Chargebacks have plagued the card-payments economy for years, leading payments providers to seek solutions, often to no avail. The latest move involves subscriptions, with Recurly early Thursday announcing an integration with Justt, a company that helps sellers manage chargebacks, to reduce losses on a problem that drains significant revenue for subscription companies.
San Francisco-based Recurly, whose platform processes subscriptions amounting to some $16 billion in annual volume for clients like Alaska Airlines, Experian, and Cinemark, says chargebacks have grown into a painful drain on revenue for companies that depend on subscription business. Efforts to counter chargebacks suffer from scattered information and drag on for weeks, Recurly says.
The average chargeback rate for subscriptions and digital products falls between 1% and 1.85% of transactions, according to industry figures, well above the 0.5% to 0.9% e-commerce average.
The revenue loss is significant. The average chargeback for the subscription economy is $69, according to Mastercard research, but factors like card-not-present transactions and fraudulently filed chargebacks are helping drive the trend, the card network says. Nor is the outlook bright. Datos Insights figures overall chargeback-related losses to merchants will reach $46.1 billion by 2029, up from $36.9 billion this year.
The link between Recurly and Tel Aviv, Israel-based Justt is aimed at compiling evidence to fight chargebacks, the companies say, with Justt gaining access to data compiled on Recurly’s platform. Indeed, the key, the companies say, is data. “Merchants often lose payment disputes not because their case is weak, but because the right evidence is never presented appropriately,” says Roenen Ben-Ami, Justt’s cofounder and chief risk officer, in a statement. Six-year-old Justt serves 250 enterprise merchants and some 80,000 smaller businesses.
Once appropriate updates are automatically applied through Recurly’s platform, “subscriber records reflect the [corrected] outcome,” the company says in its announcement.
Other recent efforts to combat chargebacks have included Chargeback Agent, technology from Findustry AI Inc. that depends on artificial intelligence to help companies comply with dispute rules set by the card networks.