Handling Disputes In Ecommerce

💳 𝐂𝐡𝐚𝐫𝐠𝐞𝐛𝐚𝐜𝐤𝐬 hurt more than profits, they can block your ability to get paid. Here’s 𝗵𝗼𝘄 𝗖𝗵𝗮𝗿𝗴𝗲𝗯𝗮𝗰𝗸𝘀 𝘄𝗼𝗿𝗸, and what you can do to stay ahead: 𝐊𝐞𝐲 𝐓𝐞𝐫𝐦𝐬 𝐓𝐨 𝐊𝐧𝐨𝐰 ► 𝐃𝐢𝐬𝐩𝐮𝐭𝐞: When a cardholder questions a charge—may trigger a chargeback. ► 𝐂𝐡𝐚𝐫𝐠𝐞𝐛𝐚𝐜𝐤: Issuer reverses funds, often due to fraud or complaints. 👉 Visa says “dispute”; others use “chargeback.” ► 𝐏𝐫𝐞-𝐃𝐢𝐬𝐩𝐮𝐭𝐞 𝐀𝐥𝐞𝐫𝐭: Warns the merchant before chargeback, enabling early action. ► 𝐑𝐞-𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐦𝐞𝐧𝐭: Merchant submits evidence to contest a chargeback. 🔄 𝐂𝐡𝐚𝐫𝐠𝐞𝐛𝐚𝐜𝐤 𝐏𝐫𝐨𝐜𝐞𝐬𝐬 𝐎𝐯𝐞𝐫𝐯𝐢𝐞𝐰: 1️⃣ 𝐂𝐡𝐚𝐫𝐠𝐞𝐛𝐚𝐜𝐤 𝐈𝐧𝐢𝐭𝐢𝐚𝐭𝐢𝐨𝐧 A cardholder disputes a charge within 120 days. The main reasons include: ► Fraud ► Consumer disputes ► Processing errors ► Authorization issues 2️⃣ 𝐏𝐫𝐞-𝐃𝐢𝐬𝐩𝐮𝐭𝐞 𝐑𝐞𝐯𝐢𝐞𝐰 Before a formal chargeback, the issuer/cardholder may: ► Run fraud checks ► Review the transaction ► Check receipts or contact info Goal: resolve early and avoid chargebacks. 3️⃣ 𝐏𝐫𝐞-𝐃𝐢𝐬𝐩𝐮𝐭𝐞 𝐀𝐥𝐞𝐫𝐭𝐬 If unresolved, alerts help merchants avoid escalation. To prevent formal chargebacks, merchants may: ► Use auto-rules ► Issue a quick refund 4️⃣ 𝐃𝐢𝐬𝐩𝐮𝐭𝐞 𝐒𝐮𝐛𝐦𝐢𝐬𝐬𝐢𝐨𝐧 If not resolved, the chargeback is filed. Merchants (e.g., Amazon) get it via their acquirer, and the cardholder gets a provisional refund. 5️⃣ 𝐑𝐞-𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐦𝐞𝐧𝐭 Merchants can: ► Accept or challenge the chargeback. ⚙️ Platforms like Solidgate automate: ► Response strategy via rules/AI ► Evidence collection (e.g., delivery proof, receipts, emails, device ID) ► Submission and process management The acquirer (e.g., Adyen) sends the response to the issuer. 6️⃣ 𝐈𝐬𝐬𝐮𝐞𝐫’𝐬 𝐑𝐞𝐯𝐢𝐞𝐰 The issuer (e.g., Barclays) reviews evidence: ► If valid, merchant keeps the money ► If not, chargeback is upheld 👉 Merchants always pay a fee. 7️⃣ 𝐏𝐫𝐞-𝐀𝐫𝐛𝐢𝐭𝐫𝐚𝐭𝐢𝐨𝐧 & 𝐀𝐫𝐛𝐢𝐭𝐫𝐚𝐭𝐢𝐨𝐧 𝐏𝐫𝐞-𝐀𝐫𝐛𝐢𝐭𝐫𝐚𝐭𝐢𝐨𝐧: If either side disputes the outcome, this step allows for further negotiation. 𝐀𝐫𝐛𝐢𝐭𝐫𝐚𝐭𝐢𝐨𝐧: If still unresolved, the dispute escalates to Visa/Mastercard, who make the final ruling. 🚨 𝐖𝐡𝐲 𝐇𝐢𝐠𝐡 𝐂𝐡𝐚𝐫𝐠𝐞𝐛𝐚𝐜𝐤 𝐑𝐚𝐭𝐢𝐨𝐬 𝐇𝐮𝐫𝐭 𝐌𝐞𝐫𝐜𝐡𝐚𝐧𝐭𝐬: High chargeback rates can lead to lower conversion, financial penalties, higher processing fees, and enrollment in card network monitoring programs, potentially resulting in the loss of payment processing altogether. Source: Solidgate - https://bit.ly/3I7DzYi More of this, and the latest Payments news in my newsletter: https://lnkd.in/dXtzP3AV Find this helpful? [ 𝗿𝗲𝗽𝗼𝘀𝘁 ] Anything to add about this subject? [𝗶𝗻𝘃𝗶𝘁𝗲𝗱 𝘁𝗼 𝗰𝗼𝗺𝗺𝗲𝗻𝘁] Nice story, Marcel. Next! [ 𝗹𝗶𝗸𝗲 ]

