Chargebacks: What Every Merchant Needs to Know

09/09/2025

By Venue Pay • 09.04.2025

Why this matters

Fraud and chargebacks drain revenue, erode margins, and consume team bandwidth. For high-growth merchants—especially those selling across web, app, and in-person—winning against fraud isn't just about stopping bad transactions. It's about building a program that reduces disputes, keeps you out of card-brand monitoring, and protects customer experience across omnichannel touchpoints.

Venue Pay was built for exactly this: low processing costs, multiple payment methods, and one platform for online and POS —with the controls, data, and partnerships to curb fraud without crushing conversion.

"The best fraud program doesn't just block fraudsters—it helps real customers glide through. At Venue Pay we focus on smart friction, not more friction."
— Kim Bengtsen, Venue Pay

Chargeback 101: friendly vs. true fraud

A chargeback is a forced reversal of funds initiated by the cardholder through their issuing bank. While "true fraud" (stolen card details) still happens, a growing share of disputes are first-party misuse (often called friendly fraud)—customers who did make the purchase but don't recognize it, forgot to cancel, or dispute to avoid the merchant's refund policy.

Why you should care:

Costs escalate fast: You lose the goods, shipping, marketing spend, authorization fees—and you pay dispute fees on top.
Brand risk: Excessive disputes can push you into network monitoring programs with fines and extra scrutiny.
Conversion trade-offs: Overly aggressive controls can suppress approval rates and legitimate customers.

TC40 & SAFE reports: the early warning system hidden in plain sight

Two data flows power how networks monitor fraud:

Visa TC40: Issuers file TC40 reports to Visa when a cardholder claims a transaction was unauthorized. These records feed Visa's fraud monitoring logic and downstream programs.
Mastercard SAFE (System to Avoid Fraud Effectively): Mastercard's equivalent dataset, documenting fraud claims to monitor and mitigate network risk.

These reports don't automatically create chargebacks, but they do influence whether you're flagged for fraud programs and are a powerful lens for spotting attacks, mule behavior, and problematic SKUs or campaigns.

Card-brand monitoring (what to avoid)

Visa Fraud Monitoring Program (VFMP): Typically triggered when monthly fraud dollars exceed thresholds and your fraud-to-sales ratio crosses set limits (e.g., USD $75,000 and 0.9% for Standard; USD $250,000 and 1.8% for Excessive, per program guides).
Mastercard Excessive Chargeback Program (ECP): Targets merchants whose chargeback counts and ratios exceed thresholds; penalties and corrective actions apply.

Bottom line: Monitor your fraud dollars, fraud ratio, and chargeback ratio. Use TC40/SAFE trends to act before you breach.

Proven ways to combat fraud

Fraud control is a funnel. The smartest programs stack prevention, deflection, and recovery:

1) Prevention: stop bad transactions upfront

Dynamic risk scoring & behavioral signals (device fingerprinting, velocity, geospatial checks). Best-in-class platforms like Kount, Sift, Forter, Signifyd, and ClearSale can be deployed as primary or secondary screening layers.
Strong Customer Authentication (SCA) / 3-D Secure 2 for high-risk flows, with exemptions where eligible to protect conversion.
Account protection: MFA where it makes sense, plus identity and email/phone intelligence (e.g., Mastercard's identity tools).
Authorization optimization: Clean descriptors, AVS/CVV use, and retry logic improve approvals and reduce post-auth confusion that becomes "friendly fraud."

2) Deflection: resolve disputes before they become chargebacks

Ethoca Alerts: near-real-time issuer alerts let you stop fulfillment or refund quickly—preventing a chargeback from ever being filed.
Verifi Order Insight (Visa): return rich order data to issuers instantly to deflect first-party misuse in the pre-dispute stage; now amplified by Visa's Compelling Evidence 3.0 (CE3.0) rules.

3) Recovery: win valid disputes you shouldn't lose

CE3.0 enables merchants to present historical usage and device evidence that can block or reverse friendly-fraud disputes on Visa when criteria are met—both pre-dispute via Order Insight and post-dispute in pre-arbitration.
Representment playbooks: reason-code templates, evidence checklists, and SLAs ensure you hit deadlines and submit the right proof the first time.

"Deflection has an outsized ROI. If we can stop a dispute before it's born, you keep the sale, avoid the fee, and stay off the programs."
— Kim Bengtsen, Venue Pay

How Venue Pay helps you beat fraud across omnichannel

Whether you sell online, at the counter, or on the go, Venue Pay gives you one payment spine with the tools and partnerships to control fraud and disputes—without bloating cost.

One platform, all channels

Omnichannel payments: Process card-not-present (web, app), in-person POS/terminals, and mobile—one platform, unified reporting, and straightforward pricing.
Hardware for every setup: Modern terminals and POS options ready to deploy with minimal setup and low operating costs.

