ORC Plans Pilot of Merchant Database to Intercept Chargebacks

Online Resource Corp. next month will begin a pilot of an online merchant database it hopes will allow issuers to resolve consumer questions regarding card payments, stopping them from becoming expensive retrieval requests and chargebacks. The new service will be tried out with an unnamed top-five debit card issuer, the company says. “If all goes well, it will be commercially available in six months,” says William T. Kinnelly, president of the Parsippany, N.J.-based Card & Credit Services unit of Online Resources, Chantilly, Va., a major online bill-payment processor. The company estimates anywhere from 55% to 75% of all incoming consumer inquiries stem from simple misunderstandings, anything from not recalling a merchant name to failure to remember a specific transaction. But these calls can be costly if not resolved quickly. Kinnelly estimates each inquiry costs anywhere from $8 to $33 each, with the more extreme cost stemming from formal dispute and chargeback processes?much of which gets passed on to acquirers and merchants. Drawing on a database that currently contains details on some 8,000 merchants, the company's new service will allow issuers to get such details as full merchant names, DBAs, return policies, and contact information, as well as tracking and reservation numbers. “We store transactions from the credit card settlement system and link it to data about the merchant,” says Kinnelly. Online Resources will charge issuers a fee per lookup, Kinnelly says, though he won't specify the charge. Ultimately, he says, issuers and acquirers may share the fee, since acquirers have a stake in shaving dispute-resolution costs, as well. “We'll be promoting the product to acquirers and merchants,” he says. “They have a vested interest in being in the database.”