What is Ethoca And Their Chargeback Alerts?

I’m always looking for ways to reduce chargebacks. I came across Ethoca and thought, “Why not write about it?”

First, I’ll explain what the company does. Then, I’ll cover their solutions and other key details.

Let’s dive in.

Key Takeaways

• Mastercard owns Ethoca.
• Ethoca Alerts work globally, covering 95% of Mastercard transactions.
• Alerts can prevent up to 57% of disputes.
• Consumer Clarity can deflect up to 23% of chargebacks.
• You can access alerts through Ethoca or resellers.

We offer Ethoca Alerts, CDRN, and RDR on one platform. This solves the problem of managing multiple alert providers across card networks.

Learn more about how we can help.

What is Ethoca?

Ethoca is a global collaboration platform for fraud prevention and chargeback reduction. Acquired by Mastercard in 2019, it enables real-time data sharing between merchants and card issuers. Ethoca helps businesses protect revenue through faster transaction dispute resolution.

They do this through the Ethoca Network, which shares data between merchants and issuers.

Ethoca was founded in 2005 in Toronto, Canada. And when Mastercard acquired it, the price wasn’t disclosed.

It offers the following solutions:

• Ethoca Alerts: Notifies merchants of potential disputes.
• Consumer Clarity: Provides detailed purchase info to card issuers for customer sharing.
• Fraud Insights: Provides data on fraud sources, decline reasons, and chargeback causes.

I won’t go into Fraud Insights. It only covers Mastercard data, so it’s less useful if you accept other cards.

Anyway:

Let’s dive into the other solutions.

Summary: It offers solutions to reduce chargebacks.

What Are Ethoca Alerts?

Ethoca Alerts are notifications sent to merchants about specific transactions with potential issues. They warn of confirmed fraud or customer disputes that may lead to chargebacks. These alerts allow merchants to take action and prevent potential losses.

These alerts cover 95% of Mastercard transactions globally. The highest Mastercard coverage among chargeback alerts. For Visa and other brands, coverage is about 50%.

I couldn’t find an exact breakdown for each network.

If Visa coverage is your priority, CDRN or RDR alerts might be better options. I’ll mention these later.

Let’s get into how these alerts work.

Summary: An alert that gives sellers a chance to take action and prevent chargebacks.

How Do Ethoca Alerts Work?

Here’s how Ethoca Alerts work:

1. The customer complains to their bank about an order.
2. The bank notifies Ethoca of the dispute.
3. Ethoca sends the merchant an alert.
4. The merchant has 24-48 hours to respond (with us you can do it automatically)
5. Ethoca informs the bank of the outcome.

When you get an alert, you can refund the customer or challenge the chargeback.

Note: A refund isn’t the same as a chargeback. We explain the differences here.

Only fight the chargeback if you’re confident you’ll win. Merchants generally win only 30% of cases. The odds aren’t in your favor.

If you choose to fight, you’ll have to go through the full chargeback process.

Here’s a guide on how Mastercard’s process works.

Anyway…

Here’s a visual on how the alerts work:

Source: Ethoca

This all looks nice. But do they have any proven results?

Do Ethoca Alerts Really Prevent Chargebacks?

Ethoca Alerts can prevent up to 40% of chargebacks [1]. This applies mainly to physical goods and fraudulent disputes.

They don’t provide specific percentages as to how many chargebacks in other categories it can prevent.

One source claims Ethoca prevents the following amounts of chargebacks based on business type [2]:

• Digital goods: 30%
• Physical goods: 17%
• Digital services: 33%
• Subscriptions: 14%

I’d trust the first source more since it’s from Ethoca. But I wanted to give you perspective as to what other resellers claim.

What about our data?

We had a case study that showed a 91% reduction in chargebacks for a SaaS company. Of that reduction, 57% came from Ethoca alerts.

Find the case study here.

The effectiveness of alerts depends on factors like business years, order volume, payment method used, and product types.

Summary: Yes.

How Much Do Ethoca Alerts Cost?

Ethoca Alerts typically cost around $40 per alert. However, many resellers charge closer to $35 per alert. Prices can vary by provider.

I couldn’t find exact figures from Ethoca, but this is based on my research from resellers.

Some resellers (like us) offer volume pricing, which reduces costs as you receive more alerts. This is one advantage of using a reseller over Ethoca directly.

I’ll go over more advantages soon.

But first, let’s check out the pros and cons.

Summary: Costs vary by provider.

Pros & Cons of Using Ethoca Alerts

Pros:

• Real-time alerts
• Fraud prevention
• Enhanced security
• Fewer chargebacks
• Better customer experience

Cons:

• Expensive
• Complex setup
• Limited customization
• Potential for false positives

That’s all for the alerts.

To learn more about chargeback alerts in general, see this guide.

Otherwise, let’s move onto another tool (that’s free), which’ll also help deflect disputes.

What is Consumer Clarity?

Ethoca Consumer Clarity helps businesses prevent friendly fraud chargebacks. It simplifies dispute management in the payment industry. By offering more transaction details, it helps prevent chargebacks before they happen.

Consumer Clarity gives customers extra information on an order to jog their memory.

Here’s what you’ll find in this solution:

• Merchant info: Clear names, logos, and contact details.
• Purchase info: Itemized receipts, dates, and locations.
• Subscription management: Tools for managing recurring charges.

Aside from preventing chargebacks, it also has the following:

• Subscription management:some text
  • Pause and resume
  • Cancel subscriptions and track the request in-app.
  • Give users a chance to upgrade their subscriptions in-app.
• Custom CTAs to encourage action.
• Digital receipts with itemized purchases.

