Find definitions and learn about the general application of common industry terms as they are used on this website.
What is accidental friendly fraud? Friendly fraud occurs when legitimate cardholders dispute charges they actually authorized. Unlike true fraud (where criminals use stolen cards), these disputes come from your actual customers. “Accidental friendly fraud” happens when customers file disputes because they’re genuinely confused, not because they’re trying to get something for free. These cardholders believe […]
What is an ACH Dispute? An ACH dispute occurs when a party involved in an Automated Clearing House (ACH) transfer challenges the legitimacy of the transaction. These disputes are usually initiated when account holders contact their bank to report unauthorized or incorrect electronic fund transfers from their accounts. Unlike credit card chargebacks, ACH disputes are […]
What is an acquirer? An acquirer, also known as an acquiring bank, is a financial institution that processes credit and debit card payments for merchants. It processes transactions, settles funds, and serves as an intermediary between merchants, card networks, and issuing banks. Acquirers provide the necessary infrastructure and services for businesses to securely handle electronic […]
What is an address verification service? An address verification service (AVS) is an automated system used in online transactions to verify a customer’s billing address. It compares the address provided during checkout with the address on file at the card-issuing bank, helping merchants detect and prevent potential credit card fraud. How do address verification services […]
What are Arbitration Chargebacks? Arbitration chargebacks, sometimes known as “second chargebacks” or pre-arbitration filings, occur when a chargeback dispute enters its penultimate stage, after the initial representment has been won or lost. At this point, the cardholder (via their issuer) or acquirer may provide new evidence to challenge the representment ruling, elevating the dispute to a higher stakes arbitration phase. […]
What is a billing descriptor? A billing descriptor is a piece of identifying text that appears on a cardholder’s credit or debit card statement, providing information about a specific transaction. This short description typically features just the merchant’s name but may include additional details about the purchase. Billing descriptors serve as an important record and […]
What is Buy Now Pay Later? Buy Now, Pay Later (BNPL) is a payment solution that allows cardholders to purchase goods or services immediately while deferring full payment to a later date, typically through a series of installments. Merchants receive the full purchase price from the BNPL provider upfront, while the BNPL provider assumes responsibility […]
What is a Card Issuer? A card issuer, also known as an issuing bank, is a financial institution that provides credit or debit cards to consumers and businesses. Examples of card issuers include banks like JPMorgan Chase, Bank of America, and Citibank, as well as credit unions and prepaid card providers. These institutions are responsible […]
What is Card-Not-Present Fraud? Card-Not-Present (CNP) fraud occurs when credit card details are used to make fraudulent transactions where the physical card isn’t presented to the merchant. CNP fraud predominantly affects online transactions, but also extends to phone orders, mail orders, and any payment where the card and cardholder aren’t physically present. Without visual verification […]
What is Chargeback Fraud? Chargeback fraud, or “friendly fraud”, occurs when a cardholder disputes a legitimate transaction with their bank or card issuer, usually with the intention of keeping both the transaction sum and the purchased product or service. This practice costs businesses an estimated $132 billion annually and accounts for 70% of all credit […]
What is Chargeback Mitigation? Chargeback mitigation refers to systems and techniques that reduce the frequency or impact of disputed transactions. Most common approaches combine preventative and responsive strategies to maintain acceptable chargeback ratios and recover lost revenue. While chargeback mitigation can be handled in-house, the global rise of friendly fraud – costing businesses $132 billion […]
What is compelling evidence in a chargeback scenario? Compelling evidence refers to the data and documentation that merchants provide to prove the legitimacy of a disputed transaction. This evidence is used in the chargeback representment process, where merchants attempt to reverse a chargeback and recover lost revenue. Compelling evidence typically includes any written or electronic documentation, […]
