For decades, financial institutions have viewed customer disputes and chargebacks as inevitable or a cost of doing business. Opinions have changed in recent years, however, as advanced technology solutions can help banks and enterprises reduce caseloads, resolve disputes, and improve the customer experience.
At Rivero, we believe in bringing clear, helpful, and straightforward insights to issuing banks. That's why we sat down with Srii Srinivasan, an investor, entrepreneur, and former co-founder and CEO of Chargeback Gurus. Her deep expertise offers invaluable lessons for financial institutions looking to simplify their payment operations, stay compliant, and better manage fraud recovery and disputes.
Srii, you've been in this space for a long time. What initially attracted you to chargeback management?
Srii: I started my entrepreneurial journey very early on in my career. One of our earliest companies was an international customer service and sales contact centre. We faced our first set of chargebacks when a long-term client filed multiple chargebacks without any notice. As I couldn't find any help to understand and navigate this deep, mysterious world, I took the time to educate myself. I fought those chargebacks and won every single one of them. With this acquired knowledge, we started servicing our clients to help them fight and win chargebacks. Eventually, our clients began relying on us to address other payment challenges, such as high decline rates, understanding payment rules, and preventing fraud.
We saw the tremendous need among merchants for a service that would solve their chargeback and fraud pain points, which led us to start Chargeback Gurus in 2014. To this day, I’m very passionate about educating both myself and merchants about the ever-changing payment rules and regulations.
What notable communication gaps have you observed, particularly those that impact issuing banks?
Srii: The complexity of the payment ecosystem creates significant communication gaps. A key one is the lack of a universal, direct communication channel between merchants and card issuers. Issuers often fail to disclose the reasons for dispute losses or the reasons for rejecting documentation, resulting in a slow and fragmented information flow. This means that issuers often lack sufficient transaction details to resolve disputes and may only learn about fraud or disputes after significant delays, forcing them to rely on outdated chargeback processes.
Another major gap arises when customers bypass merchants and directly contact their card issuer. Up to 86% of cardholders go straight to the issuer for disputes, especially in card-not-present (CNP) transactions. Our research shows consumers often don't know the difference between a chargeback and a refund, leading to unnecessary chargebacks. Also, 61% of disputes are due to vague merchant descriptions or lack of information, not actual fraud. Issuers sometimes fail to ask cardholders whether they contacted the merchant, leading to unethical disputes. Finally, many financial institutions still use outdated legacy systems for dispute management, resulting in slow resolution times and widening the communication gap.
Given the time-sensitive nature of disputes, how have technology solutions helped improve response times and resolutions for all parties, including issuing banks?
Srii: AI/ML-powered chargeback solutions have dramatically transformed dispute management, leading to faster response times, higher recovery rates, and more efficient resolutions. Some larger issuers have partially automated dispute decision-making, using AI to review scanned documents for quicker responses.
Platforms now use AI/ML to intelligently automate the entire chargeback process, from dispute intake to evidence submission. This allows instant responses, eliminating manual delays. We have advanced tools that predict dispute win probability by analysing hundreds of data points, including historical data on customers, issuers, and transaction patterns. This helps prioritise high-value cases and optimises resource allocation. These systems also determine the required evidence and customise it based on factors such as the issuer and industry.
End-to-end dispute packages can be automatically gathered, analysed, and organised from multiple sources by AI systems. They can predict transaction fraud likelihood by continuously monitoring for suspicious patterns and flagging potential fraud in real-time, preventing disputes from escalating. Automated compliance reporting and risk assessment further speed up resolution and reduce errors.
What did you find surprising or memorable in dealing with friendly fraud, and what's your advice for card issuers on this issue?
Srii: First, we need to understand that acquirers and issuers are stakeholders who do not fully reveal their cards to each other. This leads to surprising outcomes since they do not have full visibility into the 'chargeback story'... and every chargeback tells a story!
I recall a dispute from a celebrity whose Executive Assistant used their personal card for a large personal purchase without consent, shipped to the celebrity’s verified address. When the celebrity noticed the transaction, they disputed it as 'unauthorised'. It was complex: the merchant had shipped to a verified address, the transaction passed fraud filters, and all evidence was collected. This surprising case shows the multiple dimensions to the same dispute story, highlighting why 'friendly fraud' is nuanced and challenging to resolve.
