivedVolume trend
Match rateAlerts / Total disputes
Response timeAverage hours to respond
Refund rate% of alerts refunded
Prevention rateChargebacks avoided

Monthly Review​

  1. Calculate ROI (chargebacks prevented vs alert fees)
  2. Review false positive rate (refunded good transactions)
  3. Tune auto-refund thresholds
  4. Check descriptor coverage (new products added?)

Success Criteria​

You're done when:

  • Both Ethoca and Verifi CDRN active
  • Alerts being received and processed
  • Response time under 24 hours
  • Chargeback ratio trending down
  • ROI positive (cost vs prevented chargebacks)

Scale Callout​

VolumeApproach
Under $100k/moManual email alerts may be sufficient; processor bundle is fastest
$100k-$1M/moAPI integration recommended; define auto-refund rules; track ROI weekly
Over $1M/moFull automation required; RDR for high-volume resolution; dedicated alert ops

Where This Breaks​

  • Descriptors not registered. Alerts won't match. Audit all descriptors quarterly.
  • Response too slow. Over 72 hours = chargeback filed anyway. Set tight SLAs.
  • Auto-refunding everything. Fraudsters learn and exploit. Set thresholds.
  • Not tracking ROI. Easy to overpay. Alert fee should be less than chargeback cost.
  • New MIDs not enrolled. When you add processors/MIDs, enroll them immediately.

Cost Analysis​

Typical Costs​

ItemCost Range
Ethoca per alert$20-35
Verifi CDRN per alert$20-40
RDR per resolution$15-25
Chargeback fee$25-100
Chargeback ratio damagePriceless

ROI Calculation​

Monthly chargebacks: 100
Alert match rate: 35%
Alerts received: 35
Alert cost: $30 each = $1,050

Chargebacks prevented: 35
Chargeback fee saved: 35 × $30 = $1,050
Ratio improvement: 0.35% reduction

Net cost: ~$0 (breakeven on fees alone)
Plus: Ratio protection, avoid monitoring programs

Next Steps​

After alerts are operational:

  1. Tune auto-refund rules: Adjust thresholds based on actual alert patterns
  2. Track ROI monthly: Ensure alert costs stay below chargeback costs avoided
  3. Add new descriptors: When you launch products or change billing, enroll new descriptors
  4. Consider RDR: If Visa volume is high, evaluate Rapid Dispute Resolution for automation
  5. Reduce root causes: Use alert data to identify why customers dispute—then fix it