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Issuer Alerts

Technique Overview

Issuer Alerts are a form of data sharing between participating issuers and merchants where merchants receive notifications on transactions or disputes that the issuer is about to process into a chargeback, providing the opportunity for merchants to resolve the problem or refund the transaction and prevent a chargeback from occurring.

Issuer Alerts are provided to merchants through the service provider who receives notifications from the cardholder’s issuing bank. It may be that the issuer has identified fraudulent activity on a card before the cardholder does, or it may be that the cardholder initiated a dispute (fraud or non-fraud related) with the issuer but the issuing bank will first address the dispute with the merchant directly through the service provider rather than going through the chargeback process with the card association. This route can benefit both the issuer and merchant by avoiding the costs and operational processes associated with chargebacks.

Through Issuer Alerts, merchants are able to respond to disputes or avoid them entirely by refunding transactions before they hit the cardholder’s statement and before they become a chargeback. If detected early enough, merchants may be able to stop fulfillment or cancel shipment on a physical good. Merchants can also perform link analysis to find other orders associated with the ones in which Issuer Alerts were received.

Key considerations when implementing or buying this functionality include:
  • How large is the provider’s network of participating issuers? This should be considered in terms of the number of cards issued by participating banks rather than just the number of different issuers participating.

  • Does the service apply only to fraud or to both fraud and non-fraud related chargebacks?

  • How are transactions flagged by issuers to become alerts? Does it require the cardholder to contact the issuer and dispute the charge, or does the issuer provide information on all compromised cards to the service provider?

  • Are both domestic and international issuers participating in the service?

  • Can merchants provide information on a transaction to the card issuer? (one way versus two way communication)

How it Works

Typically, Issuer Alerts are sent to merchants through the service provider to recognize transactions that may be fraudulent or would otherwise result in some type of chargeback without intervention. There are some service providers that provide real time data sharing between the merchant an