PegaWorld 2025: Ethoca and Pega: delighting customers with expedited dispute resolution

PegaWorld 2025: Ethoca and Pega – Delighting Customers with Expedited Dispute Resolution

I'm Scott Andrick. I'm an Industry Principal. I work in our consumer banking area at Pega so I help with go to market. I work with our speakers to get them ready for PegaWorld so that they can give you great information every year. And what I want to do is I want to introduce Mike and Natalina.

Mike is out of our product development area for Smart Dispute. Natalina comes to us from Ethoca, which is a Mastercard company. And I've actually had the pleasure of working with Mike for over a decade. Um, you know, so we've we've been bumping around for quite a while and spend a lot of time doing that. And the Ethoca relationship goes back to I actually helped bring them on board and integrate with Smart Dispute back when they were an independent company.

When Trevor was still running things, I made many trips up to Toronto to have conversations with them. Have enjoyed that long partnership as well. So if you could please join me in welcoming Mike and Nataliya to the stage. Thank you. Thank you Scott.

I don't think I'm going out on a limb too far by suggesting that probably everybody in this room has had to dispute a credit or debit card charge at some point in their lives, probably multiple times, probably something as simple as I purchased something, returned it to a store and expected credit. That just never came or something more frustrating. You purchase something online and it arrives to your home, broken or damaged, and when you turn to the merchant to try to make things right. You didn't get the satisfaction that you expected. And perhaps worst of all, is sort of the ever increasing experience of people looking at their statement and finding transactions that they're certain that you didn't make.

These are all stressful moments that millions of people deal with around the world, and they turn to their banks every day to help them resolve their their transaction disputes. Pega has been in the business of helping banks resolve their customer's transaction disputes for over 20 years, doing that as effectively and as efficiently as possible to reduce operating costs, ensuring compliance with consumer protection laws and network rules, and turning moments of heightened stress into experiences that can actually deepen customer loyalty. I'm Michael Procek, senior director of industry development at Pegasystems, and I've been spending, I guess, 18 years of my career leading the design and development of enterprise applications. And I've been at Pegasystems for 12 years. I have a portfolio of applications under my span that includes Smart Dispute, which we're here to talk about today, Smart investigate client lifecycle management and know your customer alerts and investigations management as well.

All of which, if you haven't seen them yet, you can see them in the Financial Services Village at the Innovation Hub. I highly recommend you come by and see these products. It's my pleasure to be with you today, talking about how Pega and Ethoca have teamed up to provide early dispute resolution options. Now, there's probably a mix of people in the room, many of whom I know know this space fairly well of dispute processing, but I suspect there's a few people in here who don't really know it much at all, other than maybe their own personal experience. So I want to give a very high level explanation just to try to level set ourselves a little bit.

Um, I promise I'll try to keep it high level. Um, when people dispute their, their charges on their visa or, I'm sorry, their credit or debit cards, um, it may seem rather simple, rather straightforward. It's just you contacting the issuing bank, and somehow they represent everybody and can magically make all of this happen for you. But the reality is, it's much more complex. And there's a lot that goes on that you really don't see. And that's a good thing, right? The reality is there's you there's your issuing bank. The bank that gives you the credit card. There's the merchant, and the merchant has a bank. And then there's the networks themselves. There are lots of systems of record to collect data, get information.

And there's communications that need to take place between these parties over a longer running process than what it may seem. You as the card holder. You're saying I just want the transaction removed. That's how it feels. That's how you how you look at it.

But what's really needs to happen in order for that to take place is somebody needs to give you credit, and then somebody's going to go try to figure out who's actually liable for this, for this cost. The merchant is saying, I didn't do anything wrong. Why should I have to give up the money? And the banks for both parties are brokers in this process, trying to make sure that the rules as defined are being followed. Recovery of the money is by something referred to as a chargeback, which you can think of as a reverse charge. Assuming that certain conditions have been met and evidence provided.

But as you would expect, the merchant has an opportunity to counterclaim. Basically say I disagree. And sometimes there's an impasse where the two parties can't reach an agreement and the network has to step in to make a ruling. In the end, this back and forth process leads to a longer running time frame work. Somebody has to see what what they've now got to do, given the current state of things, and that drives up operational costs.

Not to mention that there's network processing fees with some of these things as well. So the net of it all is that you've got high operating costs. Long drawn out time frames before resolution is ultimately achieved. Disputes has Pegasystems rather has two dispute products in this space, one for the issuing side of the equation and one for the acquiring or merchant bank side of the equation as well. And through these two we can handle the processing from either perspective.

