Merchanto Helps a Fitness App Decrease Chargebacks by 96%

Overview

The significant increase in chargebacks after starting to process payments on the web could have destroyed a famous US-based fitness application business — but Merchanto managed to solve the problem.

Fitness has always been a popular industry. People want to stay fit, live long, and enjoy a happy life — and are willing to spend large amounts of money on long-term, subscription-based models.

One popular US-based iOS fitness application decided to launch web payments using Stripe. They created a website with a Stripe payment form, a quiz, a paywall, and a complete web-to-app flow that provided subscribed customers with access to their mobile application afterward.

They invested significant resources into development and promotion on Facebook and Google. It was clear that many new customers would sign up, but they didn’t expect problems with chargebacks, as they had never faced many of them through in-app purchases.

Challenge

An unexpected chargeback problem that could shut down a subscription-based business.

The first month of web payment processing went quite well — there were many new customers with trial periods and not many recurring payments yet. Starting from the second month, the financial department began to notice that the number of disputes was increasing every week and realized they had to deflect them somehow. If the situation continued for the next few months, their Stripe merchant account could be terminated because of the excessive dispute rate.

A warning from Stripe didn’t take long. During the first week of the third month, after receiving 50+ disputes, they got an email from Stripe saying the account was in bad standing and under strict supervision. The fitness app management understood they had to react quickly and integrate the most modern chargeback deflection tools to significantly decrease the dispute rate and secure their merchant account.

They started researching possible solutions and chose Merchanto, as we offered the best pricing model, fast support, and access to the latest technologies from both Visa and Mastercard.

Solution

Chargeback prevention means business protection.

In just one week, we integrated all the necessary solutions to protect the client from chargebacks and keep their merchant account secure:

1. Visa Order Insight (Compelling Evidence 3.0) and Mastercard Consumer Clarity – these tools allow merchants to respond to incoming requests from banks by providing transaction details (product description, customer name, address, etc.) to prove legitimacy and deflect disputes without refunds. They are especially useful for subscription-based merchants, as OI CE 3.0 automatically deflects disputes if there are undisputed historical transactions with the same client older than 120 days.

2. Mastercard Alerts, Visa CDRN, and RDR – the most modern solutions that provide merchants with instant notifications once a dispute is raised, bypassing the acquirer. The merchant should refund the transaction within 24 hours and provide the outcome on the Merchanto platform to avoid a chargeback.
3. Stripe–Merchanto automation – to eliminate unnecessary manual searches and refunds, saving internal resources and ensuring instant action once an alert appears.


Integrating all these tools was expected to significantly decrease the dispute ratio, so the merchant waited for the results, fingers crossed.

Results

Significant decrease and overwhelming success.

To compare results, we analyzed the last two weeks of active payment processing before the Merchanto integration and the first two weeks after.

In the 14 days before Merchanto tools were integrated, the client received 96 chargebacks — a critical amount usually considered the monthly limit, exceeding which can result in a blocked MID due to a high chargeback rate.

In contrast, during the first two weeks after integration, the fitness service received only 4 chargebacks, representing a 96% decrease. The following full month brought only 6 chargebacks in total, showing even better stability and performance.

The Stripe merchant account returned to good standing, and chargebacks were no longer a problem. The fitness app continued growing its business, expanding to new markets and traffic sources, increasing its customer base, and keeping its MID secured by Merchanto technologies.

Conclusion

Should you wait — or should you launch chargeback protection from day one?

Don’t wait until chargebacks hit your merchant account. Be proactive and connect to the most modern chargeback deflection technologies from the very beginning of your payment journey. It’s fast, easy, and will help you avoid Visa or Mastercard monitoring programs and potential account blocks.

Secure your business with Merchanto!