𝐇𝐨𝐰 𝐝𝐨 𝐂𝐡𝐚𝐫𝐠𝐞𝐛𝐚𝐜𝐤𝐬 𝐰𝐨𝐫𝐤? — A Full Breakdown by Solidgate👇 Chargebacks aren’t just refunds — they’re structured, multi-party investigations triggered by disputes. — 𝐖𝐡𝐚𝐭 𝐢𝐬 𝐚 𝐂𝐡𝐚𝐫𝐠𝐞𝐛𝐚𝐜𝐤? ► A chargeback is a payment reversal initiated by the cardholder’s issuing bank when a transaction is disputed. ► The funds are provisionally returned to the cardholder, and the burden shifts to the merchant to prove the transaction's legitimacy. ► Parties involved: → Cardholder → Issuer (Chase, Citi) → Acquirer(Adyen, Worldpay) → Card Networks (Visa, Mastercard) → Merchant → Dispute Management Platforms (Solidgate, Signifyd) Some platforms are able to manage multiple components of this process - Solidgate,. Checkout.com, Payplug, Stripe... — 𝐓𝐡𝐞 𝐂𝐡𝐚𝐫𝐠𝐞𝐛𝐚𝐜𝐤 𝐏𝐫𝐨𝐜𝐞𝐬𝐬 — Step by Step 1️⃣ Chargeback Initiation The cardholder submits a dispute with their issuer. The issuer assigns a chargeback reason code and debits the transaction amount from the acquirer. 2️⃣ Pre-Dispute Review Issuer review the transaction to determine whether the chargeback can be resolved before escalation. Using real-time transaction data, past behavior, or issuer tools, the bank may help the cardholder recognize the charge. 3️⃣ Pre-Dispute Alerts If the dispute is not resolved, pre-dispute alert services like Verifi Inc.’s Order Insight or Ethoca Alerts notify the merchant. The merchant can proactively issue a refund to avoid a chargeback. 4️⃣ Dispute Submission If the merchant doesn’t act, the chargeback is officially submitted. The acquirer receives a notification and the funds are withdrawn from the merchant’s account. The merchant is given a limited time window to respond or accept liability. 5️⃣ Re-Presentment The merchant can challenge the chargeback with supporting evidence: → Proof of delivery or usage → Refund or cancellation policies → Communications with the cardholder → Screenshots, metadata, or transaction logs The acquirer forwards this evidence to the issuing bank for reconsideration. 6️⃣ Issuer Review & Decision The issuing bank evaluates the evidence: → If it validates the merchant’s case, the chargeback is reversed and funds are returned. → If not, the chargeback stands and the provisional credit becomes permanent. 7️⃣ Pre-Arbitration & Arbitration If either party rejects the decision, pre-arbitration is triggered. If resolution still isn’t achieved, arbitration follows → costly process for all parties. — 𝐓𝐡𝐞 𝐈𝐦𝐩𝐚𝐜𝐭 𝐨𝐟 𝐂𝐡𝐚𝐫𝐠𝐞𝐛𝐚𝐜𝐤𝐬 📉 ⚠ Higher operational costs and processing time ⚠ Placement in card network monitoring programs ⚠ Financial penalties and increased processing fees ⚠ Risk of payment service provider termination Chargebacks are a major issue tied to payments, having the right infrastructure and partner is crucial. — Source: Solidgate ► Sign up to 𝐓𝐡𝐞 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 𝐁𝐫𝐞𝐰𝐬 ☕: https://lnkd.in/g5cDhnjC ► Connecting the dots in payments... | Marcel van Oost