My advice to issuers is to use technology to understand customer patterns, leveraging data from multiple sources. Card issuers should adopt a multi-pronged approach to friendly fraud, combining advanced technology with customer education, clear communication, and collaboration with merchants. Leverage data analytics to identify suspicious behaviours, such as multiple disputes from the same cardholder or unusual purchasing patterns. Facilitate clear communication and strong customer service; encourage merchants to provide automated order confirmations, transparent policies, and prompt support. Issuers can promote similar strategies to cardholders to resolve issues before disputes escalate. Finally, leverage card network rules and evidence requirements, such as Visa’s Compelling Evidence 3.0 Rule, which allows merchants to submit detailed historical transaction data to combat repeat-friendly fraud offenders. Educate cardholders about the difference between true fraud and friendly fraud, encouraging them to contact merchants first for returns or refunds.
Which advancements in chargeback automation and cardholder self-servicing in the issuing and acquiring domain have most impressed you and why?
Srii: The integration of AI and machine learning (ML) across the chargeback lifecycle has been most impressive. I believe in 'smart' chargeback automation, which combines machine and human intelligence for best outcomes. These systems intelligently automate every phase, from case intake to evidence gathering and custom dispute package generation, making the process faster, more accurate, and less repetitive. This reduces operational costs and significantly improves chargeback prevention and recovery rates.
This is closely tied to predictive analytics and data-driven decision-making. Platforms leverage predictive analytics to identify patterns in chargebacks, optimise fraud prevention, and proactively protect consumers and merchants. Card networks have also introduced programs to help merchants prevent disputes and first-party fraud, like Visa’s CDRN & RDR and Mastercard/Ethoca Consumer Clarity, connecting issuers and merchants for seamless prevention.
Cardholder self-servicing platforms are another impressive achievement. Cardholders can access seamless digital experiences via mobile apps or online banking portals to activate cards, view spending, manage cards, and even initiate and resolve disputes without needing to contact support. This shift improves customer satisfaction and loyalty by offering faster, more transparent resolutions. It also eliminates manual forms, allowing banks to collect information upfront and provide real-time status updates.
I’m also impressed by instant card issuance and management. I personally love instant card solutions that enable me to receive and activate new or replacement cards within minutes. These advancements are all about customer empowerment, while reducing costs, and proactively protecting both merchants and consumers.
Looking ahead, what are your key predictions for the future of cardholder dispute management?
Srii: AI/ML and automation will continue to dominate dispute management. AI-driven systems will streamline all aspects, drastically reducing resolution times from weeks or months to days or even hours. Manual, labour-intensive processes will be rapidly replaced, expediting processes, reducing errors, and lowering administrative costs. AI-driven predictive analytics will forecast likely outcomes for current cases, and GenAI will enhance fairness and objectivity by handling multiple cases simultaneously, making the process scalable and cost-effective.
Proactive dispute prevention and resolution will be even stronger. AI and advanced analytics will become more accurate in identifying and preventing fraudulent or illegitimate disputes, reducing overall dispute volumes and costs. Card networks and issuers will increasingly urge cardholders to resolve issues directly with merchants before escalating to formal chargebacks. Advanced AI insights will help merchants understand the story behind each chargeback to proactively prevent them, correct errors, and improve customer journeys.
Easy and fast dispute resolution will be a key differentiator for issuers. Issuers will actively promote robust dispute resolution as a selling feature to earn consumer trust. Real-time data flow and integration between issuers, acquirers, and card networks will facilitate quicker and more accurate outcomes, reducing operational costs. Advanced cloud platforms will continue to enable banks to automate workflows, leverage AI/ML for fraud detection, and provide real-time visibility into disputes, allowing efficient management of volume spikes and compliance.
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Srii Srinivasan's insights highlight a clear path forward for issuing banks: embrace technology, foster collaboration, and prioritise clear communication. At Rivero, we understand these complexities, that’s why we built solutions that help issuing banks simplify their payment operations, streamline dispute management, and ensure payment network compliance. We believe that by adopting smarter, more efficient processes, issuing banks can not only reduce costs but also significantly improve their customer experience and strengthen their position in a competitive market.
Want to learn more about how Rivero helps issuing banks navigate the evolving landscape of dispute management? Get in touch with our team.