If you’ve tried looking for information online (or asking an LLM) about chargeback tools, you’ve probably found yourself scratching your head. Answers tend to lump different tools and solutions together in very confusing ways, and at the end of the day you might find yourself comparing two tools that are not even solving the same problem.
We’re here to make it make sense, and to help you understand the different types of solutions out there, and when each might be relevant. Let’s start with a quick recap of what a typical chargeback looks like.
The Chargeback Lifecycle
Every chargeback follows a predictable path, and knowing this timeline helps you pick the right mitigation tools. We’ve covered this process in a bit more depth in our article on the chargeback dispute process, and we will also touch on these stages below, but just to give you the lay of the land:
- Transaction: The process starts with the cardholder attempting to make a purchase, which the merchant can either approve or decline (assuming it has been approved by the card company and payment service provider). This is a matter of seconds at most.
- Complaint: After the transaction is complete, the cardholder might contact the issuing bank or the card company to dispute a charge. This is still not a chargeback – there will be an additional short window where the dispute can be resolved.
- Chargeback: Once a chargeback is filed, the funds are withdrawn from the merchant’s account – and from there the only option is to dispute the chargeback, a process which can take several months.
In each of these stages, there are steps a merchant can take to prevent the chargeback or mitigate its impact.
- Before the cardholder completes their checkout, a merchant can reject a transaction that they believe will likely end up as a chargeback. Fraud prevention tools are used to automate this.
- After a complaint has been made, the merchant can attempt to resolve it with the cardholder, or choose to accept the chargeback to accept the chargeback. Automated alerts, notification, and resolution tools can be used at this stage to assist in chargeback prevention.
- If the chargeback goes ahead, the merchant can request to overturn it by submitting evidence that the transaction is legitimate. If either side is unhappy with the decision made, these disputes can then go to arbitration. This part of the process could be referred to as chargeback management.
So when someone talks about “chargeback tools”, they might be referring to software used in any one of these stages – even though these are often very different tools used to achieve very different aims.
Fraud prevention tools
The Basics
When they come into play: Before the transaction is approved by the merchant
What they do: Prevent transactions that are likely to result in fraudulent chargebacks
Notable solutions: Riskified, Signifyd, Forter, Sift
Details
Fraud prevention tools are your first line of defense in the chargeback lifecycle, blocking fraudulent purchases at checkout before they turn into disputes. These solutions analyze each transaction in real-time, typically taking milliseconds to determine whether to approve, decline, or flag a purchase for manual review.
Every fraudulent transaction you block is a chargeback you’ll never have to fight. Since fraud-related disputes make up a significant portion of all chargebacks, stopping them at checkout delivers immediate ROI.
Modern fraud prevention platforms combine multiple techniques to assess risk – including historical fraud scoring, identity verification, behavioral analysis, device fingerprinting, and many other factors – and use machine learning models to make a swift and (hopefully) correct decision as to whether to block a specific transaction.
The market includes established players like Riskified, Signifyd, Forter, and Sift, alongside solutions from payment processors and newer entrants. Many of these providers offer a “chargeback guarantee” model, where they assume liability for any fraud-related chargebacks on transactions they approve.
Chargeback prevention tools: alerts, notifications, real-time data sharing, and automated resolution
The Basics
When they come into play: After the transaction is approved and before a chargeback is filed
What they do: Allow merchants to resolve problematic transactions before they become chargebacks
Notable solutions: Verifi’si Rapid Dispute Resolution (RDR) and Cardholder Dispute Resolution Network (CDRN) for Visa; Ethoca Alerts for Mastercard; Order Insight
Details
When a cardholder disputes a transaction, it doesn’t immediately become a chargeback. Banks typically need 24-72 hours to process and submit the formal dispute. During this window, prevention tools can provide several ways to prevent the initial complaint from becoming a full-blown chargeback.
