Consumers have come to love real-time payment services. They especially like the ones where there are no additional fees to pay. Considerable market pressure has been placed on banks and credit unions to offer this type of service. Doing so will provide free transfers to members and avoid the costs tied to third-party providers.
As a result, many have rushed to meet this demand of providing real-time payment services, without any actual regulations or infrastructure in place to handle disputes or fraudulent transactions.
Troubling Gaps Within Real-Time Payment Systems
Unfortunately, the very nature of real-time payment systems is that they lack centralized authority or disputing parties to appeal to. No card network that has set rules exists, where all parties must observe and follow. Although banks and providers can essentially set their own rules, they don’t have the authority to obligate the other party’s financial institution to cooperate when a dispute does occur.
Although there are some platforms that have their own systems for tackling disputes, they are doing it at their own discretion, where there is no guarantee of fair or even consistent rules of conduct.
Just like consumers enjoy the convenience and speed of real-time payments, they also enjoy the convenience of speedy, “low barrier chargebacks” as well. However, the day will come where they will experience a transaction that could turn problematic, suddenly the real-time platform they used will no longer be in their good graces.
Differences Between Real-Time Payment And Traditional Card-Based Transaction Disputes
Although P2P payments provide the opportunity to transfer funds between parties in real-time, settling or “moving” funds between parties within P2P transactions varies greatly from settling traditional payment transactions using debit, credit cards, and checks. With traditional payment methods, the payer’s bank sends money to a card network or other financial institution through a settlement method that can take many days to complete. Although this prolongs the time before one can access their funds, the disputes procedure is better established.
Cheryl Fitzgarrald, Senior Project Manager at BHMIF explained:
“Traditional payment methods have been available for decades. As a result, the disputed transactions for these programs are very well-defined, and updates to the programs are released at set intervals. Most people using these payment methods understand the risk and financial liability involved and have a high degree of trust that disputes will be resolved,”
However, with P2P payments, the transfer of funds between the payer and the payee are much more instantaneous. The problem is that the customer could take a much longer time frame to realize that a transaction was fraudulent, which heightens the risk of being unable to settle a dispute.
One thing to note about P2P systems is that, even though the transfer of funds can be carried out in real-time, if there were any errors in that funds transfer, getting a reimbursement could take weeks, even months to complete. This is completely out of touch with the needs of payment and dispute processing.
Quality improvement is definitely in order. Some possible solutions to this dilemma are listed below:
- Decreasing the number of SLAs (service-level agreements) or the required paperwork that needs to be submitted along with disputes. This will dramatically reduce the research time and/or the number of steps required to resolve disputes.
- Implement the use of computerized workflows in order to process disputes. By using customized intelligent workflows, personnel can be “walked through” the correct dispute process.
- Reduce manual processing by increasing automated processing of disputes. This will improve consistency and facilitate compliance with proper dispute procedures.
A Step Ahead
Incorporating more automation within real-time payment disputes may not bring resolution into a real-time timeframe. One example could be a misdirected payment. To resolve this requires contacting the “unintended” payee. This alone will bring a delay as part of the research effort.