Chargebacks 101: the part of payments nobody explains When you start accepting payments… Nobody warns you about this. But it can quietly destroy your margins. 🤓 What is a chargeback? A chargeback is a forced refund initiated by the customer’s bank. Not a normal refund. 👉 It involves: the customer the issuing bank the card network (Visa / Mastercard) the acquiring bank And you… the merchant. And... (the worst part), you usually find out when the money is already gone. ⚙️ How it works (when used properly) Legitimate case: Customer spots an issue (fraud, product not received, wrong charge) Contacts their bank The bank initiates a chargeback A dispute process starts The merchant can respond (representment) 👉 If the merchant proves the transaction was valid → funds can be recovered 👉 If not → money is lost + fees applied ✔️ It’s a consumer protection mechanism ✔️ It builds trust in the payments ecosystem 🚨 How it’s actually used (in many cases) Here’s the uncomfortable truth: 👺 “Friendly fraud” The customer: received the product ✔️ used the service ✔️ and still disputes the transaction ❌ Typical reasons: “I don’t recognize this charge” Avoiding refund processes Pure abuse of the system 💥 Result: Merchants lose revenue… even when everything was done right. 📊 The data you should not ignore 60%–80% of chargebacks are friendly fraud For every €1 disputed, merchants lose €2–€3 in real cost (product + logistics + fees + operations) Critical thresholds: ~0.9% → early warning zone >1% → monitoring programs (Visa/Mastercard) >3% → potential account termination Resolution time: 👉 30–90 days And the biggest problem: 👉 most merchants don’t fight them 🧠 The biggest misconception Chargebacks are not “part of doing business”. They are a core KPI. 🛠️ How to actually reduce them It’s not just fraud prevention. It’s experience + control: ✔️ Clear product/service descriptions ✔️ Recognizable billing descriptors ✔️ Strong customer support ✔️ Smart use of 3DS (not everywhere) ✔️ Tokenization & recurring payment control ✔️ Proper evidence management 👉 And above all: measure everything. You can optimize your fees. You can improve your checkout. But if you don’t control your chargebacks… you’re losing money without realizing it. 🚀 What’s next This is just the beginning. Chargebacks behave very differently depending on the industry: ✈️ Travel 🚗 Mobility / Car rental 🛍️ eCommerce 🎟️ Ticketing I’ll break them down by vertical in upcoming posts. If you made it this far… 💬 Do you know your current chargeback ratio? 📊 And your real cost per dispute? #Payments #Fintech #Chargebacks

Read this insurance case the other day, and I couldn’t believe the reason the insurer gave. Here’s what happened. A man was suffering from a painful rectal condition—chronic fissures, spasms, inflammation. He went to a multispecialty Ayurvedic hospital that combined Ayurvedic care with supportive allopathic treatments. The kind of place known for success in cases like his. The treatment worked. But the claim? Denied! When he filed for reimbursement, the insurer rejected it outright. Why? “Ayurvedic treatment not covered.” But that wasn’t even true. His policy did cover AYUSH treatments. And he got the treatment at a proper Ayurvedic hospital. Here’s the twist: the insurer said the claim was being rejected under Clause 4.16. What’s with this new Clause 4.16? Well- it doesn’t even exist. Neither in reality nor in the policy. Turns out, the TPA (Third Party Administrator) had used an old version or possibly another policy’s wording to reject the claim. When the case went to the Ombudsman, the insurer couldn't even produce documentation that Clause 4.16 existed in this policy. So, it was a rejection based on a clause that didn’t exist. Another lapse? The letter wasn’t signed by the insurer. It was signed only by the TPA. See - you can choose the right hospital, the right treatment. And still, your claim can be rejected—because someone used the wrong version of a policy. So, what should you do? Always cross-check rejection reasons against your own policy document. Ask for the exact clause number and a copy of the version they’re using. And if the rejection comes only from a TPA—escalate it to the insurer directly. TPAs aren’t the final authority. Insurance claims shouldn’t be a guessing game. And if they ever turn into one—you shouldn’t be playing alone. *** Help share this post with 1 person in your network in a bid to help us make more people insurance-aware :)