Here’s an example of what I mean with the call to action:

Source: Ethoca

Right. You’re here for chargeback prevention.

Let’s get into that.

Summary: Gives customers details about their orders.

How Effective is Consumer Clarity?

In North America, some sellers saw a 16% reduction in Mastercard chargebacks after using Consumer Clarity [3]. Over two years, that number rose to 23%.

In Europe, sellers saw a 4% drop in chargebacks. After four months, this increased to 11%.

How Are Ethoca & Verifi Different?

Ethoca focuses on Mastercard orders, while Verifi handles Visa transactions. Verifi CDRN and Ethoca Alerts require manual merchant refunds. Verifi RDR automates refunds based on set rules. Both offer similar services: Consumer Clarity (Ethoca) and Order Insight (Verifi).

Ethoca, owned by Mastercard, works globally, while Verifi's CDRN focuses on US consumers.

In network coverage, Ethoca primarily covers Mastercard transactions, with limited Visa coverage.

Verifi's RDR offers the most comprehensive Visa coverage. Meanwhile, CDRN covers Visa and some other brands like Discover.

Both platforms use exact-match transaction descriptors.

Ethoca also uses "start with" phrases, while Verifi matches registered customer service numbers.

Ethoca requires manual processing, while Verifi's RDR system automates refunds. CDRN, like Ethoca, requires manual refund processing.

Regarding issuer network coverage:

• Ethoca covers more global BINs and Mastercard accounts
• Verifi covers more US BINs and Visa accounts

We cover more information on the differences in a separate piece.

You may want to start using Ethoca for your business. How would you do that?

Summary: Mastercard owns Ethoca and has Consumer Clarity and Ethoca Alerts. Visa owns Verifi, which has Order Insights, RDR, CDRN, and more.

How Would I Use Ethoca for My Business?

To access Ethoca Alerts, it's easiest to go through a reseller. Most resellers offer Ethoca Alerts and Verifi’s CDRN and RDR. This prevents the need to manage multiple platforms.

Of course, I’m going to say that we provide those alerts at volume pricing.

If you also want Consumer Clarity, you might need a chargeback management service like Chargebacks911. However, this could cost you $1,000 or more for basic features.

If that isn’t an option, reach out directly to Ethoca. They’ll guide you on how to start using Ethoca Alerts and Consumer Clarity.

And here’s why you should honestly consider using Ethoca.

You’re Losing Money Without Ethoca – Here’s Why

Chargebacks cause financial and reputational damage. You lose revenue and product, and fees rise. High chargeback rates can strain relationships with payment processors. In extreme cases, you might face account termination.

The last sentence sounds drastic, but it’s true.

Mastercard has a chargeback monitoring program for merchants exceeding set rates. Penalties include additional fees and fines. Failure to reduce rates can result in a ban from the Mastercard network.

Here’s more information about the program.

It is rare for merchants to enter chargeback monitoring programs in general. But it’s possible. Don’t let yourself be in it by preventing chargebacks.

Is Ethoca the only way to reduce chargebacks? Nope.

Aren’t There Other Ways to Prevent Chargebacks?

Yes, here are some other strategies:

• Implement fraud detection software
• Blacklist repeat chargeback offenders
• Respond quickly to customer inquiries
• Use clear billing descriptors
• Understand chargeback reason codes
• Have clear refund and cancellation policies
• Delay billing to improve verification
• For subscriptions, cancel immediately upon request

Let's dive deeper into some of these methods:

1. Fraud Detection

Good fraud detection tools are important to lower your fraud rate. These include AVS, 3D Secure, and fraud flagging software.

Do you use Shopify? Here are some apps to help you get started.

2. Blacklisting

Blacklisting stops repeat offenders from buying. But watch out for new accounts or fake information. Check suspicious orders by contacting customers directly.

3. Customer Service

Quick responses to customer questions can reduce chargebacks. Happy customers are less likely to dispute orders.

4. Clear Billing Descriptors

Make your billing descriptor clear. Include business name, phone number, and product description. Aim to make them 22 – 25-characters long.

5. Understanding Reason Codes

Learn about chargeback reason codes from different card networks. This helps prevent specific types of chargebacks.

See our guide on every networks’ reason codes for more information.

6. Refund and Cancellation Policies

Clear policies inform customers and protect you in disputes. Proof of policy violation can help your case.

7. Subscription Services

When a customer cancels a subscription, honor that cancellation immediately. And again, ensure you have a clear cancellation policy if you offer a free trial.

That way, they can’t claim that you’re trying to scam them.

Find more chargeback prevention techniques here.

And that’s all. Hope this helps.

FAQs

Is Ethoca Owned by Mastercard?

Mastercard owns Ethoca. The company acquired Ethoca in 2019 to enhance fraud prevention in digital commerce.

Conclusion

Ethoca mainly focuses on Mastercard transactions. It doesn't prevent all chargeback types.

For comprehensive chargeback prevention, you’ll want alerts from Ethoca and Verifi. However, using both requires managing separate platforms.

We offer a simpler solution.

We provide all alert systems — Ethoca, Verifi CDRN, and RDR — in one platform. You’ll get maximum coverage at an affordable price.

Learn more about how we can help.

Sources

• [1] Ethoca Alerts for merchants. Ethoca. 2021. PDF.
• [2] CDRN alerts. Chargebackhit. 12/07/2023.
• [3] Creating transparency to reduce chargebacks. Ethoca. 2023. PDF.