Dispute accounting
Dispute accounting refers to the systematic tracking, recording, and reconciliation of financial entries created throughout the dispute processing. Dispute accounting supports financial accuracy and compliance while maintaining transparency for all parties involved in a dispute.
Pega Smart Dispute™ Agentic Automation (SDAA) includes a dispute accounting functionality that manages financial transactions throughout the dispute lifecycle.
How it works
The Accounting flow and its associated Action are responsible for implementing the dispute accounting functionality in the application.
The following figure shows the Accounting flow added as Step in the Visa Dispute Case Type workflow:
The following figure shows the Accounting flow:
Two Data Types, Financial action and Financial decision, are available in the application to manage the Actions and Decisions that are necessary for dispute accounting implementation. These actions and decisions are tagged as SD or CDM for reference data. If you want to add more actions and decisions for your business needs, you can add them to their respective Data Types and tag them accordingly.
The following figure shows the Financial action Data Type.
The following figure shows the Financial decision Data Type.
Dispute accounting scenarios
SDAA applies dispute accounting throughout the dispute lifecycle. The following list contains examples of key scenarios in the dispute accounting process:
Issuing automatic provisional credit
When a customer initiates a dispute, the application automatically issues a provisional credit to the customer's account to temporarily cover the disputed amount.
Automatic low-value write-off
For disputes involving small amounts, the application can automatically write off the value, simplifying the dispute resolution process.
Resolving dispute Case as customer liable
At any Stage, if the application determines that the customer is liable for the disputed amount, it can resolve the dispute Case and reverse any provisional credits if necessary.
Debiting card scheme account after dispute submission
After a customer submits a dispute, the application debits the corresponding amount from the card scheme account to reflect the ongoing dispute.
Crediting card scheme account after receiving decline/partial dispute response from Acquirer
If the acquirer declines the dispute or provides a partial response, the application credits the card scheme account with the disputed amount. This scenario applies to consumer and processing error-related disputes, also known as collaboration disputes.
Section 75 accounting
This scenario involves managing disputes under Section 75 of the Consumer Credit Act, which protects credit card purchases. If the application resolves the dispute in favor of the customer, the customer receives credit for the full purchase amount.
Canada 86 accounting
This scenario involves managing disputes according to the Canada 86 regulation rules. The maximum liability of the cardholder for a claim regarding unauthorized use of their credit card is capped at CAD 50 unless the cardholder demonstrated gross negligence in safeguarding the credit card, account information, or personal authentication information. In such cases, the cardholder can be held liable for the entire transaction amount.
Reversing the provisional credit
If the application resolves a dispute in favor of the merchant or the acquiring bank, the provisional credit issued to the customer is reversed.
Foreign exchange accounting due to fluctuations in currency rate
The application accounts for any changes in the exchange rate that might affect the disputed amount, ensuring accurate financial records.
Writing off the dispute Case at any Stage
If the disputes operator decides to write off the disputed amount, the application confirms whether the provisional credit has already been issued or credits the customer with the disputed amount.
With SDAA, organizations can handle the accounting aspects of dispute management efficiently and accurately, which provides a streamlined experience for both customers and financial institutions.
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