I
Ishan Pandey
Guest
First-party fraud, the polite name for customers disputing purchases they made and received, rose from 15 per cent of all reported fraud in 2023 to 36 per cent in 2024, which makes it the largest fraud category in the world, according to LexisNexis Risk Solutions. A dispute button in a banking app has become easier than a refund request and the bill lands on merchants. Mastercard and Datos Insights count 261 million chargebacks in 2025 and project 359 million by 2029, worth $46.1 billion.
The disputed amount is the smallest part of that bill. Merchants spend an average of $128 to handle a single chargeback, $82 internally and $46 in third-party fees, against an average US dispute of $110. Card-not-present sales, 63 per cent of merchant volume, carry most of the risk. The tolerance for it is shrinking: Visa cut its merchant "excessive" dispute threshold from 2.2 per cent to 1.5 per cent on April 1, 2026, with an $8 fee on every dispute above the line.
That squeeze is the backdrop to Digistore24, the sales platform that runs backend infrastructure for thousands of digital brands, launching Instant Bank Payments for US transactions on July 9, 2026, powered by Stripe Link. Buyers authenticate inside their own bank at checkout, the payment confirms instantly and US vendors pay nothing beyond the usual margin. The premise is that account-to-account payments give merchants a settlement path with different dispute dynamics. To test whether pay-by-bank is a chargeback answer or a new trade-off, I sat down with Lucas Coro, Digistore24's Director of U.S Sales, who watches these decisions play out across a large merchant base every day.
Ishan Pandey: Hi Lucas, it's a pleasure to welcome you to our "Behind the Startup" series. Please tell us about yourself and the journey that led you to Digistore24.
Lucas Coro: Thanks, Ishan, it's my pleasure to be here. So, I'm originally from Brazil. I actually came to the U.S. on a soccer scholarship to do my MBA in marketing and business research. Before that, I'd spent about four years in Brazil doing business development and account management, but at that time, I didn't do any work in payments or affiliate marketing at all.
Digistore24 found me through LinkedIn and brought me on as an account manager doing business development. I learned the industry from the ground up, including direct response marketing, online payment processing, all of it, by asking a lot of questions and staying close to the vendors we work with.
That path took me from account manager to sales manager to where I am now, Director of U.S Sales. It's given me a front-row seat to how thousands of merchants actually run their businesses, which is exactly the perspective I bring to a conversation like this.
One thing I learned early on is that a vendor can have an amazing product and a great sales funnel, but if the payment experience isn't right, everything falls apart. I remember working with vendors where the focus was almost entirely on driving more traffic and making more sales. But once we looked deeper, we realized they were losing a significant amount of revenue through payment declines, refunds, and chargebacks. They were essentially spending more money to bring in customers they were struggling to successfully process. That experience really changed the way I look at vendors today. I don't just look at how much they're selling. I look at the entire journey: where the traffic is coming from, how customers behave at checkout, how payments are being approved, what happens after the sale, and ultimately whether that revenue is actually sustainable. Growing revenue and growing healthy revenue are two very different things.
In a traditional sales mindset, you celebrate the sale. But when you're dealing with payments at scale, the transaction itself is just the beginning. You have to ask: Was the payment approved? Did the customer have a good experience? Are they going to refund? Is the transaction going to turn into a chargeback? Is the vendor actually going to be able to scale that volume? As I started seeing those numbers at a larger scale, I realized that a 1% improvement in payment approval or checkout conversion can sometimes be worth more than adding thousands of new leads to the top of the funnel. Sales gets the customer in the door, but payments, conversion, and risk determine how much of that opportunity you actually keep.
Ishan Pandey: You sit at an unusual vantage point: vendor sales across thousands of digital merchants. From that seat, how has the payments conversation with merchants changed over the past three to five years and when did chargebacks move from an accounting nuisance to a board-level topic?
Lucas Coro: Three to five years ago, chargebacks were a line item that finance reconciled monthly. Today, they can open our sales calls, which is a huge shift. I watch this from the vendor side, and we're seeing that if you rack up too many disputes, the card networks will start treating your account like a fraud risk, even when a transaction is legitimate. Approvals and conversions drop, and eventually you can lose your merchant ID altogether. That's when a founder's chargeback problem becomes a "board problem." We're not talking about a simple fee; this is a matter of whether you can keep processing payments at all. One account's behavior can put an entire pool of merchants at risk. That reality tends to get chargebacks onto the agenda fast.
