Ethoca Alerts notify merchants of fraud disputes in real time, allowing them to act before chargebacks occur. With a 72-hour window, merchants can refund transactions, stop shipments, or investigate fraud, reducing chargebacks by 30–40%.
Chargeback management is complicated. On average, six out of every 1,000 transactions result in a chargeback, with each one costing merchants up to 2.5 times the original transaction amount if it’s not handled correctly. Despite efforts to contest disputes, merchants win only around 18% of disputes and can jeopardize relationships with acquirers if chargeback ratios become too high.
Find more statistics in our recent article: 25 Chargeback Statistics for Merchants in 2025 (& How to Fight Them)
That’s where Rapid Dispute Resolution and Ethoca Alerts come into play. They help merchants prevent chargebacks from occurring in the first place. Ethoca has built a platform that links together cardholder banks and merchants. Eschewing the traditional methods of chargeback notification, banks can now call merchants directly when there are problems with a transaction. This gives the merchant a fighting chance to prevent the problem from turning into a chargeback.
What are Ethoca Alerts?
When a customer disputes a transaction with their bank, it usually sets off a chargeback process that can take weeks to resolve. By the time the merchant is notified, the chargeback has already been filed, leading to financial losses. Ethoca Alerts change this by providing real-time notifications to merchants within minutes, providing them with a chance to act before the charge turns into a dispute.
Instead of reacting to chargebacks after they happen, Ethoca Alerts enable merchants to put together a case and fight their corner. The alerts are also incredibly useful for detecting fraud patterns by making it easier to spot repeat offenders and reduce instances of chargeback abuse.
The result? Merchants are given a fighting chance at successfully defending a chargeback rather than the cardholder winning by default. This is a major shift away from the traditional chargeback process, which heavily favors the cardholder even when they might not have a legitimate dispute.
How Ethoca Alerts Work: From Fraud Report to Action
The process begins when a cardholder reports an unauthorized transaction to their bank. The bank reviews the dispute and determines if the claim is likely fraudulent. Instead of immediately filing a chargeback, the bank sends an alert through Ethoca. This alert reaches the merchant within minutes or a few hours, significantly reducing the time it takes to address a dispute.
Once the merchant receives the alert, they can review the transaction details and take appropriate action. Merchants have a 72-hour window to respond before the chargeback proceeds. During this time, they can choose to resolve the issue in one of three ways:
- Issue a Refund — If the merchant refunds the transaction, the chargeback process is stopped before it begins. This is the fastest and most direct way to prevent additional fees and chargeback penalties.
- Stop Shipment — If the disputed order has not yet been shipped, the merchant can cancel it. This prevents inventory loss and avoids shipping costs on fraudulent transactions.
- Investigate for Fraud — If the disputed transaction appears to be part of a broader fraud pattern, the merchant can use the alert data to refine fraud detection rules and prevent similar incidents in the future.
If the merchant does not take any action within 72 hours, the dispute may move forward as a chargeback via the usual process with potential financial losses, fees, and impacts to merchant chargeback ratios.
Ethoca Alerts vs Traditional Chargeback Management
Ethoca Alerts offer a proactive approach compared to the reactive nature of traditional chargebacks. Here's a comparison:
Why Merchants Need to Implement Ethoca Alerts
Ethoca Alerts help merchants prevent chargebacks, reduce fraud, and improve the efficiency of dispute management. By providing real-time fraud notifications, merchants can act quickly, avoiding costly chargeback fees and operational disruptions.
Chargeback Prevention (and Associated Cost Savings)
Chargebacks are expensive, not just because of fees but also due to lost revenue and operational costs. Ethoca Alerts help reduce chargeback rates by 30–40%, allowing merchants to stop disputes before they escalate. This leads to significant financial savings.
Each chargeback can cost a merchant anywhere from $20 to $100 in fees, not including lost merchandise and administrative costs. By using Ethoca Alerts, merchants can resolve disputes early, avoiding these unnecessary expenses. The cost of an alert is often lower than a chargeback fee, making Ethoca a more cost-effective solution in the long run.
Faster Dispute Resolution and Fraud Detection
Traditional chargebacks take weeks to resolve. By the time a merchant is notified, they may have already lost the product, and the customer has likely received a refund through their bank. Ethoca Alerts provide real-time notifications, often within minutes or hours of a fraud report, giving merchants a chance to respond before it’s too late.
These alerts also help merchants detect fraud patterns. If multiple alerts come from similar locations, devices, or payment methods, merchants can adjust their fraud prevention strategies accordingly. By identifying repeat offenders, businesses can take proactive steps to block fraudulent transactions before they happen.
Improved Compliance and Risk Management
High chargeback ratios can result in penalties from payment processors and even lead to merchant account termination. Both the Visa Acquirer Management Program (VAMP) and Mastercard’s Excessive Chargeback Program impose strict thresholds on chargeback ratios, often requiring merchants to keep disputes below 0.9%.
