# Chargebase Chargebase is a chargeback management platform that helps merchants prevent chargebacks before they happen and win more disputes when they do. We integrate directly with the issuer networks from Verifi (a Visa company) and Ethoca (a Mastercard company) to catch disputes early and resolve them fast. Through Verifi CDRN and Ethoca Alerts, Chargebase can intercept disputes in real time and auto-refund or take action before they become chargebacks.
# What are Chargebacks? A chargeback is a forced reversal started by the customer’s bank (the issuer) after the customer disputes a card charge. The bank pulls the funds back through the card network, and your acquiring bank and processor pass that debit to you. Most of the time, you also get hit with a **chargeback fee** that may not be returned even if you win. #### **Why chargebacks happen** * True fraud: The cardholder didn’t authorize the purchase. * First‑party misuse: The cardholder authorized but disputes it later. * Merchant error: Processing mistakes, fulfillment issues, unclear policies, or duplicate charges. #### **Chargeback Lifecycle** Most cases follow a similar path: inquiry or pre‑dispute (some networks request more details that can deflect a case), first chargeback with a reason code and provisional debit, representment where you submit order, delivery, and policy evidence, then if either side continues pre‑arbitration and arbitration. Timelines and naming vary by network and processor, but response windows are short, often days, not weeks. #### **Why this matters** Chargebacks impact revenue, compliance, and workload. Beyond product cost and shipping, you pay dispute fees and spend staff time on evidence. Card networks monitor your chargeback ratio; exceeding thresholds can place you in monitoring programs with added scrutiny and costs. Confusing descriptors and hard‑to-use policies also drive avoidable disputes. # Refunds vs Chargebacks A **refund** is a choice you make. You send money back because the customer asked, your policy requires it, or you want to keep them happy. A **chargeback** is different. It’s a forced reversal started by the customer’s bank (the issuer) after the customer disputes a card charge. The bank pulls the funds back through the card network, and your acquiring bank and processor pass that debit to you. Most of the time, you also get hit with a **chargeback fee** that may not be returned even if you win. Here’s a simple way to think about it: a refund is a store return, a chargeback is a bank stepping in as referee, and the bank can take the ball back. | Topic | Refund | Chargeback | | --------------- | -------------------------------------- | ------------------------------------------ | | Who starts it | Merchant (or customer request) | Cardholder’s bank (issuer) | | Money movement | Voluntary credit back to customer | Forced debit from merchant via network | | Fees | Usually none (beyond processing rules) | Often includes non-refundable dispute fees | | Outcome control | You control timing and messaging | Controlled by issuer rules and timelines | # Chargeback Monitoring Programs (Visa & Mastercard) #### Chargeback Monitoring Programs Visa and Mastercard watch dispute levels through formal monitoring programs. They look at how many chargebacks you get and how that compares to your sales for each merchant ID. If you go over the network limits, you can be placed in a program and must reduce disputes within a set time. #### What they measure * Dispute ratio. Chargebacks divided by sales in the period the network uses. * Dispute count. Total number of chargebacks in a month. * Scope. Usually tracked per merchant ID. Sometimes by region or business model. #### What happens if you exceed limits If you cross a threshold, your acquirer is notified. You may be enrolled in a program such as Visa VDMP or Mastercard Excessive Chargeback Program. While enrolled, you can face monthly fees, extra reviews, and required plans to bring ratios down. If the trend does not improve, you can face processing limits or account closure. #### Why this matters Being in a monitoring program raises costs and adds risk. You can face higher dispute fees, monthly assessments, payout holds, and new or larger reserves. If results do not improve, your acquirer may set processing caps, suspend a merchant ID, or close the account. In severe or repeated cases, you can be placed on MATCH, which makes opening new merchant accounts difficult. The impact reaches revenue and cash flow. You lose product and shipping on many disputes, and double refunds can happen when a refund is issued and a chargeback follows. Reserves and payout delays make planning harder and can limit growth. Keeping ratios below limits avoids added fees, protects approval rates, keeps your processing stable, and preserves a good relationship with your acquirer. # Chargeback Rate Limits Chargeback rate limits are the maximum dispute levels card