All right everybody hopefully with me. That's as far as I'm going to go with explaining this this process in general. So ultimately this leads to some key challenges for disputes and fraud operations groups. As you can imagine, it can be an inefficient process with all of these systems, all of this back and forth. Um, automation is key.

How quickly and how efficiently this is done is really dependent upon the presence and the degree of automation. Compliance is a requirement. It's non-negotiable. Noncompliance with network rules leads to failed disputes, lower recovery rates, and financial loss. Noncompliance with consumer protection laws can lead to fines and court orders and reputational impact.

And fraud is increasing as new methods, new scams and new payments, which always represent new opportunities emerge. These, along with consumer protection laws, increase liabilities for banks and can lead to higher fraud losses. And last but certainly not least, there's the whole point of customer experience. Customers have come to expect protections regardless of their payment types. And these are moments of truth, right? Because they're highly stressful and they therefore have a sort of an outsized impact on the cardholder and bank relationship.

So how you handle it really matters. So this is the charter of smart dispute. As already mentioned, Pega has been providing intelligent automation solutions for fraud and dispute resolution for over 20 years. We handle credit and debit corporate cards, ACH, Zelle with expandability into other payment types. We do this for banks of various sizes large, medium, small around the world.

And these these clients of ours, they benefit from pega's intelligent automation nation out of the box regulatory compliance and our commitment to improving customer experience. And of course, increasingly, especially lately, there's the emergence of agentic experiences and those expectations. And unless we've been at different, um, you know, a different, uh, convention, I'm going to guess that you guys have heard a little something about Agentic technologies here over the past couple of days. Not a word. Right, Scott? So, um, again, I'll just make a shameless plug.

If you have not yet been to the Innovation Hub to look at some of these things, please go. There are so many examples of the application of Agentic technology, including at the Smart Dispute uh, demo booth. Now, recently, Mastercard published their 2025 State of Chargebacks report. I'm not going to go through all of these numbers, and a lot of things I'm going to talk about are not going to be referenced up there. But what you can see is that over 70% of disputes go into the chargeback process or part of the process and beyond before they're ultimately resolved.

And these have delays and costs, as I've explained already, even with certain amount of automation, because you're putting something in somebody else's court and they need to have time to review, do some research and respond. Now, we've probably all been in situations before, in our personal or professional lives, where somebody pulled you into some process that ended up being long and drawn out, where you really just want to say, gosh, I wish you had just told me, because had I known or had you told me, we probably could have resolved this ourselves separately, more efficiently. Or perhaps you've been in some situation where you instigated or started down some process, but had you known a little more information, you might have taken a different path. And this is really where our partnership with Ethoca comes into play. With our integration of Ethoca services, we can head off unnecessary disputes and chargebacks.

And for those that do end up needing recovery, we can do that much more quickly. We can deflect over 70% of chargebacks when an agent has the ability to talk off a cardholder by helping them recognize a transaction that they thought was fraudulent. And we can resolve card not present transaction disputes much faster. We find that merchants respond in 24 hours or less. 80% of the time, and we can achieve a recovery rate of 60%.

Prior to chargeback. For our clients who are using Smart dispute with Ethoca integrations, there's two forms of these Ethoca service integrations that we have. The first is the ability to just get more information to solve that first problem of not recognizing. So there's service that we can call, and we can provide information to the agent or to the to the cardholder that helps them recognize the transaction by giving them more information about the merchant. The second is by giving us the direct ability to alert a merchant that their customer is disputing a transaction and why.

And it allows them to resolve it straight away and save time and money. So this is a bit of an eye chart, but I'm going to say the business process. This is a Blueprint, by the way, from Smart Dispute. This business process that stitches together systems of record. Networks between banks and merchants services and orchestrates this whole life cycle end to end is very, very robust.

But what we've done is we've taken a section of this, and we've actually created the Ethoca integration into this unified end to end process that allows us to really realize the full benefit of intelligent automation. Smart dispute can determine whether or not a merchant is enrolled, and they can send them an alert that a chargeback is forthcoming. If it's done early enough, the merchant might have the opportunity to just cancel the transaction, not ship a product in which you never have to deal with this again. If the transaction has already been been sent through and processed, they can. If they agree, they can issue a credit.

And once that credit posts, then we can resolve the dispute without ever actually getting into a chargeback. Or frankly, if they do nothing or they disagree. It'll just continue down this process. So Smart dispute is very good at ensuring that the disputes and the chargebacks that we process are valid. But when we integrate with Ethoca services, we shift the resolution point much earlier in this process.

