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Merchants face an escalating challenge with chargebacks, leading to significant financial losses. According to a report by Mastercard, in the US, cardholders disputed at least $105 million worth of charges in 2023, with the global figures sitting at approximately $238 million. The surge in disputes not only results in immediate revenue loss but also drains resources, increases operational costs, and forces businesses to raise prices or cut services to compensate.
Chargebacks represent an even more significant financial burden for merchants, where fraud accounts for around 50% of these disputes. According to research by The Federal Reserve Bank of Kansas City, card-not-present transactions, such as online purchases, often lead to higher chargeback rates than in-person transactions. Merchants then must manage these disputes effectively to minimize costs and avoid further revenue loss. They often face liability for these chargebacks, highlighting the need for better prevention and resolution strategies.
Emerj Senior Editor Matthew DeMello recently sat down with Roenen Ben-Ami, Co-founder and Chief Risk Officer at Justt, to discuss the broader challenges of chargeback management, including the complexity of dealing with multiple payment processors, fluctuating win rates due to fraud or issuer issues and the importance of driving continuous data-driven insights to help merchants improve their chargeback handling strategies.
This article examines two critical insights from their conversation:
- Optimizing chargeback management: Merchants must provide the appropriate evidence for fraud and service-related chargebacks to dispute them effectively.
- Customize evidence with dynamic arguments: Use dynamic arguments instead of static templates to tailor responses and increase the likelihood of favorable chargeback outcomes.
Listen to the full episode below:
Guest: Roenen Ben-Ami, Co-founder and Chief Risk Officer, Justt
Expertise: Leadership, Business Analytics
Brief Recognition: Previous to helping found Justt, he built the chargeback and merchant risk teams that successfully recover millions of dollars a year at the payments service provider Simplex. Before that role, he served in an elite military intelligence unit in the Israel Defense Forces for nine years, attaining the rank of captain.
Optimizing Chargeback Management
Roenen opens the conversation by explaining how chargebacks work in the retail industry. He says customers who dispute a transaction go to their issuing bank instead of the merchant to reclaim their money. The bank processes the chargeback, and the funds are returned to the customer.
However, these funds are taken directly from the merchant, who – by the default ejudication of the process – is basically treated as guilty until proven innocent. In other words, the system favors the customer by default, putting the burden of proof on the merchant to prove the chargeback is illegitimate while the transaction behind the chargeback is legitimate.
He further explains that while merchants can dispute chargebacks by providing documentation, the process is complex and varies based on the reason code assigned to the chargeback. Typically, the issuing bank reviews the documentation, but in some cases, it can escalate to acquiring banks or card networks like Visa and MasterCard.
Chargebacks can stem from:
- fraud claims (where the merchant must prove the actual cardholder made the purchase
- ) or service-related disputes (where they must show goods or services were correctly delivered).
The process is often manual, making it a growing challenge for merchants. Roenen points out that,
“Chargeback disputes arise for various reasons—customers may forget a purchase, a family member might have made the transaction, or in some cases, individuals deliberately attempt to reclaim funds despite receiving the goods or services. These types of cases, particularly friendly fraud, are increasing rapidly in the online space. The issue is now estimated to cost businesses approximately $180 billion annually. Many merchants struggle to address all chargebacks, often prioritizing higher-value claims. In a recent conversation with a major U.S. retailer, they revealed that 20% of their cases — either low-value transactions or complex disputes — are simply written off, resulting in unnecessary financial losses.”
— Roenen Ben-Ami, Co-founder and Chief Risk Officer at Justt
Roenen explains that chargebacks fall into fraud-related and non-fraud-related categories, requiring different evidence. Many merchants either ignore chargebacks, losing full transaction amounts, or handle them manually, which is hard to scale. Others try basic automation, but templated responses reduce win rates.
The challenge for driving the best possible win rates in chargeback processes, he underscores, is balancing scale and customization for better recovery.
Customize Evidence with Dynamic Arguments
Roenen then explains that his company, Justt, has developed a smarter and more scalable approach to handling chargebacks by leveraging data and automation effectively. The first step in this process is integrating data from multiple sources, including payment processors, merchant data, and third-party enrichment data.
Payment processors such as Stripe, Adyen, and Worldpay provide essential transaction data, but some operate on older systems that require manual extraction. Additionally, third-party enrichment data – such as IP addresses, phone numbers, and billing information – helps establish connections to prove whether a transaction was legitimate or fraudulent.
Instead of relying on static templates, Justt’s system uses a method referred to as dynamic arguments (sometimes referred to as dynamic parameters elsewhere in data science), which ensures that the evidence presented is tailored to the specific situation. The placement of supporting arguments and screenshots is also adjusted based on what is most effective for winning a case.
By customizing responses this way, Roenen tells Emerj’s executive podcast audience that Justt increases the likelihood of a favorable outcome for merchants.
“Behind the scenes, our data science, R&D, and domain expert teams work together to build the foundation of Justt’s solution. They define the dynamic arguments, establish how they can be adapted, and set the rules governing their application. Once a customer is live, the system operates fully automated at scale, handling high volumes of chargeback cases seamlessly. Whether a merchant faces hundreds or hundreds of thousands of disputes, the technology determines the most effective arguments for each scenario. By tailoring responses more precisely than a manual process, Justt’s automation eliminates human error and optimizes chargeback recovery.”
— Roenen Ben-Ami, Co-founder and Chief Risk Officer at Justt
He also shares with Emerj that Justt improves merchants’ chargeback win rates by leveraging three key data sources:
- PSP data
- Third-party data, and
- Additional merchant data.
Once a higher win rate is achieved, Justt further optimizes results by analyzing subcategories within the win rate, such as specific issuers, reason codes, and card schemes.
Through A/B testing, the system fine-tunes argument placement and data usage rather than relying on rigid templates. Additionally, the platform continuously updates its solution based on industry changes from Visa and MasterCard, ensuring all merchants benefit from ongoing improvements at scale.
Once a merchant adopts Justt’s solution, the system primarily operates independently, with minimal involvement required from the merchant. However, providing additional merchant data can further improve the win rate.
If merchants want to enhance results, Roenen says that they can provide additional data in multiple ways:
- Submitting a CSV file weekly, which only takes 20 minutes or
- integrating with Justt’s API for an entirely hands-off process.
The latter enables the system to ingest the additional data and improve chargeback outcomes.