Ethoca Alerts help merchants stay below these limits by stopping chargebacks before they are filed. By keeping chargeback ratios low, merchants avoid costly penalties and maintain favorable processing rates. Additionally, Ethoca’s system aligns with fraud prevention standards, helping businesses stay compliant with industry regulations.
How to Implement Ethoca Alerts
You’ve got two options: Integrate them manually via an API (expensive, complicated) or use an Ethoca partner platform.
Direct Integration via API
Ethoca offers an API that allows businesses to integrate alerts directly into their payment and fraud management systems. This approach gives merchants full control over how alerts are processed, but it requires in-house development resources to set up and maintain the integration.
With direct API integration, merchants can:
- Receive alerts in real time within their existing systems.
- Automate responses based on predefined rules.
- Customize workflows for refunds, shipment holds, and fraud analysis.
Although this gives merchants ultimate control and flexibility, it can be complex for businesses that lack the technical expertise to not just develop but also maintain the connection.
Integrating via a Partner Platform
Many businesses opt to access Ethoca Alerts through a partner platform, which simplifies implementation and adds additional features. ChargebackStop, for example, offers built-in Ethoca Alerts functionality with automated workflows, reporting tools, and analytics. The benefits of taking the platform approach include:
- Faster setup without the need for custom API development.
- Automated handling based on pre-set rules for even faster resolutions.
- Centralized management of alerts, disputes, and chargebacks from one interface.
- Possibility to combine Ethoca Alerts with other fraud prevention measures.
Ultimately, it comes down to your use case. If you’re happy to take ownership of your own Ethoca integration and have the resources to maintain it, direct integration is the better option. If you’d like fast deployment without the need for day-to-day management, you’ll be better off working with an approved partner like ChargebackStop.
How ChargebackStop Enhances Ethoca Alerts
ChargebackStop supercharges Ethoca Alerts by automating responses, filtering out invalid alerts, and providing cost-effective dispute management tools. Merchants who adopt the ChargebackStop platform stand to reduce manual workloads, avoid unnecessary refunds, and optimize fraud prevention strategies while keeping costs low.
Automation for Faster Dispute Resolution
ChargebackStop enhances Ethoca Alerts by automating key processes that would otherwise require manual intervention. With ChargebackStop’s Alert Resolution Rules, you can set up preconfigured rules to automatically handle alerts based on transaction criteria such as amount, risk level, or product type. This automation drastically speeds up the response time, ensuring that chargebacks are prevented before they can escalate. Our Alert Resolution Rules:
- Automatically process refunds for alerts that meet specific criteria.
- Flag alerts for review when additional verification is needed.
- Trigger fraud prevention workflows to block future high-risk transactions.
Invalid Alert Detection
Not every alert requires action. Some alerts may be invalid, leading to unnecessary refunds if acted upon blindly. ChargebackStop's Automatic Invalid Alert Detection tool identifies these invalid alerts and prevents refunds from being processed unnecessarily. This helps merchants avoid losing money on alerts that don’t actually pose a risk of chargeback, improving cost efficiency. We achieve this by monitoring for:
- Duplicate refund requests for transactions already refunded.
- Disputes filed in error that do not require merchant action.
- Transactions from repeat-friendly fraud customers to flag abuse.
Billing Descriptor Monitoring
One common reason for chargebacks is confusion over billing descriptors. Our Billing Descriptor Monitoring ensures that your billing statements match your customers' expectations, reducing the likelihood of chargebacks due to “transaction not recognized” disputes. We proactively help merchants align their billing descriptors with customer recognition, making chargebacks less likely while enhancing the customer experience by:
- Tracking customer complaints related to unclear billing descriptors.
- Providing suggestions for clearer, more recognizable descriptors.
- Alerting merchants to potential increases in “transaction not recognized” disputes.
Take Control of Your Disputes
Chargebacks are costly, time-consuming, and can damage a merchant’s ability to process payments. Ethoca Alerts provide a proactive solution by notifying merchants of disputes before they turn into chargebacks. By acting on these alerts, businesses can reduce chargeback rates by 30–40%, prevent unnecessary fees, and protect their revenue.
Integrating Ethoca Alerts with ChargebackStop enhances these benefits even further. ChargebackStop automates alert resolution, detects invalid alerts, monitors billing descriptors, and offers cost-effective pricing for high-volume merchants. This combination allows businesses to handle chargebacks more efficiently, reduce fraud, and minimize revenue loss with less manual effort.
For merchants looking to stay ahead of chargebacks and improve fraud prevention, adopting Ethoca Alerts with ChargebackStop is a smart move. Get started today and take control of your dispute management process.
