How One Simple Integration Decreased the Refund Ratio by More Than Half for a Podcast Streaming Service

Overview

The problem of over-refunding can eat up a large share of a company’s profit if it relies on outdated anti-fraud tools instead of modern chargeback deflection solutions and fails to control its refund policy.

Your customer support team might issue refunds for every complaint instead of following the approved refund policy and refunding only when the user genuinely didn’t use the service — and always within the framework of the applicable laws in the country of operation.

Additionally, without implementing modern chargeback deflection tools that can deflect disputes without unnecessary refunds, businesses end up refunding every dispute and losing a significant portion of their profit.

Challenge

Identifying the Core Problem

Our client — a local Latin-American podcast streaming service — noticed that their refund volume was eating into their revenue so badly that, unless something changed, they would likely have to shut down operations due to monthly losses.

Interestingly, their chargeback rate and fraud ratio were low, indicating no real issues on the payment processing side, as multiple anti-fraud solutions were already in place. However, excessive refunds were the true problem.

In January, the company issued:

• 250 manual refunds based on customer requests (without alerts)
• 420 refunds triggered by chargeback alerts
• 340 automatic refunds from Visa RDR cases

With an average transaction amount of $40, this meant a total refunded amount of $40,400 — a shocking figure that prompted them to seek a real solution to reduce refund losses.

Solution

Implementing True Chargeback Deflection and Adjusting Internal Policies

The first step was updating their refund policy according to the national regulations.The law required merchants to refund only if less than 14 days had passed since the purchase — or not at all if the merchant could prove the service was provided (through customer activity logs, usage history, 3D-Secure proof, etc.).

After updating their refund policy, the number of refunds issued upon request dropped significantly.

The second, more technical step was the integration of the Merchanto Prevent Toolset, which includes:

• Visa Order Insight Compelling Evidence 3.0 (CE 3.0)
• Mastercard Consumer Clarity

How OI/CE Works in Simple Terms

• When a customer initiates a dispute, Merchanto receives the request and provides the merchant’s transaction details, including previous successful transactions from the same customer, product history, and merchant information (terms & conditions, phone, address, etc.).
• If the issuing bank finds the information sufficient, the dispute is deflected without refund.
• Visa CE 3.0 automatically deflects disputes if there are two or more non-disputed transactions with the same merchant and customer, at least 120 days old.

Once the integration was complete, OI/CE requests began arriving, and the merchant immediately started seeing deflections — meaning no alerts, no RDR cases, and no refunds.

Results

Fast and Impressive Outcomes

After one full month of using the Merchanto Prevent Toolset, the results were remarkable.

Due to the policy update and OI/CE integration, refund volumes dropped dramatically. The 380 deflected chargebacks alone represented $15,200 saved — without issuing a single refund.

The total refund volume decreased by more than half — from $40,400 to $18,400 — an acceptable level for the merchant.

As an added bonus, the fraud ratio dropped by 55%, which improved their acceptance rate, reduced declines, and increased overall profit.

Conclusion

If refunds are eating into your revenue — don’t panic and don’t rush to close your business.

Controlling refund volumes is simply a matter of integrating modern chargeback and fraud deflection technologies.

Facing a similar problem?

👉 Contact us today and start earning more instead of refunding more.