Stripe offers fraud dispute protection via machine-learning tool
Stripe has launched Chargeback Protection through its machine-learning fraud prevention system called Radar.
The San Francisco company announced Monday that it will handle fraud prevention and respond to disputed charges for businesses using the latest version of Stripe Checkout in the U.S. and Europe.
“Over the last few years, a top request from Stripe’s users—no surprise—has been for help with fraudulent chargebacks,” Eeke de Milliano, product manager for Stripe Radar and Chargeback Protection, said in a press release. “Chargebacks beleaguer internet businesses: they’re unpredictable, hard to win, and hurt cash flow since disputes can lock up legitimate funds for months while the process plays out."
Stripe will automatically reimburse the cost of a disputed charge and any associated fees to its business customers. There is no need for the business to submit any evidence in the case of a dispute, Stripe said.
Through Radar, Chargeback Protection leverages a machine learning infrastructure to assess charges in real time, allowing fraud to be detected on the spot, asking for additional authentication from suspicious buyers, and ensuring the checkout flow for trustworthy transactions remains frictionless.
Pricing for Chargeback Protection starts at 0.4% per approved transaction. For users on the latest version of Stripe Checkout, the company says Chargeback Protection requires a single click to turn on.
"Chargebacks are a significant operational and cash flow pain point for internet companies,” Jordan McKee, research director at 451 Research, said in the release.
Being hit with an unexpected chargeback for a massive dollar amount — sometimes months after the initial transaction — and then losing access to that revenue as the dispute process proceeds to an uncertain conclusion places a huge burden on the business, McKee added.
"The ability to offload both the operational overhead and the financial uncertainty associated with chargebacks is a valuable proposition for many businesses," he said.