Recurring billing comes with a unique headache: disputes that never stop. One chargeback can trigger months of customer service follow-up, lost revenue, and damage to your merchant reputation. For subscription businesses, this isn’t a once-in-a-while problem. It’s a volume problem. Alternate dispute resolution (ADR) gives subscription merchants a scalable way to respond before a dispute becomes a chargeback.
Here’s how it works, and why it matters.
What Is Alternate Dispute Resolution (ADR)?
Alternate dispute resolution is any process that lets a buyer and seller settle a disagreement without going through the card network’s formal chargeback system. This usually means platforms like Verifi’s Order Insight or Ethoca’s Consumer Clarity, which let merchants respond to bank inquiries with transaction details, receipts, or refund options before the chargeback is filed.
ADR doesn’t guarantee a win. But it gives subscription merchants a chance to resolve complaints faster, protect revenue, and avoid chargeback fees altogether.
Why Subscription Businesses Struggle With Chargebacks
Recurring billing isn’t always easy to track, especially for customers. Some don’t recognize the charge on their statement. Others forget they signed up or believe the service didn’t deliver. When that happens, they call their bank.
Here’s what makes subscriptions high-risk for chargebacks:
- Long billing cycles lead to forgotten purchases.
- Free trials often roll into paid plans without clear reminders.
- Digital services don’t always show clear proof of delivery.
- Multiple billing attempts may frustrate users with expired cards.
All of this adds up to more disputes than most single-sale businesses see.
How ADR Supports Subscription Merchants
ADR fits into subscription models because it’s fast, flexible, and automated.
1. Faster Dispute Resolution
ADR tools give you a short window to respond to a pending dispute before it becomes a chargeback. That means fewer revenue reversals and less risk of hitting Visa or Mastercard monitoring thresholds.
2. Scalable Response for High Volume
Most ADR platforms are built to automate replies with saved transaction metadata, customer support messages, and refund triggers. Subscription merchants can resolve dozens or hundreds of disputes without adding manual labor.
3. Keeps Metrics Clean
Chargebacks affect your standing with payment processors. A high dispute rate puts your merchant account at risk. Since ADR doesn’t count as a chargeback, resolved cases won’t hurt your ratios.
4. Prevents “Friendly Fraud” Early
Not every chargeback is malicious, but many are avoidable. ADR lets you clear up simple misunderstandings before a refund request becomes a fraud report.
What ADR Looks Like in Practice
Let’s say a customer forgets about a $9.99 monthly charge for your app. They call the bank. Before the chargeback is processed, your ADR tool sends a breakdown of the subscription plan, login activity, and refund policy. The customer confirms the charge or accepts a refund. The chargeback never happens.
This process repeats automatically for each flagged transaction. You stay ahead of disputes, and your win rate doesn’t drop from bad cases you never had a chance to fight.
How to Start Using ADR
You’ll need to work with a provider like Verifi or Ethoca, often through your payment processor or gateway. Some processors include these tools by default, while others charge per case.
You can also combine ADR with chargeback alerts, which pause the dispute window and give you more time to offer a resolution.
If you’re a subscription merchant dealing with high volume or recurring chargebacks, it’s worth checking which tools your platform already offers and how they plug into your billing stack.
Final Takeaway
Subscription businesses don’t get the luxury of ignoring disputes. The volume is too high and the margin for error too small. Alternate dispute resolution helps you manage complaints at scale, avoid chargeback fees, and keep your processor happy.
It won’t fix every case, but it can stop hundreds of preventable chargebacks before they damage your metrics.
FAQ: Alternate Dispute Resolution for Subscription Merchants
What is alternate dispute resolution in payments?
In payments, alternate dispute resolution refers to tools like Verifi or Ethoca that let merchants resolve transaction issues with banks before a formal chargeback is filed.
How is ADR different from chargebacks?
Chargebacks go through the card network and involve strict documentation and fees. ADR happens earlier and lets merchants respond with info or refunds before the chargeback is created.
Is ADR available to all merchants?
Most subscription merchants using platforms like Stripe, Adyen, or Braintree can access ADR through a connected service or integration. Availability depends on the processor.
Can ADR stop all chargebacks?
No. Some disputes still go to chargeback, especially if customers insist. But ADR reduces volume by resolving common billing confusion or refund requests early.
Is ADR free for merchants?
Usually not. Providers charge per case, but the cost is often lower than chargeback fees. Some processors may bundle ADR into higher-tier plans.
Make Chargeback Protection Work for Subscriptions
Subscription merchants face chargebacks month after month. Chargeblast connects directly to platforms like Verifi and Ethoca to handle ADR automatically, so you can resolve disputes before they escalate. Less friction, fewer chargebacks, and more revenue saved.
Set up in minutes and start reducing your dispute rate without changing how you bill.