I remember talking to one of our vendors who was very focused on one thing: selling more and bringing more volume to the platform. Their thinking was basically, "if you want more volume from us, we should be able to get better deals." I had to explain that volume without a healthy business behind it isn't necessarily what we're looking for. If the volume comes with high chargebacks, refunds, or poor customer experience, it creates risk for everyone and isn't sustainable long term.
From that conversation, I saw their mindset start to shift. Once they began looking beyond the sale and thinking more about the entire customer journey after the payment (Did the customer actually receive access? Do they understand what they purchased? Do they know who the merchant is and who is processing the payment? Is the customer getting the support they need?), their processing got healthier. That's one of the biggest changes I've seen in the industry: the goal isn't just to generate more volume anymore. It's to generate healthy, sustainable volume that you can continue processing long term.
I advise founders not to present chargebacks as a payment metric alone. A dispute ratio is a business-health metric. If I'm a founder talking to my board, I wouldn't just say, "our chargeback rate went from 0.4% to 0.8%." I'd explain why it moved, where it's coming from, what impact it has on the business, and what we're doing about it.
I would break it down into three areas: trend, root cause, and action plan. First, is the ratio improving or deteriorating? Second, what's actually driving the disputes, product expectations, traffic quality, fulfillment, fraud, customer support, or something else? And third, what are we changing to bring it back down? I also try to make founders understand that not all revenue is equal. $1 million in revenue with a healthy dispute profile is much more valuable than $1 million that creates significant downstream risk.
To a board, I would position chargebacks as both a risk indicator and an opportunity to improve the quality of revenue, rather than something the payments team needs to deal with.
Ishan Pandey: First-party fraud has more than doubled as a share of all fraud in a single year and the industry now calls it "friendly fraud," which is a very polite name for customers disputing purchases they made. From the merchant data you see, what is actually driving this behavior: economic pressure, one-click dispute apps, subscription fatigue or something else?
Lucas Coro: All three play a role, but vendor behavior is probably the most underestimated factor. I spend a lot of my time educating vendors on how being too aggressive (e.g. overselling, not taking care of customers after the sale) can directly generate chargebacks, because unhappy buyers default to disputing rather than asking for a refund.
That instinct makes sense: your banking app makes disputing effortless, while contacting a merchant and negotiating a refund feels like a hassle. Layer in genuine economic pressure and subscription fatigue, and you get buyers who aren't trying to defraud anyone but end up doing exactly that. Apps that market disputes as "free refunds" make it worse, but they're accelerating behavior that friction, and sometimes a vendor's own tactics, likely caused.
One data point I find telling: our data shows that products priced under $10 tend to be flagged as fraudulent much more often than products above that threshold. I think that says something interesting about payment behavior. It could be that customers are more likely to dispute lower-ticket transactions because the amount feels less significant, or it could be related to the type of products being sold and the purchasing behavior of customers at those price points. Either way, it's something we've noticed in our data, and it reinforces the idea that price point and customer behavior are closely connected when it comes to fraud and disputes.
For digital product sellers: the customer should clearly understand what they're purchasing, the price, whether it's a subscription, who is charging them, how they will receive access, and who they should contact if they have a problem. That shouldn't stop at the checkout page. The post-purchase experience is just as important. Send the confirmation, give them immediate access when possible, make your brand recognizable on their bank statement, and make customer support easy to find.
The best way to prevent a chargeback isn't always fighting the chargeback after it happens. It's removing the confusion that causes the customer to file it in the first place.
Ishan Pandey: Can you walk us through the true economics of a chargeback for a digital product seller. Beyond the disputed amount, what do merchants underestimate: the fees, the labor, the network monitoring thresholds like Visa's new 1.5 per cent VAMP line or the downstream cost of getting classified as high-risk?
Lucas Coro: The disputed amount is the smallest number in the equation. Mastercard puts the all-in cost around $128 per chargeback once you factor in fees and handling, and merchants underestimate how much their relationship with the card companies can cost them. Once your dispute pattern trips a card network's fraud signals, even legitimate transactions start getting declined, because Visa and Mastercard start treating your merchant ID as risky.