networks and acquirers allow before extra reviews and fees begin. The main measure is your chargeback ratio, which compares the number of chargebacks to the number of sales for a defined period, usually per merchant ID. Networks also watch your total monthly dispute count. #### How limits are measured Most networks use two signals. First is the ratio of chargebacks to sales. Second is the absolute count of chargebacks in a month. Visa often compares chargebacks in the current month to sales from a recent prior month. Mastercard commonly compares chargebacks and sales in the same month. Exact methods change, so confirm with your acquirer and the latest network guides. #### What counts toward the ratio A network chargeback counts when it is created by the issuer under network rules. Refunds you issue before a chargeback do not count. Alerts and pre dispute resolutions that you accept and refund usually do not count, but the rules differ by program and acquirer. Second chargebacks and arbitration steps relate to the same original case and do not create extra new cases for the ratio. #### How to calculate your rate Pick the period your network uses. Count all network chargebacks for that period. Count the sales that the network pairs with those chargebacks. Divide chargebacks by sales and convert to a percent. Example. If you have 120 chargebacks and 9,500 sales in the paired period, your ratio is 120 divided by 9,500, which is 1.26 percent. Key factors that affect the number * The month the network uses for sales in the denominator * Whether certain dispute types are excluded * Whether the count is per merchant ID or rolled up by region
# How to Keep Your ChargeBack Rates Low Crossing a limit can place you in a monitoring program, add monthly assessments, and trigger remediation plans. If results do not improve, you can face processing caps or account closure. Limits protect the network and issuers from high risk traffic and help drive dispute reduction. #### How to Keep Your Chargeback Rates Low The fastest way to keep your rate low is to stop disputes before they become network chargebacks. Chargeback alerts are the key tool for this. They give you an early warning from the issuer or network so you can act quickly, usually by refunding, and avoid a chargeback that would count against your ratio. #### What chargeback alerts are Alerts are notices sent before a formal chargeback is created. Common sources are Verifi RDR and CDRN and Ethoca Alerts. When you accept and resolve an alert within its window, the case is closed at the alert stage. In most setups, resolved alerts do not count toward network chargeback ratios. #### Measure results and tune rules Track alert acceptance rate, time to first action, and how many alerts still become chargebacks. Review by reason, product, and channel to find issues you can fix upstream. Keep an eye on double refunds and add checks that block a second refund on the same case. Round out the program with simple prevention steps. Use a clear billing descriptor and send order and delivery confirmations. Use AVS and CVV checks and 3DS where it fits. When you do contest a chargeback, submit complete evidence on time.
# What is Verifi? Verifi is a Visa company that helps merchants prevent and resolve disputes before they become chargebacks. It connects issuers and merchants to share order details early, send alerts, and close cases fast. The goal is fewer network chargebacks, lower ratios, and less manual work. #### Core services * Rapid Dispute Resolution. Issuers send a pre dispute to Verifi. You set rules to automatically accept and refund or reject. If you accept and resolve within the window, a network chargeback is not created. * Cardholder Dispute Resolution Network. You receive an alert that a cardholder disputed a transaction. Refund or respond within the time frame to stop the chargeback at the alert stage. * Order Insight. When a cardholder contacts the bank, the issuer can pull your enhanced receipt and order data in real time. Clear details can help the cardholder recognize the charge and end the dispute. #### How it works A potential dispute starts at the issuer. Verifi delivers a data request or an alert to you. You either share order details that explain the charge or issue a refund. If you act within the allowed window and the issuer accepts the outcome, the case closes without a network chargeback. #### Impact on chargeback rates Accepted RDR and CDRN cases usually do not count toward Visa chargeback ratios. Order Insight aims to resolve the case even earlier, so no chargeback is created. Rules can vary by acquirer and program. Confirm how each outcome is counted in your setup. #### When it helps most Verifi is useful for card not present merchants with recurring disputes such as unrecognized charges, goods not received, or canceled subscriptions. It helps across digital goods, subscriptions, retail, travel, and marketplaces.