If we were to go back to that prior slide with the funnel, we're moving things way up to the top. And when we do that, obviously we save operational costs. That allows our our issuing banks, for example, to lower their write off thresholds. And we certainly improve customer satisfaction. I'm going to turn it over to Natalina Biafore.

But before I do that, I just want to say what a pleasure our partnership has been. It's been amazing to have a shared vision of helping banks save money and improve customer experiences. And I really do look forward to our continued collaboration, leveraging each other's strengths and in finding ways to maximize value for our customers. Thanks, Mike. Likewise, it's a pleasure to be here today with all of you.

And of course, we do value our relationship with Pega as well. My name is Natalina Biafore. I am a Director of Platform Partnerships at Ethoca, a Mastercard company where I lead strategic issuer partnerships globally with the focus of preventing fraud and preventing chargebacks. It's a pleasure. It's a pleasure to speak with you as it relates to the impactful partnership between Ethoca and Pega, because together, we enable issuers that can leverage Pega solution to easily connect to Ethoca product suite, all focusing on chargeback prevention and reducing that operational expense that's tied to a chargeback.

So our Ethoca alerts product is our flagship product, and what that means is we've originated we launched in 2010, and it is a unique collaborative network between issuers and merchants to help mitigate fraud and prevent chargebacks. As we've expanded as an organization, we continue to build strategic partnerships in a brand scheme agnostic environment. While we are proud to be a subsidiary of Mastercard, we still operate as a separate entity. Approximately 40% of our transaction data originates from visa, and we also have formal relationships with other card schemes like American Express, discover, and so on to enhance our value proposition. Ethoca has formed strategic partnerships with multiple other payment platforms in the ecosystem, and our network is comprised of over 11,000 issuers, issuer processors, technology partners and dispute management platforms like Pega who send data to us on behalf of the issuers Assures to send to our extensive merchant network that comprises of over 15,000 merchants, either merchants, direct merchant partners, acquirers, all through our robust API infrastructure.

We're especially excited to share with you that we form partnerships with the likes of Stripe and Fiserv, and what that means to all of you is that we will send or they will send alerts through their merchant network to thousands, millions of merchants globally. And what that means is we we sincerely continue to build our network to ensure that we drive value to everyone in our ecosystem. So many of us, as Mike mentioned, have experienced seeing a charge on your banking statement that you didn't recognize and you're forced to call into your bank to dispute that transaction. We all know that transactions that we don't recognize, for example, that have a billing descriptor that have no reference to the merchant name can cause confusion. And that's the majority of the reason why a chargeback is initiated.

Mike obviously explained what a chargeback is, but what we've done with Ethoca consumer clarity. We deliver purchase information through various ways by providing clean merchant name, by providing a merchant logo, by providing the digital receipt to understand what was actually purchased directly to the customer through their their mobile banking app. And all of this provides the ability for us to empower your cardholders to understand what was purchased to avoid a call going into the call center. We see 40% reduction in disputes when the customer is presented with a digital receipt, or at least understanding what was purchased. And through Pega smart dispute, they're leveraging our Consumer Clarity API so that they can provide that merchant rich data to the customer service agent or the back office teams, empowering those agents to be able to talk up that dispute at the first interaction.

This also helps reduce average handle time, of course. And then improving the customer experience overall is what's more important. And in the event the customer doesn't recognize a transaction, that's where our alerts comes into play. They're there. Um, through Pega smart dispute, we have the ability to get both pending and settled transaction so we can share that with our merchant network to be able to get a recovery.

And what that means is you provided you prevented a chargeback, but you also have the ability to prevent the provisional credit and ensuring that you're not absorbing any costs associated with any of those transactions. So there's been a lot of work across the payment industry, um, to make payments seamless, right? So no matter where, when or how the payment was made, whether it was a click or tap or a face scan, there's a lot of technology that was built upfront to help the payments. Very seamless. Right? Um, but on the other side of the spectrum, when the purchase has been made, what support is available to help us understand what that transaction was? Where with more of our purchases being done online, and with the growth of the subscription economy, it's becoming more and more important for us to be able to provide additional information to the cardholder so they can better track their finances and reoccurring payments. Right now, the details of the transaction is available through multiple platforms.

If you think about it, your digital transaction is available through your issuing banking app, but the details of what you purchased might be available in the merchant app or via email, or through an actual physical receipt. This makes it harder for the average person to understand what transactions took place, especially if it's a payment that's reoccurring. I took an example in my household, so between my husband, my daughter and myself, we have over 30 subscriptions. The average subscription per person is actually about ten. I would like to take a poll in the audience.

