Firms team up to tackle subscription chargebacks

Subscription businesses lose billions each year to chargebacks, and two companies are now teaming up to fight back. Recurly, a San Francisco-based platform that processes $16 billion in annual subscription payments, has integrated with Justt, a chargeback management firm, to help merchants recover disputed transactions. The collaboration targets a persistent issue that disrupts cash flow and erodes profit margins.

Chargebacks hit subscriptions harder than other sectors

The average chargeback rate for subscriptions and digital products ranges from 1% to 1.85% of transactions—more than double the 0.5% to 0.9% average for general e-commerce. Each disputed transaction costs merchants an average of $69, according to Mastercard, and the problem is growing. Industry projections estimate chargeback-related losses will climb from $36.9 billion this year to $46.1 billion by 2029. The disparity between subscription businesses and traditional e-commerce stems from several structural factors. Unlike one-time purchases, recurring billing models expose merchants to repeated exposure to chargebacks over the lifetime of a customer. Additionally, the rise of “friendly fraud”—where legitimate customers dispute charges they later regret—has become a significant contributor, as consumers increasingly treat chargebacks as a form of buyer’s remorse insurance rather than a fraud protection tool.

Card-not-present transactions and fraudulent disputes are major drivers of the trend. For subscription companies, the financial strain is compounded by lengthy resolution processes and fragmented data, making it difficult to build strong cases against chargebacks. The typical dispute timeline can stretch for weeks, during which funds are held in limbo, creating liquidity challenges for businesses.

Data as the missing piece

Recurly and Justt say the key to reducing losses lies in better evidence. Justt, which serves 250 enterprise clients and 80,000 smaller businesses, will now pull transaction data directly from Recurly’s platform to automate dispute responses. The goal is to present stronger documentation faster. The integration allows Justt to access a centralized repository of transaction details. By automating the compilation of this evidence, the partnership aims to reduce the time merchants spend assembling cases.

“Merchants often lose payment disputes not because their case is weak, but because the right evidence is never presented appropriately,” said Roenen Ben-Ami, Justt’s co-founder and chief risk officer. Once a dispute is resolved, Recurly’s system updates subscriber records automatically to reflect the outcome. This real-time synchronization ensures that future billing cycles are not disrupted by outdated dispute statuses.

This isn’t the first attempt to tackle the problem. Other tools, like Chargeback Agent from Findustry AI, use artificial intelligence to help merchants comply with card network rules. But subscription businesses have unique challenges—recurring billing cycles, free trials, and customer churn all complicate dispute resolution. Free trials, in particular, are a frequent source of disputes, as customers may forget to cancel before being billed or claim they were misled about the terms. Similarly, subscription pauses or upgrades can create confusion, leading to chargebacks when customers see unexpected charges.

Recurly’s clients include Alaska Airlines, Experian, and Cinemark, companies that rely on predictable revenue streams. For them, even a small reduction in chargebacks could mean millions in recovered revenue.

Justt, founded six years ago, is based in Tel Aviv and has raised $70 million in funding. Its integration with Recurly is live now, though neither company has disclosed specific performance metrics yet.