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Is this the Death of Chargebacks?

  • Mike Conway (Platinum Partner, ChargebackHelp)
  • May 28, 2020
  • 5 minute read

If you want to understand how our platform can help your business specifically, give us a call today! Visit us at or go old-school and call us +1.888.821.5302. 

There’s two ways a transaction can go: a good way, and a bad way. The good way is where you make a sale, get the money, and move on. Then there’s a bad way when for whatever reason, a dispute arises and your revenue is in jeopardy. This is known as a chargeback, which allows cardholders to obtain refunds for products and services by side-stepping the merchant and going through their card-issuing bank. Chargebacks are expensive and can even cost merchants their ability to process credit cards altogether. 

Visa and Mastercard are about to fundamentally change the dispute process. They have bought up the mechanisms which merchants rely on to resolve disputes. In doing this, they’re aiming to delete chargebacks altogether for merchants. 

If these changes are widely adopted by Visa/Mastercard issuers, we could very well see the death of the chargeback as we know them. We’ll explain exactly how this will likely shake out, and how subscriptions merchants can position themselves to reap the benefits. But first, some context… 


The chargeback was first introduced in the U.S in 1978, as part of the Electronic Fund Transfer Act (EFTA). This disco-era concept has endured largely unchanged into the internet age; as such, the chargeback is crudely adapted to today’s eCommerce markets and is widely abused. A cottage industry of solutions providers have spawned to help today’s merchants manage disputes with yesteryear’s tools; two of the most prominent being Verifi and Ethoca. 

Both founded in 2005, Verifi and Ethoca blew up on the idea that they can alert merchants to pending chargebacks when a dispute is raised with an issuing bank. By law, issuers can not issue a chargeback until 15 days after a cardholder initiates a dispute. During that interim, Verifi and Ethoca alert the merchants who subscribe to their service that they must issue a refund or face a chargeback. Merchants lose the revenue just the same with a refund but save themselves from the fees and penalties of a chargeback. 

If a merchant does not agree with a dispute, they can fight it through representment—a process where the merchant submits “compelling evidence” to the issuing bank that further ties the cardholder to a purchase. These are things like delivery confirmations, signatures, and device fingerprinting to name a few. But the merchant has to let the dispute escalate to a chargeback in order to fight back. And even if they win, the fees and penalties of the chargeback remain on the ledger. 

Verifi and Ethoca came up with excellent solutions to the merchants’ representment problem: a streamlined data-sharing infrastructure that sends compelling evidence to issuers and cardholders in real-time. If a customer or their bank needs more information, it would appear on their bank statements, as an up-front representment. Verifi’s Order Insight and Ethoca’s Eliminator were ahead of their time, but issuers have not hitherto adopted these tools on a scale that merchants can rely on. 


While many issuers slept on Verifi/Ethoca and their innovative products, Visa and Mastercard were wide awake. In 2019, amid dueling acquisition sprees, Visa scooped up Verifi and Mastercard bought Ethoca. The cards are now all-in on the dispute management game, merging Verifi/Ethoca capabilities into their extensive networks and stimulating adoption with their influence. And as anyone who has worked with the card schemes knows, when they want you to do things a certain way, they’re not asking. 

With the Verfii/Ethoca infrastructure now running on the Visa/Mastercard networks, dispute management may potentially change for the better. Order Insight and Eliminator are now bundled into Visa/Mastercard processing. Both schemes are expecting the majority of their issuers to automate the dispute process over their networks. 

This automation will give merchants a direct line of communication to resolve disputes, in real-time. With participating issuers, merchants can now deflect friendly fraud disputes by sending compelling evidence immediately, so cardholders and their banks can see exactly what/when/how they purchased and received goods and services. Merchants can also automate resolutions for fraudulent transactions by integrating and customizing fraud data to better qualify those instances where a refund is warranted. 


Merchants will not passively receive these benefits; there are steps they must take to deflect or resolve disputes and recover revenue. First, merchants must automate the delivery of their transaction data. There are roughly 250 data points to integrate for transaction data capture and transmission. This requires a platform to integrate their payment gateway, CRM, and other transaction data for the timely and secure flow of information. 

As a chargeback management company, ChargebackHelp had already been working with Verifi/Ethoca, integrating their Order Insight and Eliminator products into our dispute management platform, ChargebackHelp Plus (CBH+). With the recent maneuvers by Visa/Mastercard, CBH+ is now the premier solution for merchant dispute management. 

The new Visa/Mastercard system creates a 1:1, adoption-to-reduction probability. If 100% of issuers get on board, it is probable that we can reduce close to 100% of chargebacks. This is the death of chargebacks as a friction point in merchant processing! 

While the ball is in the issuers’ court, get in position to take full advantage. As of right now, ChargebackHelp can resolve and deflect disputes automatically with participating issuers, and more banks are coming online every day. 

If you have a chargeback problem and you’re serious about dealing with it, then ChargebackHelp Plus is right up your alley. When you integrate your processing and CRM onto CBH+, we will be able to deflect disputes entirely, refund alerts immediately, and reduce chargebacks more effectively than ever before. 

If you want to understand how our platform can help your business specifically, give us a call today! Visit us at or go old-school and call us +1.888.821.5302. 

Written by Mike Conway
Platinum Partner, Chargeback Help


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