This is often useful for merchants, for example in order to stay beneath card company thresholds (see our recent article on VAMP). There can also be other costs associated with chargebacks
In this stage, there are several tools that can come into play:
- Automated dispute resolution: Verifi’s RDR enables merchants to set up automatic refunds based on pre-defined rules. You might configure RDR to auto-refund all disputes under $50, disputes from certain high-risk regions, or transactions matching specific criteria. The system processes these refunds instantly. You lose the transaction amount, but you avoid chargeback fees and protect your dispute ratio. For merchants without a robust automation solution, auto-refunding small disputes costs less than fighting them.
- Chargeback alerts: Alert systems such as Verifi’s CDRN or Ethoca alerts provide early notification without taking any form of automated action. When a cardholder disputes a transaction, you receive an alert with basic dispute details. You can then investigate and decide whether to issue a refund or let the dispute proceed to a formal chargeback.
- Real time data sharing: Visa’s Order Insight enables merchants to share detailed transaction data with issuers during the dispute process instead of sending alerts or automated refunds. When a cardholder calls to dispute a charge, the issuer can instantly access detailed purchase information – product descriptions, merchant contact details, delivery confirmation. This clarity often resolves confusion before a dispute is filed and can dissuade the cardholder from disputing the charge.
Chargeback management / revenue recovery
The Basics
When they come into play: After a chargeback has been filed
What they do: Automate the representment process, compile compelling evidence, and help merchants win disputes
Notable solutions: Justt, Chargebacks911, Chargeback Gurus, Midigator
Details
When a chargeback hits, merchants feel it immediately. The transaction amount vanishes from their account, along with fees levied by the issuing bank (and, in some cases, the card company). However, they still have a chance to recover that revenue by overturning the chargeback. This is where dispute management comes into play.
Representment means showing the issuing bank that the original transaction was legitimate by collecting evidence such as proof of delivery, proof of purchase, customer support interactions, or other data points that help counter the cardholder’s claims. While this can be done manually, teams will often need to scramble to gather transaction records, delivery confirmations, and customer communications – then format everything to match each card network’s requirements. For merchants processing real volume, this leads to missed deadlines and suboptimal responses, which ultimately lead to lost revenue.
Modern dispute management platforms automate this entire workflow – collecting relevant data to use as compelling evidence, generating dispute representments, tracking deadlines, and monitoring win rates. Different levels of automation might be used by different providers – from template-based outsourcing to Justt’s zero-touch AI, which generates bespoke responses for every dispute.
In addition to day-to-day dispute management, these tools can also help shed light on broader trends in a merchant’s chargeback mitigation program by collating data from different payment service providers and providing a centralized view of win rates, reason codes, regions, and more.
Choosing the Right Tools for the Job
Chargebacks can take a major toll on your bottom line, and merchants looking to protect theirs will typically employ more than one line of defense against them. The three categories of chargeback tools we’ve explored aren’t really competing alternatives. Fraud prevention tools stop bad transactions before they happen. Prevention tools catch disputes before they become chargebacks. Chargeback management tools help you recover revenue when disputes do occur. The most successful merchants would often use all three, in various constellations.
Because chargebacks are quite complex and can impact your business in many ways, we recommend designing your ‘chargeback stack’ by focusing on net dollar recovery. This means understanding where chargebacks are hurting most, and investing in solutions to alleviate these pains. The answers could vary between, e.g., a merchant whose business model is based on thousands of smaller and riskier transactions (such as a mobile app developer selling in-app purchases), versus a merchant selling a small number of high ticket items (such as luxury physical goods).
One final caveat is that the distinctions between the tools can be a bit blurry in practice because vendors might bundle different offerings. For example, at Justt we’re focused on dispute management, but we also provide revenue recovery features through our partnerships with Ethoca and Verifi, as well as advanced analytics and reporting features.
Hopefully you now have a clearer idea of what “chargeback tools” or “chargeback solutions” might actually mean – and why it’s important to look past that initial label.
