How are defects prevented by using a closed-loop solution?

Because data used by closed-loop solution providers come from integration with top issuers, the chargeback is stopped in near real-time and merchants have ample time to address the dispute directly with customers.

The closed-loop solutions provider passes data to merchants very quickly whenever a customer initiates a new dispute. Merchants have up to 72 hours to respond in a manner that fits within their policies and is best for their business. A merchant may choose to issue a credit, a refund or take no action at all and accept the chargeback, but the power of choice is in the merchant’s hands.

Closed-loop process solutions eliminates data transmission and communication delays, gives merchants an effective period of time in which to respond, prevents a “race to the refund” and eliminates defects – alerts that still turn into chargebacks.

Open-loop solutions not only do not stop chargebacks from occurring, the merchant often is acting based on inaccurate, non-direct and old data that ends up causing high defect and/or failure rates. Merchants’ expenses for an open-loop chargeback solution extends well beyond the cost of each alert as the percentage of faulty alerts, lost goods, chargeback fees, manual review costs all need to be totaled to arrive at the total cost.