Provisional Credit

Provisional credit allows institutions to temporarily credit a borrower’s account while a dispute or operational discrepancy is under investigation. This mechanism supports operational efficiency and customer satisfaction, especially in card and transaction-based products where speed of resolution is paramount.

Use Cases

Transaction Disputes

Fraud or Unauthorized Use: Provide funds back to a customer while fraud claims are under review
Merchant Errors: Address complaints involving double charges, incorrect amounts, or undelivered goods
ACH or Card Chargebacks: Manage the interim period while funds are recalled or retracted from a merchant or partner bank

Operational Continuity

Avoid Service Interruptions: Restore access to credit or debit accounts during resolution windows
Improve CSAT: Demonstrate responsiveness to borrower concerns without requiring immediate adjudication
Time-Sensitive Workflows: Support operational SLAs where investigations span multiple days or teams

Strategic Considerations

Why Enable Provisional Credit?


Customer Experience	Offering provisional credit can differentiate your servicing experience, particularly in card programs where immediacy is expected. Customers who feel heard and credited upfront are more likely to trust the resolution process.
Operational Agility	Allows servicing and ops teams to decouple resolution timelines from customer-facing impact. You can extend investigation periods without harming borrower access to funds.
Regulatory Expectations	In certain regulated environments (e.g., Regulation E in the U.S.), provisional credit may be required within a defined window for certain dispute types. Systems that support automated crediting reduce compliance risk.

📣
Enabling it, is as easy as applying the policy. Look at our creating a line of credit template API to see where to apply operational_policies.disputes.auto_issue_provisional_credit

Why You Might Not Enable it?


Credit Risk	If the dispute is later found to be invalid, the institution may need to claw back funds, which carries repayment risk—especially in products without guaranteed recovery paths.
Complex Accounting	Provisional credits must be clearly segregated in financial systems to avoid misstating balances, interest calculations, or delinquency logic.
Fraud Vectors	Without appropriate controls, provisional credit can be abused. Actors may learn to trigger disputes in order to access temporary funds.

Frequently Asked Questions

How long should provisional credit last?

This depends on your internal investigation timelines and regulatory obligations. Many institutions default to 60-90 business days for card disputes, though this may vary based on region and risk appetite.

What types of products benefit most from this feature?

Card and revolving credit products see the most value, as they involve frequent transactions and customer touch points. However, even installment products can benefit in niche servicing scenarios (e.g., misapplied payments, incorrect fees).