Business 4 min read By Arthur Ellington
Casap Raises $56 Million to Tackle Cardholder Chargeback Fraud
Casap, a startup using AI to resolve card disputes, has raised $56 million in a Series B round. The company helps banks and card companies cope with rising fraud committed by cardholders themselves.
Fintech startup Casap has raised $56 million in a Series B funding round led by Base10 Partners. The company, founded in 2023, now has total investment of $90 million. The startup builds AI tools that help banks and card-issuing companies handle disputes and payment chargebacks for transactions contested by cardholders.
The main shift, according to founder and CEO Shanti Shanmugam, lies in the nature of fraud. Previously, almost all fraudulent transactions were carried out by third parties; today, cardholders themselves account for nearly a third of fraudulent transactions. Shanmugam attributes this to AI tools making it easier to dispute charges, as well as to social media spreading advice on how to get "free stuff" through deception. She says many people consider this a harmless crime, since banks have a lot of money, and they resort to what they see as "white lies."
Financial giants Synchrony and Experian also took part in the round as strategic investors. Along with Base10 Partners, the investors include Lightspeed Venture Partners, Emergence and Primary. The company did not disclose its valuation.
Casap trained its AI on several large models, but the key element, the company says, is the so-called harness, built specifically for resolving disputes. Demand for the service, according to Shanmugam, is partly driven by consumer protection laws. They protect people well from third-party fraud but place a heavy burden on banks and card companies when they need to reject dishonest claims from cardholders. "The rules that govern these disputes are written as if no one ever lies," she says.
Because of this, many financial organizations simply rule in the customer's favor on all disputes below a certain threshold. That threshold is usually around $30, though, according to Shanmugam, in some situations the line can be considerably higher, since banks do not want to spend time and money on investigations.
According to Casap, its AI tools significantly change this economics and bring noticeable savings to card issuers. The startup's clients have reduced first-party fraud losses by up to 51 percent, and the share of won chargebacks has risen to 96 percent against an industry average of 60 percent. Shanmugam also stresses that dispute resolution time shrinks to 8 days on average, while traditional methods can take up to 90 days. She says a human still takes part in the review, but the task becomes much simpler and often takes just 1–2 minutes.
Casap does not disclose the full set of indicators it uses to assess whether a customer is lying about a purchase. According to Shanmugam, they include the physical location of the card and various spending patterns. The company's name is meant to convey the idea of "get your case done ASAP." Casap has already established itself in handling first-party fraud claims, and it plans to direct the new funds toward expanding into adjacent back-office areas for banks and card companies, including customer complaint handling and debt collection services.
Casap was founded by Shanmugam and Saxey Peters, a former Chime employee. Shanmugam herself previously worked as a product manager at several well-known Silicon Valley companies, including Robinhood, Meta and Salesforce.
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