Dispute Management Firm Chargeback Raises $6.6M To Accelerate Platform Automation

Retail dispute management system Chargeback announced Monday (June 8) that it has closed a $6.6 million Series A1 funding round.

Chargeback said the funding will accelerate its growth and ability to help online and offline retailers decrease credit card disputes, achieve higher win rates and retain more revenue. The company said the COVID-19 pandemic has made chargebacks a more urgent concern as eCommerce transactions have spiked.

CEO John Munro said the funding will be used for several purposes, most importantly to continue to automate the company’s business process across different payments platforms. While the company’s dispute management system is basically deployed across the major credit card and alternative payment ecosystem, he says that navigating network rules continues to be a complex task for retailers faced with growing chargeback issues.

“Automation will help us take all the rules and data from four or five disparate systems and aggregate them into one response document,” he told PYMNTS. “When retailers see chargeback fraud or when they want to contest that chargeback we need to integrate into all relevant platforms. That’s the best way for us to support merchants as we grow and as eCommerce grows.”

According to the company, dispute management has historically been a drain on personnel and a drag on the customer experience. It offers a Software-as-a-Service (SaaS)-based solution that integrates and automates the dispute lifecycle. Munro says the problem has been most prevalent online, where transactions are disputed 12 times more often than in-store purchases. The eCommerce volume spike that has accompanied the pandemic has also increased the problem.

“Social distancing and lockdowns have made it necessary for consumers to make their purchases online,” says the company’s blog. “Additionally, customers are now shopping in bulk and doing ‘panic shopping’ in anticipation of longer lockdowns and shelter-in-place orders. Fraudsters are taking advantage of these increased order volumes to make even larger purchases with stolen digital payment credentials from platforms such as Apple Pay and Android Pay. As more consumers embrace digital banking and mobile apps, this type of fraud is bound to increase in the future. Merchants should update their fraud prevention methods to include mobile fraud and fraud done using digital wallets.”

Munro says the new funding will also be used to develop the company’s data insights capabilities. For example, Chargeback’s predictive analytics solution helps retailers see the relative levels of success it can expect to have with different types of chargebacks and predict how they can affect acceptance rates, winbacks, customer satisfaction and overall revenue.

FINTOP Capital and Next Frontier Capital led the new funding round, with participation from existing investors including Next Coast Ventures and the Kickstart Fund.

“We are thrilled to add rapidly growing Chargeback to our FinTech portfolio,” said John Philpott, partner at FINTOP. “In a space that is historically labor intensive and slow to adopt technology, the Chargeback SaaS platform has made [the company] a clear leader in the dispute management space. The way Chargeback couples automation, data aggregation and deep insights helps merchants easily and quickly scale, optimize revenue and provide a better customer experience.”