As my chargeback debacle with American Express and a merchant enters month number 3, I have to ask myself 'is the chargeback system broken?'.👇 The chargeback system is pitched as a solution that provides a balance for the interests of both consumers and merchants, but opinions on whether it is weighted in favour of one party or the other vary. Right now I am in a state of 'chargeback fatigue', something I am sure anyone that has had to go through the process consumer side recently can relate to. _____________________________ Consumer Side: Consumers need to provide evidence to substantiate their claims in chargeback disputes. This can be challenging if they don't have detailed documentation, especially in cases of disputed quality or service delivery. Merchant Side: Merchants can often dispute chargebacks and have an opportunity to present evidence (e.g. proof of delivery or customer acknowledgment). This process can tilt disputes in their favour if they are adept at managing such disputes. _____________________________ Process Factors: 👉 Fees. Some chargeback systems impose penalties or fees on merchants for successful consumer disputes, encouraging merchants to preemptively fight chargebacks aggressively, even when a consumer's claim may be valid. 👉 Fraudulent Chargebacks (Friendly Fraud). Chargebacks were designed to protect consumers from fraud or unfair practices. Card networks often side with consumers in cases of doubt, especially in fraud claims. While some merchants may feel burdened by fraudulent chargebacks (where consumers falsely claim refunds), consumers have stronger protections for genuine disputes. 👉 Merchants often bear the burden of proof in disputes. They need to demonstrate that the transaction was valid, services were rendered, or goods were delivered. This can be time-consuming and costly. But the evidence provided to win such disputes can also be shockingly poor, as evidenced in my recent post on this matter with AMEX and said merchant: https://lnkd.in/eFeQg7VS. 👉 Size and sector. Larger merchants or certain industries may have systems in place to handle disputes more effectively, while smaller merchants may struggle. 👉 Regional variables. Regions like the EU have specific consumer protection laws that may affect the chargeback system's operation compared with other regions. 👉 Card Network Policies. Visa, Mastercard, and other networks have different policies that may sway the process differently for consumers on a claim by claim basis. _____________________________ Ultimately, whether the system feels weighted toward merchants or consumers depends on how the rules and processes are implemented and experienced in practice. All I know is it feels a lot more merchant weighted to me right now...and not for the first time!

Restaurants can no longer automatically add service charges in India. Under the Consumer Protection Act, 2019, forcing a service charge is treated as an unfair trade practice, with penalties up to ₹50k. What does this mean to you? • Service charges are strictly voluntary. • ⁠Refusal to pay can't affect service. • ⁠GST cannot be applied to any service charge added without consent. • ⁠No restaurant can collect the charge under any other name. At its core, this is about pricing transparency and informed consent. A fair market works only when customers clearly understand what they’re paying for. PS: Service should earn a tip, not assume it.

When AI agents start shopping, who’s responsible for the chargeback? Your payments dashboard says the transaction was authorized. The issuer approved it. The card details are valid. Yet the customer still files a dispute. This situation is becoming more and more likely as AI agents begin making purchases on behalf of consumers. Imagine this scenario: A customer asks their AI assistant to reorder groceries. The agent selects the premium version of a product and completes the purchase automatically. The order ships. Three days later, the customer disputes the charge. Now your team must answer a difficult question: Did the customer actually authorize the agent to make that purchase? This is the new challenge emerging with agentic commerce. According to McKinsey, AI-driven commerce could generate up to $1 trillion in U.S. retail revenue by 2030. At the same time, 87% of payments leaders say trust will be the biggest barrier to adoption, and 78% expect fraud to increase as agentic payments scale. Most merchants have spent years optimizing their payment stack around three priorities: - Improving authorization rates - Reducing processing costs - Routing transactions across multiple PSPs Those capabilities remain essential. But they can’t solve the core problem autonomous transactions introduce: proving what actually happened. When an AI agent initiates a purchase, traditional payment records rarely capture: - Whether the agent had permission to transact - What spending limits the user defined - Which system verified the agent’s authority So when a dispute occurs, the evidence trail is often incomplete. This is why many payment leaders are starting to think about Trust Orchestration. Instead of focusing only on transaction execution, trust orchestration adds a layer that verifies and documents the full transaction lifecycle: - Who (or what) initiated the payment - Whether the action followed approved policies - What consent existed at the moment of purchase - The complete chain of events leading to the transaction Think of it as creating a verifiable record of intent, identity, and authorization, not just payment approval. As autonomous commerce grows, merchants will face a new operational requirement: Your payments infrastructure must not only process transactions efficiently. It must also prove that those transactions should have happened in the first place. Teams that build this trust layer into their payments stack now will be far better positioned when AI-driven commerce becomes part of everyday purchasing. Insights by IXOPAY #fintech #ai

