Credit unions must create better processes for real-time payment dispute management as adoption and dispute volumes grow.
A key goal for credit unions in 2022 should be creating better processes for real-time payment dispute management—particularly because as real-time payments adoption grows, so does the number of disputes. Although disputes typically aren’t complicated for traditional card-based transactions, that isn’t the case for real-time payments.
“Some of this is attributable to the relatively short time real-time payments have been in the market,” says Jack Baldwin, Ph.D., chair/CEO of BHMI, Omaha, Nebraska, a leading provider of product-based software solutions focused on the back-office processing of electronic payment transactions. “Card-based [dispute] options have existed for decades, and thus benefit from established, well-defined programs with consistent updates that are understood and trusted by users.
“However, the relative newness of real-time payments means that dispute regulations and procedures are still being created,” he continues. “This not only results in less focused programs with uncertain update cycles, but it also means real-time payment users may not be completely aware of who is liable for a dispute until they find themselves involved in one. To add to the possible confusion, real-time payment methods such as P2P (person-to-person) transfers may occur in real-time, but the amount of time needed to research and return P2P funds is about the same as with traditional payments.”
As a result, an instant payment dispute can end up taking weeks to resolve, and that lengthy resolution can be a serious risk to a credit union’s reputation. “The primary challenge is that even as credit unions move to upgrade and adapt to support real-time payments, they are still all too often leveraging older, legacy dispute systems that are not designed for handling today’s newer payment methods,” Baldwin says. “The overall goal should be to modernize dispute systems to be more agile. This is the best way to prepare for the current and future real-time payments environment.”
To significantly improve the management of real-time payment disputes, Baldwin recommends setting a few goals:
1. Implement procedures to shorten dispute research time. “One way to shorten overall dispute resolution time is the adoption of procedures to decrease research time,” Baldwin says. “This might include decreasing the amount of paperwork or reducing the number of steps to resolve dispute issues.”
2. Increase use of computerized workflows to process disputes. Any formal set of procedures, like dispute processing, requires training, which can be extensive depending on its complexity. “Training and … processing can be shortened by use of customized ‘intelligent’ workflows that automatically walk disputes personnel through the correct processes,” Baldwin says. “This might include screens that are automatically populated with data that is appropriate for the specific task at hand. In addition, data-entry fields can be automatically presented to only solicit and collect required information for the processing step under consideration.”
3. Automate warnings and alerts. Since dispute procedures typically include a range of time windows for participants to complete their work, a computerized dispute system could automatically route warnings to supervisors noting that a processing time limit is about to be reached. “This can ensure that disputes are not forgotten or abandoned, improving quality and maintaining target times for completing dispute research,” says Baldwin.
4. Reduce manual processing. “Increasing automated processing of disputes reduces the amount of manual processing that must be completed,” Baldwin says. “This improves processing consistency, facilitates compliance with dispute procedures and shortens dispute resolution. Used in combination with refocused dispute procedures, it may be possible to eliminate manual processing of certain dispute steps.”
5. Increase integration with supporting systems. These can include document generation and management or email distribution. “Incorporating these additional supporting systems as inherent components of automated dispute processing further reduces the need for additional manual intervention and reduces processing time,” says Baldwin. cues icon
Celia Shatzman is a Brooklyn-based writer who has penned stories on topics ranging from beauty to fashion, finance, travel, celebrities, health and entertainment.