How many of you have subscriptions? Between 5 and 10. Ten and 15. Well above 25. I guess the two of us are the only ones, right? This makes it very hard for the average person to remember and track and manage those purchases that were made. And of course, especially if it's a reoccurring transaction.

Like many of us, we forget about those subscriptions all the time. So to be able to provide this information in one application through your mobile banking app would be absolutely imperative for our customers to be able to make sure that they can manage and track their their purchases over a period of time. So giving people more subscription details available in one banking app allows us to be able to pause transactions. We have the ability to check the status of of a subscription. We can also maybe cancel the subscription.

Um, and then obviously there are different levels of subscriptions that you can possibly change. Imagine this was available through one banking application. You're issuing banking application. And we have the ability to provide that to you. We found that over 24% of consumers actually call into their bank to investigate a transaction within the last 12 months, and simply because of transaction confusion.

So again, our our subscription controls definitely does help in those aspects. And of course through Pega smart dispute, they are leveraging our Consumer Clarity API for our call center channel. And that provides additional information to your agents regardless of the channel, whether it's the call center, whether it's the back office or even the branch. Right. Giving them the ability and empowering them to be able to talk off that dispute at the first interaction versus the customer having to call in multiple times, which we've seen.

Right. All of this helps to reduce the average handle time for those agents, because they're not having to create a chargeback in every instance. They're helping the customer recognize the transaction. As Mike had mentioned, we're seeing 70% deflection when the agent is providing that level of detail to the customer directly. So we spoke about our solution being upstream and in the digital first.

Right? But what we haven't really touched was in the event the customer is adamant the transaction is not theirs, which happens quite often. We have the ability to help them before a chargeback is being presented or initiated. So as we all know, and as Mike explained, a chargeback process is very archaic. It's lengthy, it's expensive. It's truly a dispute between a merchant and an issuer as it relates to the liability.

And so what we do together is we have the ability to present all of this data to a merchant directly so we can get a refund on behalf of the issuer so that we're avoiding the chargeback where possible. Avoiding a chargeback we're preventing a chargeback does help the issuer ensure that they're not consuming any additional costs associated with chargeback, but more importantly, helping the customer and improving that customer experience. Not having to absorb any cost associated with a transaction where you have no chargeback rights, or if the transaction is uneconomical for you to proceed to chargeback. So let's take a look at what our dispute workflow looks like. So the issuer obviously is working closely with our partners such as Pega.

When a customer is calling into their bank, their bank is sending us that data directly to Pega. Pega is sending it over to Ethoca, and we transmit that information over to the merchant in hopes that they can intercept the goods, in hopes that they can actually prevent the goods and services from being shipped or rendered us stopping fraud where possible. So an example of Uber or an example of a subscription. They can cancel that subscription so there's no longer any future fraudulent transactions. We've had issuers that have sent us data that were, um, issuer liable, and we were able to recover multiple dollars in, in and on behalf of those issuers.

As you can see, highlighting again, as we are a Mastercard company, we still operate as a brand agnostic in a brand agnostic scheme environment so that we have the ability to help you, where possible, recover transactions regardless of the brand. So our alerts has helped numerous people as it relates to issuers leveraging Pega smart dispute. In this one example, this North American issuer has been leveraging Pega Smart dispute for some time, and they've been able to avoid over 200,000 chargebacks, over $18 million worth of fraudulent and non-fraudulent Transactions over a period of 12 months. So imagine the operational expense that's tied to that. The avoiding of the provisional credits where possible.

All of that is imperative so that we have an understanding of how do we help you leverage our systems so that you have the ability to help the customer as well. While remaining competitive in between your peers. So as it relates to Pega smart dispute, what we want to do. There's a number of issuers that are possibly in here that obviously you know who Ethoca is and how we exist and how we work with Pega. But you might not be able or you might not be using Ethoca via Pega at this time. We'd love to work with each of you to help be able to help you recover transactions in a timely manner, to be able to ensure that you're not absorbing any unnecessary costs associated with the chargeback. To improve your overall customer experience where possible, so that you can make sure that your NPS scores are quite high and to. Especially be very competitive in the market, um, along with your peers. If you haven't already gone to the innovation Hub, Bindu is there and she has the ability to showcase the Ethoca alerts workflow. So you can actually see how we're connected with Pega.