# What is Verifi CDRN? Verifi CDRN (Cardholder Dispute Resolution Network) is an alert system that lets you resolve a cardholder dispute before it becomes a network chargeback. When a cardholder contacts the issuer to challenge a transaction, CDRN sends you an alert. You get a short window to act, usually by issuing a refund and stopping fulfillment. If you resolve the alert in time and the issuer accepts it, a network chargeback is not created. #### How it works A potential dispute starts at the issuer. Verifi sends you the alert with key details like card number (tokenized), amount, date, and reference IDs. You match it to your order and choose an action. The common action is to refund and cancel shipment or access. You confirm the outcome back to Verifi. If no action is taken within the window, the issuer may proceed with a chargeback that will count toward network ratios. #### Why it matters Resolved CDRN alerts usually do not count toward Visa chargeback ratios. This helps you stay below network limits and avoid monitoring programs. Alerts also surface issues early, such as unclear descriptors, late shipping, and subscription cancellations, so you can fix the root cause. What you need to set up\ • Enrollment with Verifi and mapping of your merchant IDs\ • API or portal access to receive and act on alerts\ • A way to link alerts to orders fast and record refunds and case IDs\ • Clear refund and cancellation rules for alert cases #### Timelines and outcomes Response windows are short, often measured in hours or a few days. Fast action is key. A full refund typically closes the case at the alert stage. Partial refunds or declines can lead to a chargeback. Not all issuers participate, so some disputes will still arrive as normal chargebacks without an alert. # What is Verifi RDR? Verifi Rapid Dispute Resolution is a Visa service that lets you resolve a dispute before it becomes a network chargeback. It works by applying rules you set in advance. When a cardholder raises a dispute, the issuer sends a pre dispute to Verifi. If the case matches your rules, it is accepted and refunded right away. The dispute ends at this stage and a network chargeback is not created. #### How it works You define rules such as refund all disputes under a set amount, refund unrecognized charges on the first claim, or refund disputes from a certain country or product line. When a pre dispute arrives, Verifi checks your rules and either accepts and refunds or rejects. Accepted cases are closed at the issuer level. Rejected cases may continue on to a standard chargeback. #### Why it matters Accepted RDR cases usually do not count toward Visa chargeback ratios. This helps you stay below network limits and out of monitoring programs. RDR also cuts manual work because decisions happen in near real time. Rules can be tuned to protect high value orders while letting smaller or low success disputes refund quickly. #### Setup requirements * Enroll with Verifi and link your merchant IDs * Configure decision rules and default behavior for cases that do not match a rule * Provide a refund path and record the refund reference * Map incoming cases to your orders for audit and reporting * Test end to end before going live #### Timelines and outcomes RDR decisions are near real time. There is no long response window because your rules drive the outcome. A full refund closes the case. Partial refunds may not stop the dispute for the remaining amount. If you reject a case, expect a normal chargeback if the issuer continues. # What is Verifi Order Insight? #### What is Verifi Order Insight? Verifi Order Insight is a Visa service that lets an issuer view detailed order information when a cardholder questions a charge. The aim is to help the customer recognize the transaction and stop the issue before it becomes a dispute or chargeback. It is a real time data sharing tool, not an alert or refund program. #### How it works When a cardholder contacts their bank or taps a transaction in a banking app, the issuer can request more details through Order Insight. Your system returns the order data right away. If the cardholder recognizes the purchase after seeing clear details, the case usually ends. If not, the issuer may proceed to a pre dispute or a normal chargeback. #### What data to provide Send specific data that matches the exact transaction. Keep names and values consistent with what the customer saw at checkout and on the receipt. Suggested fields * Merchant name that matches the billing descriptor * Order ID and invoice number * Transaction date and time * Item names, quantities, and prices * Customer name and email * Fulfillment status, shipping address, tracking link, or digital access records * Refund and cancellation policy text shown at checkout * Support contact details #### When it helps most Order Insight works well for unrecognized charges, subscription renewals, goods not received claims, and cases where item details or delivery proof can clear up confusion. It is most useful for card not present transactions.