"We designed Venue Pay for real-world operations: e-commerce one day, pop-ups the next, and steady in-store traffic on weekends—all tracked and protected under one roof."
— Kim Bengtsen, Venue Pay

Fraud control, built-in and pluggable

Risk rules that learn: Configure rules by channel, SKU, country, and basket risk.
TC40/SAFE visibility: Our team can help you operationalize TC40/SAFE intelligence so you act before metrics breach thresholds.
Pre-dispute deflection: Ethoca Alerts and Verifi Order Insight integrations available to stop or deflect disputes early (including CE3.0 use cases).
3-D Secure 2: Step-up only when it helps; minimize unnecessary friction while staying compliant with SCA in Europe.
Evidence automation: Templates and data feeds to streamline representment, including device, usage, delivery, and customer history where available.

Transparent, competitive pricing

Low, transparent processing costs with variable pricing that adapts to card types and channels. No startup fees; pay for what you use. Venue Pay

Made for Denmark—and beyond

Support for local and global payment methods and omnichannel use cases relevant to Nordic commerce, where digital wallets are surging (e.g., MobilePay's growth post-merger).

External services you can subscribe to (and how they fit)

Venue Pay believes in giving merchants choice. We'll help you decide, integrate, and operate the providers that match your risk profile, vertical, and budget.

Dispute prevention & alerts

Ethoca Alerts — issuer-to-merchant alerts to prevent chargebacks via quick refunds or fulfillment stops.
Verifi Order Insight — real-time order data sharing with issuers; enables CE3.0 pre-dispute deflection for first-party misuse.

Fraud decisioning platforms (machine learning + rules)

Kount — end-to-end fraud prevention, including education on SAFE/TC40 and card-brand thresholds.
Sift — adaptable machine-learning fraud prevention for digital commerce.

Your step-by-step anti-fraud game plan

1) Baseline your metrics
Track three north-stars monthly: fraud dollars, fraud-to-sales ratio (Visa), and chargeback count/ratio (Mastercard). Use TC40/SAFE data as leading indicators. Set alerting so risk and finance see spikes within 24 hours—not at month-end.

2) Map the customer journey to friction
Decide where to require 3-D Secure, when to step up with MFA, and where to use exemptions. Prioritize high-risk baskets (virtual goods, resellable electronics, high AOV) and risky geos.

3) Enable pre-dispute deflection
Switch on Ethoca Alerts and Order Insight. Configure auto-refund or auto-cancel policies for specific SKUs/carriers to prevent fulfillment on alerted orders. Add billing descriptors and clear confirmation emails to cut "unrecognized" disputes.

4) Optimize authorization and descriptors
Cleaner descriptors and post-purchase emails reduce confused cardholders (a major driver of friendly fraud). Many "I don't recognize this" cases never become disputes when customers can self-resolve via a portal.

5) Build representment muscle
Codify evidence packs by reason code. For subscription and repeat-buyer cases, use CE3.0 criteria to block first-party misuse on Visa. Track win rates and root causes to tune upstream controls.

6) Review and iterate monthly
Hold a cross-functional review: risk, ops, CX, and marketing. If a new promo or channel sparked a bump in TC40/SAFE, adjust targeting, shipping rules, or SCA strategy.

Why choose Venue Pay as your PSP & platform provider

Lower total cost
Our transparent pricing and daily payouts protect cash flow and margins—without hidden fees.
Multiple payment options, one integration
Accept cards, local favorites, and more online and in-person. A single platform simplifies reconciliation, reporting, and risk management across channels.
Omnichannel by design
From POS terminals to web checkout, you get a unified view of customers and orders—essential for spotting fraud patterns that hide when systems are siloed.
Fraud control that balances revenue and risk
We help you connect to leading providers like Ethoca and Verifi and leverage CE3.0 where it matters—so you avoid disputes instead of fighting them later.
Expert guidance, local context
With the Nordic market's rapid shift to digital payments and wallets, you need a partner who understands the landscape and tailors controls accordingly.

Reference: services & resources

Ethoca Alerts (chargeback prevention overview) — issuer alerts to prevent chargebacks and collaboration to reduce confusion and friendly fraud. ethoca.com
Verifi Order Insight (Visa) — pre-dispute deflection, CE3.0 support. verifi.com
Visa CE3.0 Merchant Readiness (PDF) — how to qualify and implement evidence. usa.visa.com
Visa Fraud Monitoring Programs (VFMP) — thresholds and timelines. chargebackgurus.com
Mastercard ECP / SAFE — rules and merchant compliance programs. Mastercard
Kount — fraud prevention platform and TC40/SAFE education. Kount
Sift — machine-learning fraud prevention for digital commerce.
Venue Pay: Omnichannel & pricing highlights — low, transparent pricing; online + POS in one platform. Venue Pay

Ready to reduce fraud and disputes—while growing sales?

Let's tailor a fraud & disputes plan for your business. With Venue Pay, you get one PSP, multiple payment methods, omnichannel coverage, and the expertise + integrations that lower disputes, keep you out of monitoring programs, and lift conversion.

Talk to Venue Pay today to see how our platform, services, and partner ecosystem can help you stop fraud, deflect chargebacks, and protect revenue—at a cost that keeps your unit economics strong.