A vendor with a clean history gets the benefit of the doubt on a mismatched address; one with a bad pattern doesn't. Then, there's the threshold math: cross the network's excessive-dispute line and you're not paying a fee anymore, you're negotiating your ability to keep processing at all. When you get reclassified as high-risk, your rates will jump and processing partners might walk away entirely. Merchants budget refunds, but they rarely budget for losing the relationship.
There's a threshold where we start treating chargebacks as a serious concern, and these days with the changes around Visa VAMP, we're also paying much closer attention to chargeback alerts and the overall trend. A merchant might still have a relatively low CB ratio, but if we see their alerts increasing rapidly, that becomes a red flag for us much earlier. These alerts can be an early indicator of where the merchant is heading and, more importantly, they have become increasingly relevant to how our overall processing portfolio is viewed under the new Visa framework.
We don't want to wait until the actual chargeback ratio becomes a problem. We want to identify the warning signs early and work with the merchant to correct the issue before it becomes a larger processing risk.
Ishan Pandey: On the technical side, could you explain how an instant bank payment actually differs from a card transaction under the hood: the authentication flow, the settlement path and, crucially, what happens when a customer wants their money back. Why does moving from card rails to bank rails change the dispute mechanics at a structural level?
Lucas Coro: With a card, authentication is delegated. A card number and CVV stand in for the cardholder, which is exactly why 'card-not-present' transactions are easy to dispute after the fact. With Instant Bank Payments, powered by Stripe Link, the buyer logs into their own bank and authenticates directly with their bank's credentials, right at checkout.
During the transaction, Stripe never sees the bank's credentials. Instead, it receives a token representing that specific, permissioned connection, where the authorization record is the buyer's own bank login, not a stored card number a shopper can later claim was misused.
When a legitimate return does happen, it's resolved directly with the merchant rather than routed through a card network's dispute machinery. The dispute mechanism gets faster and fundamentally more secure with this layer of proof.
Ishan Pandey: Chargebacks exist because card networks built strong consumer protections. If bank payments reduce disputes partly by removing that reversal machinery, are merchants solving fraud or simply shifting risk onto consumers? How do you keep buyer trust intact on rails with fewer built-in protections?
Lucas Coro: That's a fair challenge, and I won't pretend there's no trade-off. But I'd push back on "fewer protections." In this case, we're looking at different protections for consumers.
Card chargeback rights exist partly to compensate for weak authentication. When authentication is strong (in this case, because the buyer approved the purchase inside their own bank's login), we don't need such a large safety net.
To be clear, we're not asking merchants to abandon refund policies here. Instant Bank Payments work alongside card purchases, and legitimate returns still get handled directly by the merchant.
Consumer trust can actually improve in this scenario because they made an unambiguous, bank-verified choice to pay, not because they lost all recourse. The honest answer is that this works best for merchants who already offer fair, responsive refund practices, and it's not a substitute for good customer service.
Ishan Pandey: Payment method proliferation cuts both ways: every new option can lift conversion or add checkout friction. What does adoption actually look like when a merchant turns on pay-by-bank in the US, where consumers have decades of card habit and how does that compare with what you have seen in Europe?
Lucas Coro: In the U.S., we love shopping with cards, and no one is seeking a wholesale replacement. With Instant Bank Payments, we see an added option that some shoppers will reach for immediately, particularly ones already comfortable moving money through bank-linked apps, and a more understated effect on everyone else.
Research on U.S. payment behavior shows that comfort with technology is already there (even where habit hasn't caught up yet), and simply offering a trusted, recognizable option at checkout has been shown to lift checkout completions even among buyers who ultimately pay another way.
Europe's relationship with account-to-account payments is structurally different, so open banking and bank-transfer options have been part of checkout there for years. European shoppers arrive already trained to expect these payment options while they're still early-innings in the U.S.
Generally speaking, we tend to see the U.S. as a market that adopts new technology, business models, and consumer trends very quickly. In several European markets, consumers have already developed strong habits around bank transfers and local payment methods, so there isn't necessarily the same attachment to credit cards that we see in the US.
For U.S. consumers to shift in the same way, the payment experience has to become easier than using a card, not just different. It needs to be fast, secure, widely accepted, and provide a clear benefit to the customer. Solutions like Instant Bank Payment have an opportunity here. If consumers realize they can pay directly from their bank with a seamless experience, while still having the confidence that they're protected and know exactly who they're paying, adoption can happen pretty quickly.
Ishan Pandey: You chose to build this on Stripe Link rather than integrating open banking rails directly. Take us inside that build-versus-partner decision: what does a platform gain and what does it give up when a critical payment capability depends on another company's infrastructure?
Lucas Coro: Building direct open banking integrations means owning bank partnerships, security certifications and a compliance surface that grows every time a new financial institution joins the network. We're talking about a multi-year commitment before a single transaction even runs. Partnering with Stripe Link gives merchants a secure, bank-authenticated checkout option in a fraction of that time, with a token-based model that keeps credentials off our systems entirely. We give up some control over the roadmap and some differentiation since we can't move faster than our infrastructure partner chooses to move.
However, as a platform serving thousands of merchants, we didn't want to slow the delivery of that value down while we "built the plumbing" that specialized providers like Stripe already do really well. We'd rather spend our engineering effort on the seller experience rather than reinventing bank connectivity.
Ishan Pandey: Finally, for founders selling digital products who are watching their dispute ratios climb toward network thresholds right now, what is the most practical advice you can give them this quarter?
Lucas Coro: Don't wait for a warning letter: Check your actual dispute ratio against your processor's threshold today, because "excessive" is a lower bar than most founders assume. Take an honest look at your own tactics. If you're overselling or not taking care of customers after the sale, you're generating your own chargebacks, and no amount of payment technology fixes that on its own. Make canceling as easy as disputing so customers have a reason to talk to you before they call their bank. It's essential that you keep clean records of authorization and delivery for every transaction.
A lot of founders may believe that making refunds or cancellations harder will prevent refunds from scaling and help them avoid losing money. It can actually have the opposite effect. If customers can't easily resolve an issue with the merchant, they may look for another way to get their money back, and that can turn into a chargeback. Today, with the increased focus on chargebacks and the changes around Visa VAMP, that's much more dangerous for the merchant than simply processing a refund.
I tell founders: don't look at a refund as money you're losing; look at it as a cost of protecting the rest of your processing. Sometimes accepting a refund today is what allows you to keep processing tomorrow.
At Digistore24, we give vendors a live dashboard to monitor the key financial and processing metrics of their business, including refund rates and chargeback rates. The idea is to give vendors visibility into these numbers in real time so they don't have to wait until there's a problem to react. They can see how their business is performing, identify trends early, and take action before a small issue becomes a bigger processing problem.
Don’t forget to like and share the interview!
Vested Interest Disclosure: HackerNoon has reviewed the report for quality, but the claims herein belong to the author. #DYOR.
The disputed amount is the smallest part of that bill. Merchants spend an average of $128 to handle a single chargeback, $82 internally and $46 in third-party fees, against an average US dispute of $110. Card-not-present sales, 63 per cent of merchant volume, carry most of the risk. The tolerance for it is shrinking: Visa cut its merchant "excessive" dispute threshold from 2.2 per cent to 1.5 per cent on April 1, 2026, with an $8 fee on every dispute above the line.
That squeeze is the backdrop to Digistore24, the sales platform that runs backend infrastructure for thousands of digital brands, launching Instant Bank Payments for US transactions on July 9, 2026, powered by Stripe Link. Buyers authenticate inside their own bank at checkout, the payment confirms instantly and US vendors pay nothing beyond the usual margin. The premise is that account-to-account payments give merchants a settlement path with different dispute dynamics. To test whether pay-by-bank is a chargeback answer or a new trade-off, I sat down with Lucas Coro, Digistore24's Director of U.S Sales, who watches these decisions play out across a large merchant base every day.
Ishan Pandey: Hi Lucas, it's a pleasure to welcome you to our "Behind the Startup" series. Please tell us about yourself and the journey that led you to Digistore24.
Lucas Coro: Thanks, Ishan, it's my pleasure to be here. So, I'm originally from Brazil. I actually came to the U.S. on a soccer scholarship to do my MBA in marketing and business research. Before that, I'd spent about four years in Brazil doing business development and account management, but at that time, I didn't do any work in payments or affiliate marketing at all.
Digistore24 found me through LinkedIn and brought me on as an account manager doing business development. I learned the industry from the ground up, including direct response marketing, online payment processing, all of it, by asking a lot of questions and staying close to the vendors we work with.
That path took me from account manager to sales manager to where I am now, Director of U.S Sales. It's given me a front-row seat to how thousands of merchants actually run their businesses, which is exactly the perspective I bring to a conversation like this.
One thing I learned early on is that a vendor can have an amazing product and a great sales funnel, but if the payment experience isn't right, everything falls apart. I remember working with vendors where the focus was almost entirely on driving more traffic and making more sales. But once we looked deeper, we realized they were losing a significant amount of revenue through payment declines, refunds, and chargebacks. They were essentially spending more money to bring in customers they were struggling to successfully process. That experience really changed the way I look at vendors today. I don't just look at how much they're selling. I look at the entire journey: where the traffic is coming from, how customers behave at checkout, how payments are being approved, what happens after the sale, and ultimately whether that revenue is actually sustainable. Growing revenue and growing healthy revenue are two very different things.
In a traditional sales mindset, you celebrate the sale. But when you're dealing with payments at scale, the transaction itself is just the beginning. You have to ask: Was the payment approved? Did the customer have a good experience? Are they going to refund? Is the transaction going to turn into a chargeback? Is the vendor actually going to be able to scale that volume? As I started seeing those numbers at a larger scale, I realized that a 1% improvement in payment approval or checkout conversion can sometimes be worth more than adding thousands of new leads to the top of the funnel. Sales gets the customer in the door, but payments, conversion, and risk determine how much of that opportunity you actually keep.
Ishan Pandey: You sit at an unusual vantage point: vendor sales across thousands of digital merchants. From that seat, how has the payments conversation with merchants changed over the past three to five years and when did chargebacks move from an accounting nuisance to a board-level topic?
Lucas Coro: Three to five years ago, chargebacks were a line item that finance reconciled monthly. Today, they can open our sales calls, which is a huge shift. I watch this from the vendor side, and we're seeing that if you rack up too many disputes, the card networks will start treating your account like a fraud risk, even when a transaction is legitimate. Approvals and conversions drop, and eventually you can lose your merchant ID altogether. That's when a founder's chargeback problem becomes a "board problem." We're not talking about a simple fee; this is a matter of whether you can keep processing payments at all. One account's behavior can put an entire pool of merchants at risk. That reality tends to get chargebacks onto the agenda fast.
I remember talking to one of our vendors who was very focused on one thing: selling more and bringing more volume to the platform. Their thinking was basically, "if you want more volume from us, we should be able to get better deals." I had to explain that volume without a healthy business behind it isn't necessarily what we're looking for. If the volume comes with high chargebacks, refunds, or poor customer experience, it creates risk for everyone and isn't sustainable long term.
From that conversation, I saw their mindset start to shift. Once they began looking beyond the sale and thinking more about the entire customer journey after the payment (Did the customer actually receive access? Do they understand what they purchased? Do they know who the merchant is and who is processing the payment? Is the customer getting the support they need?), their processing got healthier. That's one of the biggest changes I've seen in the industry: the goal isn't just to generate more volume anymore. It's to generate healthy, sustainable volume that you can continue processing long term.
I advise founders not to present chargebacks as a payment metric alone. A dispute ratio is a business-health metric. If I'm a founder talking to my board, I wouldn't just say, "our chargeback rate went from 0.4% to 0.8%." I'd explain why it moved, where it's coming from, what impact it has on the business, and what we're doing about it.
I would break it down into three areas: trend, root cause, and action plan. First, is the ratio improving or deteriorating? Second, what's actually driving the disputes, product expectations, traffic quality, fulfillment, fraud, customer support, or something else? And third, what are we changing to bring it back down? I also try to make founders understand that not all revenue is equal. $1 million in revenue with a healthy dispute profile is much more valuable than $1 million that creates significant downstream risk.
To a board, I would position chargebacks as both a risk indicator and an opportunity to improve the quality of revenue, rather than something the payments team needs to deal with.
Ishan Pandey: First-party fraud has more than doubled as a share of all fraud in a single year and the industry now calls it "friendly fraud," which is a very polite name for customers disputing purchases they made. From the merchant data you see, what is actually driving this behavior: economic pressure, one-click dispute apps, subscription fatigue or something else?
Lucas Coro: All three play a role, but vendor behavior is probably the most underestimated factor. I spend a lot of my time educating vendors on how being too aggressive (e.g. overselling, not taking care of customers after the sale) can directly generate chargebacks, because unhappy buyers default to disputing rather than asking for a refund.
That instinct makes sense: your banking app makes disputing effortless, while contacting a merchant and negotiating a refund feels like a hassle. Layer in genuine economic pressure and subscription fatigue, and you get buyers who aren't trying to defraud anyone but end up doing exactly that. Apps that market disputes as "free refunds" make it worse, but they're accelerating behavior that friction, and sometimes a vendor's own tactics, likely caused.
One data point I find telling: our data shows that products priced under $10 tend to be flagged as fraudulent much more often than products above that threshold. I think that says something interesting about payment behavior. It could be that customers are more likely to dispute lower-ticket transactions because the amount feels less significant, or it could be related to the type of products being sold and the purchasing behavior of customers at those price points. Either way, it's something we've noticed in our data, and it reinforces the idea that price point and customer behavior are closely connected when it comes to fraud and disputes.
For digital product sellers: the customer should clearly understand what they're purchasing, the price, whether it's a subscription, who is charging them, how they will receive access, and who they should contact if they have a problem. That shouldn't stop at the checkout page. The post-purchase experience is just as important. Send the confirmation, give them immediate access when possible, make your brand recognizable on their bank statement, and make customer support easy to find.
The best way to prevent a chargeback isn't always fighting the chargeback after it happens. It's removing the confusion that causes the customer to file it in the first place.
Ishan Pandey: Can you walk us through the true economics of a chargeback for a digital product seller. Beyond the disputed amount, what do merchants underestimate: the fees, the labor, the network monitoring thresholds like Visa's new 1.5 per cent VAMP line or the downstream cost of getting classified as high-risk?
Lucas Coro: The disputed amount is the smallest number in the equation. Mastercard puts the all-in cost around $128 per chargeback once you factor in fees and handling, and merchants underestimate how much their relationship with the card companies can cost them. Once your dispute pattern trips a card network's fraud signals, even legitimate transactions start getting declined, because Visa and Mastercard start treating your merchant ID as risky.
A vendor with a clean history gets the benefit of the doubt on a mismatched address; one with a bad pattern doesn't. Then, there's the threshold math: cross the network's excessive-dispute line and you're not paying a fee anymore, you're negotiating your ability to keep processing at all. When you get reclassified as high-risk, your rates will jump and processing partners might walk away entirely. Merchants budget refunds, but they rarely budget for losing the relationship.
There's a threshold where we start treating chargebacks as a serious concern, and these days with the changes around Visa VAMP, we're also paying much closer attention to chargeback alerts and the overall trend. A merchant might still have a relatively low CB ratio, but if we see their alerts increasing rapidly, that becomes a red flag for us much earlier. These alerts can be an early indicator of where the merchant is heading and, more importantly, they have become increasingly relevant to how our overall processing portfolio is viewed under the new Visa framework.
We don't want to wait until the actual chargeback ratio becomes a problem. We want to identify the warning signs early and work with the merchant to correct the issue before it becomes a larger processing risk.
Ishan Pandey: On the technical side, could you explain how an instant bank payment actually differs from a card transaction under the hood: the authentication flow, the settlement path and, crucially, what happens when a customer wants their money back. Why does moving from card rails to bank rails change the dispute mechanics at a structural level?
Lucas Coro: With a card, authentication is delegated. A card number and CVV stand in for the cardholder, which is exactly why 'card-not-present' transactions are easy to dispute after the fact. With Instant Bank Payments, powered by Stripe Link, the buyer logs into their own bank and authenticates directly with their bank's credentials, right at checkout.
During the transaction, Stripe never sees the bank's credentials. Instead, it receives a token representing that specific, permissioned connection, where the authorization record is the buyer's own bank login, not a stored card number a shopper can later claim was misused.
When a legitimate return does happen, it's resolved directly with the merchant rather than routed through a card network's dispute machinery. The dispute mechanism gets faster and fundamentally more secure with this layer of proof.
Ishan Pandey: Chargebacks exist because card networks built strong consumer protections. If bank payments reduce disputes partly by removing that reversal machinery, are merchants solving fraud or simply shifting risk onto consumers? How do you keep buyer trust intact on rails with fewer built-in protections?
Lucas Coro: That's a fair challenge, and I won't pretend there's no trade-off. But I'd push back on "fewer protections." In this case, we're looking at different protections for consumers.
Card chargeback rights exist partly to compensate for weak authentication. When authentication is strong (in this case, because the buyer approved the purchase inside their own bank's login), we don't need such a large safety net.
To be clear, we're not asking merchants to abandon refund policies here. Instant Bank Payments work alongside card purchases, and legitimate returns still get handled directly by the merchant.
Consumer trust can actually improve in this scenario because they made an unambiguous, bank-verified choice to pay, not because they lost all recourse. The honest answer is that this works best for merchants who already offer fair, responsive refund practices, and it's not a substitute for good customer service.
Ishan Pandey: Payment method proliferation cuts both ways: every new option can lift conversion or add checkout friction. What does adoption actually look like when a merchant turns on pay-by-bank in the US, where consumers have decades of card habit and how does that compare with what you have seen in Europe?
Lucas Coro: In the U.S., we love shopping with cards, and no one is seeking a wholesale replacement. With Instant Bank Payments, we see an added option that some shoppers will reach for immediately, particularly ones already comfortable moving money through bank-linked apps, and a more understated effect on everyone else.
Research on U.S. payment behavior shows that comfort with technology is already there (even where habit hasn't caught up yet), and simply offering a trusted, recognizable option at checkout has been shown to lift checkout completions even among buyers who ultimately pay another way.
Europe's relationship with account-to-account payments is structurally different, so open banking and bank-transfer options have been part of checkout there for years. European shoppers arrive already trained to expect these payment options while they're still early-innings in the U.S.
Generally speaking, we tend to see the U.S. as a market that adopts new technology, business models, and consumer trends very quickly. In several European markets, consumers have already developed strong habits around bank transfers and local payment methods, so there isn't necessarily the same attachment to credit cards that we see in the US.
For U.S. consumers to shift in the same way, the payment experience has to become easier than using a card, not just different. It needs to be fast, secure, widely accepted, and provide a clear benefit to the customer. Solutions like Instant Bank Payment have an opportunity here. If consumers realize they can pay directly from their bank with a seamless experience, while still having the confidence that they're protected and know exactly who they're paying, adoption can happen pretty quickly.
Ishan Pandey: You chose to build this on Stripe Link rather than integrating open banking rails directly. Take us inside that build-versus-partner decision: what does a platform gain and what does it give up when a critical payment capability depends on another company's infrastructure?
Lucas Coro: Building direct open banking integrations means owning bank partnerships, security certifications and a compliance surface that grows every time a new financial institution joins the network. We're talking about a multi-year commitment before a single transaction even runs. Partnering with Stripe Link gives merchants a secure, bank-authenticated checkout option in a fraction of that time, with a token-based model that keeps credentials off our systems entirely. We give up some control over the roadmap and some differentiation since we can't move faster than our infrastructure partner chooses to move.
However, as a platform serving thousands of merchants, we didn't want to slow the delivery of that value down while we "built the plumbing" that specialized providers like Stripe already do really well. We'd rather spend our engineering effort on the seller experience rather than reinventing bank connectivity.
Ishan Pandey: Finally, for founders selling digital products who are watching their dispute ratios climb toward network thresholds right now, what is the most practical advice you can give them this quarter?
Lucas Coro: Don't wait for a warning letter: Check your actual dispute ratio against your processor's threshold today, because "excessive" is a lower bar than most founders assume. Take an honest look at your own tactics. If you're overselling or not taking care of customers after the sale, you're generating your own chargebacks, and no amount of payment technology fixes that on its own. Make canceling as easy as disputing so customers have a reason to talk to you before they call their bank. It's essential that you keep clean records of authorization and delivery for every transaction.
A lot of founders may believe that making refunds or cancellations harder will prevent refunds from scaling and help them avoid losing money. It can actually have the opposite effect. If customers can't easily resolve an issue with the merchant, they may look for another way to get their money back, and that can turn into a chargeback. Today, with the increased focus on chargebacks and the changes around Visa VAMP, that's much more dangerous for the merchant than simply processing a refund.
I tell founders: don't look at a refund as money you're losing; look at it as a cost of protecting the rest of your processing. Sometimes accepting a refund today is what allows you to keep processing tomorrow.
At Digistore24, we give vendors a live dashboard to monitor the key financial and processing metrics of their business, including refund rates and chargeback rates. The idea is to give vendors visibility into these numbers in real time so they don't have to wait until there's a problem to react. They can see how their business is performing, identify trends early, and take action before a small issue becomes a bigger processing problem.
Don’t forget to like and share the interview!
Vested Interest Disclosure: HackerNoon has reviewed the report for quality, but the claims herein belong to the author. #DYOR.