Two Different Jobs, Not One Product

Part 7 of a seven-part series on chargebacks: what chargeback protection programs actually do, and which one you're paying for

Chargeback protection isn't one product, it's at least two different jobs, and they solve completely different problems. This is the seventh and final post in a seven-part series on chargebacks, and understanding chargeback protection programs correctly is what ties the whole series together.

Deflection Tools Stop The Filing Entirely

Ethoca Alerts, Verifi CDRN, and Visa RDR catch a dispute in the window after a cardholder contacts their bank but before a formal chargeback is filed. Refunding inside that window means the chargeback never happens at all. Cost runs roughly $30 to $40 per alert, and the average prevented loss is closer to $315 once fees, merchandise, and ratio impact are counted.

Guarantee Programs Protect The Money, Not The Ratio

Providers like Signifyd and Riskified take on the financial loss for qualifying fraud chargebacks on approved orders, in exchange for a fee, usually a percentage of approved order value, running up to around 100 basis points at the high end. This tier removes the liability entirely. But a reimbursed chargeback is still a filed chargeback: it still counts against a merchant's dispute ratio, even without a financial loss.

Even A "Prevented" Dispute Can Still Count Against You

Refunding through Ethoca or CDRN stops the chargeback from being filed, but the underlying fraud report can still get submitted to the network. That report still counts toward a merchant's VAMP ratio, regardless of whether a chargeback was technically filed.

The Right Tier Depends On What You're Actually Protecting Against

Low dispute volume and thin margins usually favor the cheaper deflection tier. High volume, high-risk categories, or a business already near a monitoring threshold often justify the cost of a full guarantee, even at 100 basis points, because protecting the ratio itself is worth more than the fee.

The Takeaway

Do you know which tier your business is actually paying for, deflection, guarantee, or neither? This closes out the full seven-part chargeback series: prevention, descriptors, customer care, preparation, active dispute management, friendly fraud, and now, the tools available to handle all of it.