The moment a cardholder challenges a charge, it shifts from a quiet operational task to a critical customer touchpoint.
Disputes are no longer just a back-office issue, said Shane Malloy, vice president of Value Added Services at Visa DPS. “It’s really one of the highest impact moments that a cardholder goes through,” he told PYMNTS.
Research shows that a large percentage of cardholders say they would change their behavior based on a bad dispute experience. That elevates post-purchase interactions to a boardroom concern.
“We’ve really seen that this is elevated from an experience that is not just really in the back office or operations, but really expands and is something being looked at the C level across issuers around the globe,” Malloy said.
Card-Not-Present Surge Drives Complexity
The challenge is growing as more payments shift from card-present to card-not-present channels. “We’ve seen this huge increase especially over the last few years of shifting more payment volume from card-present channels to card-not-present channels,” Malloy said. Subscription billing and eCommerce growth mean that legacy systems, designed for simpler transactions, are being strained.
Inquiry volumes now routinely reach the millions for large issuers, creating pressure on them.
The financial stakes are significant. Issuers are writing off a third of their inquiries that come in, and those inquiries don’t even make it to the chargeback process, Malloy said. Losses stem from manual errors, wrong classifications, incomplete documentation and missed deadlines. Some issuers simply decide it’s not worth contesting: “The cost for me to recover this is actually greater because of all the manual processes. It’s not worth it for me to invest in actually disputing this. And so I’m just going to write it off,” he said, illustrating the issuers’ current mindset.
Even when disputes proceed, “win rates … are really modest and not at the levels you would anticipate based on progress you’ve seen in other areas of the payments industry,” Malloy said. Fragmented intake channels — branch, online and contact center — add complexity.
AI: From Reactive to Proactive
Visa DPS sees artificial intelligence (AI) as key to changing the game. “AI is really going to allow us to shift dispute [management] from being a really more of a reactive approach … to more of a proactive approach,” Malloy said. AI can triage cases, help with proper classification, and route them to the right teams.
Visa DPS is also helping issuers flag recoverable cases and automate evidence gathering to reduce unnecessary write-offs. “Every inquiry that we have is an opportunity for us to help recover value for our issuers, reinforce trust and the AI aspect of that now makes that really scalable,” Malloy said.
Agentic AI for Complex Workflows
Malloy points to agentic AI as particularly powerful. “In my mind it’s the best case in payments to apply agentic AI,” he said. Disputes involve unstructured data, multiple intake channels, and regulatory deadlines, making them ideal for automation that goes beyond simple fraud scoring. Use cases include auto-classification, evidence validation, and predicting the likelihood of resolution.
Compliance is another pressure point. Issuers spend hundreds of hours on audit prep, but still face findings. “Technology’s allowing us to do things on the Visa DPS side to help clients as far as automating the documentation they need, to detect anomalies … and maintain those audit trails,” Malloy said.
He advised issuers to look for AI-first partners who can connect the entire customer journey, from fraud alerts to digital card issuance. “Make sure as you’re doing this, you’re working with partners that have that connectivity that you can connect the customer journey end to end,” he said.
Ultimately, Visa DPS aims to resolve disputes as quickly as possible. “We really want to get to an end point where we’re resolving disputes in minutes or maybe even seconds for our cardholders,” Malloy said. “The faster we can get them access to the money that is theirs and they’re able to continue to transact … that’s huge driver of loyalty, and really, that’s what we’re looking to build across the ecosystem.”
Source: https://www.pymnts.com/