How Ethoca helps reduce card-not-present (CNP) fraud chargebacks

As e-commerce, mobile payments and digital-first experiences continue to grow, so does card-not-present (CNP) fraud. Unlike traditional card-present transactions, CNP purchases occur when the physical card is not presented to the retailer, making it more difficult to verify the cardholder and increasing fraud risk.

The growth of digital commerce has created more opportunities for fraudsters to exploit payment channels. Card-not-present fraud continues to increase as retailers provide customers with convenient digital payment experiences across e-commerce websites, mobile apps and omnichannel purchasing journeys.

At the same time, retailers frequently bear liability for fraudulent CNP transactions, making fraud prevention a critical business priority.

Card-not-present fraud occurs when a fraudulent transaction is completed without the physical payment card being presented to the retailer. These transactions most commonly occur through online purchases, mobile applications and other digital payment channels.

Examples include:

• E-commerce purchases
• In-app mobile transactions
• Buy online, pick up in-store (BOPIS) purchases
• QR code-enabled digital payments

As payment experiences become increasingly digital, businesses must work harder to identify and stop fraudulent activity before losses occur.

For many retailers, CNP fraud creates a unique challenge because they are often liable for fraud losses associated with card-not-present transactions.

The impact extends beyond the value of the transaction itself and can include:

• Fraud losses
• Chargeback fees
• Operational expenses
• Lost merchandise
• Customer service costs
• Revenue leakage from avoidable disputes

According to Mastercard’s research with Datos Insights, global chargeback volumes are expected to reach 334 million annually by 2028, highlighting the growing need for effective fraud and dispute prevention strategies.

Ethoca helps retailers and issuers reduce fraud disputes through a collaborative network that enables faster information sharing and greater visibility across the transaction lifecycle.

When issuers identify confirmed fraud or customer disputes, speed matters.

Traditional chargeback processes may take days or weeks to notify retailers of fraud activity. Ethoca's collaborative network enables issuer-confirmed fraud notifications to be shared in near real time, helping retailers respond more quickly.

Ethoca Alerts allows retailers to:

• Identify suspicious transactions earlier
• Stop order fulfillment before goods are shipped
• Issue refunds proactively when appropriate
• Reduce fraud losses
• Prevent unnecessary chargebacks

Mastercard reports that Ethoca Alerts helped prevent more than 39 million chargebacks in 2025, with more than 110 million chargebacks prevented since 2011. Mastercard also reports $1 billion in fraud prevented during 2025 through Ethoca Alerts.

Want to learn more about Ethoca Alerts?  Learn more about Ethoca Alerts here.

Fraud prevention is not only about identifying bad transactions. It is also about helping consumers recognise legitimate purchases.

Ethoca Consumer Clarity provides enhanced purchase information to cardholders through issuer digital banking channels, helping reduce transaction confusion that can lead to fraud claims and chargebacks.

Consumer Clarity helps businesses:

• Reduce transaction confusion
• Decrease unnecessary disputes
• Minimise first-party fraud losses
• Improve customer experiences
• Protect revenue from avoidable chargebacks 

Want to learn more about Ethoca Consumer Clarity™?  Learn more about Ethoca Consumer Clarity™ here.

Historically, retailers and issuers have operated with different pieces of information.

Issuers have visibility into fraud claims and cardholder inquiries, while retailers have access to purchase, fulfillment and customer interaction data. When these perspectives remain disconnected, fraud investigation becomes more difficult and unnecessary chargebacks become more common.

Ethoca's collaboration network helps bridge these gaps by enabling richer data sharing and faster communication between participants across the payments ecosystem.

This collaborative approach can help reduce fraud losses, improve operational efficiency and create better outcomes for both consumers and businesses.

As digital commerce continues to evolve, fraud prevention strategies are increasingly focused on stopping issues before they become formal disputes or chargebacks.

Leading organisations are investing in:

• Earlier fraud detection
• Improved transaction transparency
• Better retailer-issuer collaboration
• Faster dispute resolution
• Reduced transaction confusion

Through solutions such as Ethoca Alerts and Ethoca Consumer Clarity™, retailers and issuers can take a more proactive approach to reducing card-not-present fraud, preventing chargebacks and improving customer experiences.