A client of ours reached out, frustrated and exhausted. His reimbursement claim for chemotherapy had been rejected. Not once—but twice! He had already undergone cancer surgery covered under his corporate health plan. The chemo sessions were part of his ongoing treatment. So naturally, he filed a claim. And then came the first roadblock. Rejection #1: The insurer raised a query asking for documents related to Rheumatoid Arthritis (RA). You see, what’s odd is that this condition had nothing to do with his treatment. So where did it come from? Turns out, one of his recent blood tests had markers suggesting RA. But here’s the thing—it wasn’t in his medical history when he bought the policy. It surfaced much later. We clarified all this, backed it up with medical documentation, and the insurer launched an investigation. But just when we thought it was all sorted out—Rejection #2 came in. This time, it was due to a reference in the medical file about a psychiatrist consultation. But our client had no record of such a visit. So—claim denied. Again. This time for “document deficiency.” At this point, many would’ve given up. But not our client. And not us. We escalated the matter with the insurer again, and helped the client locate the missing document. This reopened the case and triggered another investigation. Even then, there was hesitation. So we took it further—we prepared the case for the Ombudsman. After a detailed hearing—where we helped the client present every fact, timeline, and report—the Ombudsman ruled in the client’s favor. The claim was finally approved! The takeaway? Even the most genuine claims can be rejected for reasons unrelated to the treatment itself. So always have an advisor (preferably Ditto Insurance :)) who can help you out in situations like these.

AI agents will retry. They will always retry. We have to be ready for it. Given how long-running agentic loops are, network drops, timeouts, and rate limits kicking in are super common. When that happens, the agent often does not know if the original tool call succeeded. So it calls again. Thus, if that tool charges a card, sends an email, or creates a record, a retry means it happens twice. The fix is to make every mutating tool call idempotent. The second run of the tool should be a no-op that returns the original result. The standard way to do this is an idempotency key. The caller generates a unique key per logical operation (a UUID tied to the user's intent, not the HTTP request). We store the result keyed by that value. If a request with the same key arrives again, the server simply returns the stored response. Idempotency key generation logic completely depends on what task you are doing, but a few patterns cover most cases. In some cases, the client generates a stable operation ID. In others, a deterministic key can be derived from the business operation being performed. For example, in a one-shot user action (place an order, send a payment), hash the meaningful inputs together: user ID, action type, and the request payload. A common mistake is generating the key from something that changes on every attempt, like a timestamp or a fresh UUID with no link back to the original call. That defeats the purpose. The key has to be deterministic from the standpoint of "what is the agent trying to accomplish," not "when did this packet leave the machine." The key has to live above the retry loop, not inside it. Generate it once, before the first attempt, and pass that same key into every retry of that operation. The network can fail ten times. The key does not change. Idempotency is not a nice-to-have for agents; it is a must-have when it comes to building reliable agents. Hope this helps.

As Health Insurers increasingly use AI to deny claims, can patients use AI to fight back? From a commercial perspective, using AI to assess medical claims is pure genius, albeit a very evil one. AI streamlines operations, reducing staff time spent on claims, and boosting profitability. But when these algorithms are designed not as objective arbiters of fairness but as tools to actively seek out reasons for denial, profits soar even higher. You can’t get blood out of a stone, but with patients, it’s pretty easy. Just program the algorithm to err on the side of denial. The strategy is shockingly effective, around 85% of denied claims go unchallenged. Even when patients are entitled to care, companies profit by banking on the likelihood that they won’t fight back. The algorithm can even be fine-tuned to target claims that are least likely to face appeals. Among the companies under scrutiny for such practices are UnitedHealth Group, Humana, Aetna, a CVS Health Company, and Cigna Healthcare. The human cost of this approach is immense. These denials inflict stress, financial hardship, and delayed or denied care, even leading to worse health outcomes. Alarmingly, 69% of Americans aren’t even aware they can formally appeal a denial. For those who do, the process is daunting, requiring time, persistence, and often the active support of their care team. However, AI is emerging as a counterweapon for patients and doctors to fight back against these denials. Startups like Fight Health Insurance, Banjo Health, Crosby Health, PARx Solutions, Cofactor AI, Guardian AI, and Claimable are leveraging technology to automate and streamline the appeals process. Claimable, for instance, uses generative AI to analyze policy details, clinical research, and patient data to draft appeal letters. Focused initially on autoimmune disorders and other high-denial conditions, the platform charges $50 per appeal and boasts an 85% success rate in overturning denials. They aim to expand their reach, offering hope to more patients battling against unjust denials. On one hand this feels inspiring, like a modern-day David vs. Goliath. But on the other it is disappointing and raises a deeper question, is the answer really giving David an AI powered slingshot, or is it finally fixing the broken, Goliathian U.S. healthcare system? #DigitalHealth #AI 👇See related articles below