The cost of online fraud sits with merchants.
It shouldn't.
The fact that online payments fraud sits with merchants is because of the way online payments are accepted. It was never your fault, it’s because card not present payments don’t have the one thing that protects merchants in-store; proof the cardholder made the transaction.
85%
The dispute is decided against you
In roughly 85% of chargeback cases, the merchant cannot prove the cardholder made the transaction. With no proof, you are forced to refund, even if the purchase was genuine.
45%
And it’s getting worse
Chargebacks grew roughly 45% in 2024. Friendly fraud and card-not-present exposure are alltrending the wrong way for merchants.
2.5x
You lose more than the sale
A successful chargeback costs about 2.5× the sale value once you count the refund, the shipped goods or delivered service, scheme fees and the staff time to fight it.
$74
Every dispute has a cost
The average chargeback costs the merchant $74 to process and contest. And this is before thevalue of the sale itself is written off.
Card present vs Card not present
In-store payments are better for merchants than online.
Card Present Payments
-
Physical card tapped or inserted
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PIN authenticates the cardholder
-
Fraud liability sits with the card issuer
-
Typically settles on the same day
Decades of tap and PIN makes this the safest way to take a payment in any channel.
Card Not Present Payments
-
No physical card and no PIN
-
The card details entered are stealable
-
Fraud liability sits with the merchant
-
Settlement can take weeks
CPoI® changes the risk by enabling card present payments online.
Whoever holds liability for the transaction is responsible for the refund
Instore
Card Present
Issuer
Instore
Card Not Present
Merchant
Online
Card Not Present
Merchant
False positives:
The big problem you may not know you have
If the anti-fraud solutions that merchants use to detect fraudulent transactions identifies a high-risk sale, it will not allow the sale to proceed. But there is a very high chance that the majority of the transactions the anti-fraud system deems as fraudulent (and therefore blocks), are not fraudulent at all. This is called a false positive.
41%
Of customers won’t shop again with a merchant after a false positive.
65%
Of transactions that anti-fraud solutions block are actually genuine.
$13
Is the total loss to the merchant for every $1 in false positives.
The checks that are supposed to protect you may be blocking your sales
Anti-fraud scoring
Risk models decline first and ask questions never. Around 65% of what they block is a real customer, making this the single most expensive error in the funnel.
The three digits on the card and a billing postcode are trivially available to anyone holding stolen details. They prove data, not a person.
CVV / AVS
3D Secure / OPT
One-time passcodes add friction, arrive late (or never), and are a leading cause of abandoned baskets. When they fail, the sale is lost.
Biometrics / app step-ups
Face and fingerprint checks depend on enrolment and the right device. They stall unfamiliar shoppers and still leave the merchant liable.