Elevated dispute management: achieving top of wallet status

A guest editorial by Fatemeh Nikayin, co-founder and chief growth officer at Rivero

With the introduction of open banking just under a decade ago, there has been an influx of issuer banks and card providers for payments, meaning there is now a lot of choice for the public in through who they spend their hard-earned cash. This has thoroughly changed the public perception of payment methods, where in the past the option was split between cash, credit and your bank, and each one of these had a specific role to fill in the customers wallet. Now, the customer has a choice and all of these competing payment methods are battling it out for the converted ‘top of wallet’ status.

How does one achieve the ‘top of wallet’ status? In some cases it may just come from brand loyalty – a customer has been using Barclays for so long that it’s too much hassle for them to leave now. But for the end-user who does have several cards from different banks, the primary factors that impact their decision to use one over the other are convenience,  efficiency and concern over payment disputes and fraud. Humans naturally want to go for the safest path and of least resistance as it’s usually the most pleasant and if there are hurdles or annoyances to using a certain card, it will be dropped in favour of an option that is hassle-free.

The path to ‘top of wallet’ is painless

One pain-point that has impacted customers and their decision for which of their cards should be the ‘top of wallet’ choice is one of payment disputes and fraud. It always feels terrible when you’re stuck in a payment dispute and for the customer these scenarios are when it needs to be as stress-free as possible. Unfortunately, both the public and issuer banks have seen friction when it comes to this process and in recent years it has become a prime concern for all parties, especially in Europe where the European Central Bank (ECB) and the European Banking Authority (EBA) recently reported a total value of fraud across payments at €4.3bn for 2022 and €2bn for the first half of 2023.

The solution to this issue sounds obvious on paper: issuer banks just need to reduce the friction in the payment dispute system; but actually doing so is another story. Much of this friction comes from the customers having to wait for the issuer banks to analyse and solve the case with their payment schemes, going back and forth to approve the chargeback and all the while balancing other business needs that can’t be ignored. Legacy approaches to dispute management are not working and so a modern approach is required, one that takes advantage of modern technology like automation to allow for customers to self-service the dispute process and act as a quick-and-easy way to communicate directly with the bank. This way, the issuer bank can turn its attention to more pressing business needs, and the customer isn’t held up waiting for actions in the dispute chain to commence – actions that they have zero visibility on.

The customer experience (CX) plays a vital part in deciding if a payment option will be ‘top of wallet’ or not, so it is crucial to prioritise the CX during moments of distress. Rather than focusing solely on smoother customer journeys, like onboarding, issuer banks and card providers need to also ensure that every facet of payments that the customer interacts with is intuitive. These critical moments can have a lasting impact after all.

Automation paves a modern path forward 

A modern dispute management system must also be easy to use for the end user. In many cases, the stress of payment disputes comes from all the complex forms that both the end-user and issuer bank must fill out to make a claim. This is also the part that causes a lot of delays in the dispute process. A solution that can resolve this problem needs to be intuitive and something the customer can immediately understand, such as a chatbot that is bolstered through the power of automation.

With that said, not all forms of automation can be relied on for something as important as payment dispute management. In highly regulated industries like payments, relying on large language models (LLMs) for customer-facing services can lead to significant risks and liability issues for banks. A good example of the risks involved is the case of Air Canada’s chatbot, which offered objectively bad advice to travellers and caused a mountain of stress. This case study serves as an example for the potential pitfalls banks could face relying on LLMs.

Instead, automation should be handled through the use of “rule-based AI”, using strict rules informed by payment networks. This ensures customers receive accurate and reliable service, while banks are protected from potential issues. This is important for dispute management solutions that use a chatbot as the main method of communication with the end-user—you can’t have the chatbot “hallucinating” or making up a dispute rule.

Top of wallet = top priority

Achieving “top of wallet” status is a top priority for issuer banks and card providers as the more their card gets used the more success it brings them. With how competitive the market currently is for banks and providers, all steps need to be taken towards ensuring the customer is not inconvenienced and feels motivated to keep using that payment card. While there are many ways to incentivise this, such as loyalty schemes and benefits, improving the CX is arguably the most important as it appeals to the basic needs of humanity.

A basic need fulfilled effectively is sometimes more important than esteem needs and added extras like reward points. Elevated dispute management is one of those basic needs; nothing is worse for a customer than losing money to fraud. Reducing the stress that situation causes and ensuring the customer gets their money back in a timely manner is vital, and elevated dispute management can achieve this; making it the missing link for issuer banks and card providers in achieving that ‘top of wallet’ status.

Related news: earlier this year Rivero raised $7m in series A round.

Image: Rivero

Guest Editorial This article was produced specially for Fintech Intel by an expert guest contributor.