And then we obviously can have the conversation as it relates to consumer clarity and how we can work together to be able to provide and empower your cardholders to ensure that they recognize a transaction and of course, avoiding the call going into the call center where possible. And at this point, we have the ability to answer any questions you may have. Can we give them a round of applause for. Coming up, that's always a good thing, although comical, does not feel good. So again, if you have any questions, I would encourage you to come down to either one of the microphones, and then you can play Stump the Chump with Natalie and Mike.

On that. So we're waiting for that. I think one of the things it was interesting, we were talking about this, I think, at breakfast this morning, this is a question that comes up a lot, and it has to do with configurable SLAs around this process of notification to the merchant and how long we wait for the credit to come back in. And so we know this is a question that comes up constantly. So we thought we'd go ahead and tee this one up as a starter point.

You know is it fixed in terms of the time frame for this. Or what can we do with the SLA management elements of this. From the smart dispute perspective. Yes. Yeah.

So out of the box smart dispute for for alerts. Um, when we send an alert through Ethoca, the merchant has three days to respond affirmatively or negatively or not at all. Um, at which point, um, you know, if they if they don't respond, we'll we'll proceed. Um, or they decline, then we'll proceed. If they if they accept and agree and issue a credit, then we wait three days for that, for that credit to appear.

Once that credit is posted, then we resolve the dispute entirely and we're we're done. But that is configurable. Yes. And from an ethical perspective, we would suggest, especially where Mastercard is coming into play, that you wait for a period of ten days. The reason being is it might take a merchant, a period of time for them to find the transaction, send a refund, and to make sure that the refund is actually received in the account in question or the disputed transaction in the in the customer's account.

So it is configurable. We will make recommendations that we feel are suitable for you based on the card schemes. Um, and then we can help support you in any possible way so that we ensure that you can get a refund as quickly as possible. Yeah. And just to be clear, that item is sitting in a pending status.

Nobody's working on it. It's just waiting. The smart dispute is going to wake up once a day. It's going to check, you know, last night's posting file. It's going to say did this credit come through? Can I resolve this case based upon a matching inbound credit.

And if it finds it then we're going to be done. Nobody's going to touch this thing. So it's you know, this is the ultimate straight through process where if you've enabled a digital self-service channel. So the customer saying, I've got this problem and it goes through Ethoca and the merchant decides to issue the credit. No, no employees were harmed in this process of actually getting this dispute taken care of.

So we like that. All right. So we got a question over here. Yeah. Can we hit the we're not getting.

Try it again. There you go. It's on, it's on. Okay. So from the Pega perspective, how do you reconcile the refunds when they come? What are the data elements you are looking for to match funds coming back to the accounts, and so on.

If you can elaborate a little bit. Yeah. So there are some common identifiers of match to allow us to match. I forget the specific property names. My apologies.

Um. Uh, yeah. Right. To allow us to to recognize that this is a, a a credit refund for the associated transaction. So it's a it's a rather straightforward matching.

Yeah. Aaron, if this is where we have conversations with customers, if the merchant didn't provide a full refund, what do you do. You know, do you do fuzzy. Do you do a fuzzy match. But then you've got to make a decision.

Are you going to write off the difference. And so you have to make some decisions around that. If it's not a 100% match, that's the easy. So then you get into the questions of well, what do you do if it's close but not quite. And again, that can all be automated.

But the arm is typically the thing that's going to be the leading indicator in addition to the amount for the items that we're looking for. So what do you see in the partnership coming down the road between Ethoca and many things? Right. Mike I sure hope so. Yes. Um, we will ensure that our our teams continue to work together.

We value this partnership. And what we'd like to do is make sure that you're also competitive in the marketplace. As we discussed earlier, how do we work together to ensure that we're aligned, that we're able to scale, um, for all product solutions and that our teams are working together as we have mutual customers in place? That's right. Yeah, we have, um, we have a very open dialog between us. Right.

So not joking at all. Our product managers, actually the product manager who's who's giving the demos today. Yes. Um, is is on email threads and and meetings and calls as needed on a weekly basis. Very open in our discussions with with Ethoca about what we're trying to do with the product and how best can we leverage Ethoca services, and also to try to understand where where Ethoca is going as well.

Right. What services are they going to bring to bear that we can look to, to leverage, to maximize value for, for our shared customer base? So I've been when I said, you know, I think it's been like a refreshing and amazing experience. It's it it does feel like a true partnership, not a not a contractual sort of sort of thing. Um, yeah. And, you know, I think we have a lot of really good ideas that we're starting to explore and brainstorm a little too early to to share any of that here.

But I think we're going to, we're going to see some great things out of this partnership. Okay. Great. I don't see anybody else ready to queue up. So with that, if you give one more round of applause to our speakers..