How to Use Ethoca & Verifi to Protect Your High-Risk Business?

High-risk businesses, such as those in online gaming, adult content, travel, CBD products, and subscription services, face higher fraud and chargeback rates compared to other industries. These issues not only cause financial losses but can also threaten merchant account stability. If your chargeback ratio exceeds industry thresholds (typically 1%), you risk fines, reserve requirements, or even account termination.

Two powerful tools—Ethoca and Verifi—can help reduce chargebacks and fraud exposure. Used correctly, they give you a competitive edge in managing disputes and protecting revenue. This article explains how these tools work, why they matter for high-risk industries, and practical steps to implement them.

Understanding the challenge in High-Risk industries

High-risk businesses often deal with:

• Fraudulent transactions: Criminals use stolen cards or compromised accounts to make purchases.
• Friendly fraud: Customers make a legitimate purchase but later dispute it, claiming they never authorised or received the product.
• Subscription disputes: Customers forget about recurring payments and file chargebacks instead of requesting cancellations.
• Regulatory scrutiny: Banks and card networks closely monitor these businesses due to their higher dispute rates.
  

When a chargeback occurs, you not only lose the transaction amount but also pay additional fees, spend time on dispute management, and risk damaging your relationship with your payment processor.

What are Ethoca and Verifi?

Ethoca and Verifi are leading platforms for fraud and chargeback prevention. While they operate differently, their goal is similar: to stop disputes before they escalate into chargebacks.

1. Ethoca

• Owned by Mastercard
• Focuses on collaboration between merchants and card issuers.
• Provides real-time alerts when customers dispute transactions, allowing merchants to stop shipments, refund proactively, or communicate with customers before a chargeback is filed.

2. Verifi

• Owned by Visa
• Offers tools like Order Insight and Rapid Dispute Resolution (RDR).
• Shares transaction-level data directly with card issuers so customers receive clear purchase details when contacting their bank. This often prevents disputes based on confusion or lack of information.
• Allows merchants to automatically issue refunds in certain cases, preventing chargebacks altogether.

Why are these tools essential for High-Risk businesses?

For high-risk merchants, speed and transparency are everything. Customers often go straight to their bank rather than contacting the business, especially if they do not recognise the charge. This is where Ethoca and Verifi step in:

1. Faster Dispute Resolution: Instead of waiting weeks for a chargeback notice, you get real-time alerts.
2. Customer Confidence: When your purchase details are visible to customers and their banks, misunderstandings decrease.
3. Lower Chargeback Ratios: Preventing disputes before they hit your account keeps your ratio within acceptable limits.
4. Better Banking Relationships: Reducing disputes demonstrates proactive risk management, which helps maintain your merchant account.
   

Step 1: Integrate Ethoca and Verifi

How to get started

• Talk to your payment processor or acquiring bank. Many already have partnerships with Ethoca and Verifi and can enable these services quickly.
• Direct contracts. If you prefer to manage the integration yourself, you can sign agreements directly with Ethoca and Verifi.
  

Technical setup

• For Ethoca: You will need an API integration or a web portal to receive alerts.
• For Verifi: Order Insight requires you to share transaction and order details with Visa in real time. Rapid Dispute Resolution (RDR) allows you to set rules for automatic refunds.
  

Step 2: Optimise your data sharing

The success of these platforms depends on data accuracy:

• Include detailed transaction descriptors: For example, instead of “XYZ LLC,” use “XYZ CBD Store – www.xyz.com – 800-123-4567.”
• Provide order details: Item name, subscription terms, delivery address, and cancellation policies.
• Use digital receipts: Include links to invoices or order confirmations that banks can show customers through their interfaces.
  

When customers recognise charges immediately, they are less likely to dispute them.

Step 3: Set refund rules wisely

Verifi’s RDR allows merchants to define automatic refund rules based on transaction amount, risk level, or product type. For example:

• Refund all disputes under $50 automatically.
• Refund disputes related to digital goods or recurring billing cycles.
  

These rules reduce the cost of fighting low-value disputes and help you focus on preventing high-value chargebacks.

Step 4: Train your team

Your support and risk management teams need to:

• Monitor alerts daily: Ethoca alerts often require action within hours to stop shipments or issue refunds.
• Understand when to fight and when to refund: Not all disputes are worth contesting.
• Document everything: Keep detailed logs of responses, refunds, and communications to support future audits.

Practical example: subscription-based CBD company

A subscription-based CBD business faces a chargeback ratio of 1.4%, mainly from customers who forget about auto-renewals. After integrating Ethoca and Verifi:

• They receive real-time alerts when customers dispute charges and immediately refund those transactions before they become chargebacks.
• Using Order Insight, their transaction data shows subscription terms and cancellation policies, reducing friendly fraud disputes.
• They create an RDR rule to refund all disputes under $75 automatically.

Result: Within three months, their chargeback ratio will drop to 0.7%, avoiding fines and account restrictions.

Common mistakes to avoid

1. Ignoring data quality
   
   • If you provide incomplete order information, banks cannot help customers understand the charge.
     
2. