Chargeflow raises $35 million to fight the surge in transaction denials
Fintech startup secures equity and debt funding as e-commerce fraud grows to $100B a year.
Fintech company Chargeflow, which develops a chargeback automation platform, has raised $25 million in a Series A round, alongside a $10 million debt round. The equity round was led by Viola Growth, with participation from existing investor OpenView Venture Partners and additional backers. The company’s total funding now stands at $49 million.
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Chargeflow currently employs 160 people, including 60 at its headquarters in Modi’in, and operates in the United States, the Philippines, and Poland. According to the company, it has tripled its revenue year-on-year and now serves over 15,000 businesses worldwide. In the Philippines, the company employs support and finance teams, while its development teams are based in Poland due to lower operational costs.
In a conversation with Calcalist, Ariel Chen, CEO and co-founder of Chargeflow, explained the company’s product: “Some cardholders bypass the merchant, go directly to their bank, and ask to dispute or cancel a transaction. When that happens, the merchant must provide evidence to prove the charge is legitimate or they lose both the money and the goods. Chargeflow is a post-transaction friendly fraud prevention and chargeback automation platform. We protect the merchant from the moment a transaction is processed, through the dispute and chargeback process, at every stage.
“We automatically collect and enrich the data around each transaction, build the best possible dispute response, and submit it back to the banks at scale. In subscriptions and certain digital verticals, dispute and chargeback rates can easily reach a few percent of revenue, and in categories like gaming and digital goods, they can be even higher. Our core pricing is performance-based on recovered funds, and for some of our newer products we use a per-transaction fixed-fee model.”
Chargeflow has built a merchant network of 15,000 clients, enabling the company to cross-reference data and provide deeper insights into customer behavior.
“Riskified and Forter focus on fraud,” Chen says. “We come from the world of transaction cancellations, so we developed a product designed specifically for that. They operate before the transaction, and we operate after the transaction. Some organizations use both solutions, while smaller businesses often choose only us because they can’t afford multiple systems. For every transaction we review, we charge 20 cents.”
The company was founded by brothers Ariel Chen (CEO) and Avia Chen (CMO) and is based in Modi’in. In recent years, the phenomenon of chargebacks has grown significantly due to the rise in e-commerce. Although the chargeback process was created to protect consumers, misuse and abuse have turned it into a major source of losses for both small and large businesses. According to Mastercard, the volume of chargebacks is expected to rise 24% by 2028, reaching 324 million cases per year. About 80% of cases are classified as “friendly fraud,” meaning the customer, rather than a third party, claims they did not receive the product, were incorrectly charged, and so on. These denials cause more than $100 billion in losses to businesses annually.
Chargeflow’s platform automates the entire handling process, from preventing disputes in advance to recovering lost revenue, achieving a success rate four times higher than the industry average. This helps companies significantly reduce losses.
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Handling transaction denials is a lengthy process that requires companies to compile and submit large amounts of documentation. Instead of manually collecting evidence from multiple systems, Chargeflow automates the process from end to end. Its platform integrates with more than 100 leading payment, data, and e-commerce systems, including Shopify, Stripe, PayPal, WooCommerce, Adyen, and Afterpay. It detects, manages, and prevents transaction denials at scale, collecting and analyzing data, building and submitting evidence, and tracking results in real-time.
Using AI-based fraud detection, Chargeflow can proactively identify and prevent “friendly fraud,” alerting merchants immediately when a suspicious charge is detected and giving them a critical advantage.