# What is Ethoca? #### What is Ethoca? Ethoca is a Mastercard company that helps merchants and issuers prevent and resolve disputes before they become chargebacks. It does this in two main ways: early alerts you can act on right away, and sharing clear receipt and order data with banks when customers question a charge. #### Core services * Ethoca Alerts. You receive an alert that a cardholder disputed a transaction. You have a short window to refund and stop fulfillment or access. If resolved in time, a network chargeback is usually not created. Confirm counting rules with your acquirer. * Ethoca Consumer Clarity. When a cardholder contacts their bank or taps a transaction in the banking app, the issuer can show your enhanced receipt and order details. This helps the customer recognize the purchase and often ends the issue early. #### How it works A potential dispute starts at the issuer. For Alerts, Ethoca sends you case details so you can match to the order and take action. For Consumer Clarity, the issuer requests data and you return a receipt with item and delivery details in real time. If the customer is satisfied or you refund quickly, the case usually ends before a chargeback is created. What data to share for Consumer Clarity Send the merchant name that matches your billing descriptor, order ID, date and time, item names and prices, customer contact, fulfillment status, shipping address and tracking link, or digital access records such as login and IP. Include refund and cancel policy text shown at checkout and a support link. Why it matters Acting on alerts lowers your chargeback count and helps you stay below network limits. Clear receipts reduce unrecognized charge disputes, cut support contacts, and prevent avoidable chargebacks. # What is Ethoca Consumer Clarity? Ethoca Consumer Clarity is a Mastercard service that lets a bank see your detailed receipt and order data when a cardholder questions a charge. The goal is simple. Help the customer recognize the purchase so the issue ends before it becomes a dispute or a chargeback. It is a real time data sharing tool. It is not an alert or a refund program. #### How it works A customer calls the bank or taps a transaction in their banking app. The issuer requests more details through Consumer Clarity. You return the order data right away. If the customer recognizes the charge after seeing clear details, the case usually ends. If not, the issuer may move on to an alert or a standard chargeback. #### What data to provide Share specific details that match the exact transaction. Keep names and values consistent with what the customer saw at checkout and on the receipt. • Merchant name that matches the billing descriptor\ • Order ID and invoice number\ • Transaction date and time, amount, and currency\ • Item names, quantities, and prices, taxes, and fees\ • Customer name, email, and support contact\ • Fulfillment status, shipping address, carrier, and tracking link\ • Digital access logs such as device, IP, login, and usage timestamps\ • Refund and cancellation policy text shown at checkout #### When it helps most Consumer Clarity is effective for unrecognized charges, subscription renewals, goods not received claims, and cases where item level detail or delivery proof clears up confusion. It is especially useful for card not present sales in retail, subscriptions, travel, and digital goods. # Chargeback Lifecycle & Timelines A chargeback follows a set path from the moment a customer questions a transaction to the final decision. Names and timelines vary by network and acquirer, but the steps are similar. Acting early and meeting every deadline are the keys to good results. #### Main stages * Inquiry or pre dispute. The issuer asks for more details. This can happen through data sharing tools. You respond in near real time with a clear receipt and order data. Many cases end here if the customer recognizes the charge. * Alerts. You receive an early alert that a dispute was raised. You have a short window to refund and stop shipment or access. If you resolve the alert in time, a network chargeback is usually not created. * First chargeback or dispute. Funds are debited and a reason code is set. You choose to accept the loss or submit evidence that the charge was valid. * Representment. You send order, delivery, and policy proof. The issuer reviews and either reverses the chargeback or upholds it. * Pre arbitration or second chargeback. If one side disagrees with the representment result, the case can move to this stage. You can accept or continue. * Arbitration. The card network makes a final decision. This is slower and adds fees. #### Typical timing * Inquiry responses are real time or within hours. * Alerts often require action within 24 to 72 hours. * First chargeback responses are commonly due within a few weeks from the date your acquirer receives the case. * First chargeback responses are commonly due within a few weeks from the date your acquirer receives the case. * Issuer review after representment often takes a few weeks. * Pre arbitration responses are usually due within one to two weeks. * Arbitration can take one to three months. #### Operational tips Stop shipment or access when you refund on an alert. For subscriptions, cancel future rebills. Track every deadline by merchant ID. Watch for duplicates so you do not refund twice. Review outcomes by reason, product, and channel to fix root causes. # Types of Fraud Fraud in card not present payments falls into a few clear buckets. Knowing which type you face helps you choose the right prevention steps and the right response when a dispute arrives. #### Main types **True fraud**\ Someone other than the cardholder used the card or account. This includes stolen cards, account takeover, and synthetic identities. Common signs are failed or mismatched AVS and CVV, unusual device or IP, shipping far from billing, and rapid repeat attempts. Prevention focuses on stronger checks and step up when risk is high. **First party misuse**\ Also called friendly fraud. The cardholder made the purchase but later disputes it. Reasons include unrecognized descriptors, not received claims when tracking shows delivered, or canceled subscriptions that were not actually canceled. Signs include a good AVS and CVV match, normal device history, prior successful orders, and usage logs that show access. Prevention is about clarity and simple support. **Merchant error**\ Not fraud, but a common dispute source. Examples are duplicate billing, wrong amount, late or missing shipments, or unclear policies. Fix process issues in billing, fulfillment, and support. When an error occurs, refund quickly to avoid a chargeback. #### Map reason codes to types Reason codes point to the likely type. Fraud codes usually map to true fraud. Not recognized and not received can be first party misuse or an operations issue. Use the code to guide your evidence. Networks differ, so keep a simple reference by network. #### Data you should keep Keep order details, device and IP, AVS and CVV results, 3DS status, delivery or access logs, customer communications, and the exact policy text shown at checkout. These records let you prevent more issues and win valid disputes.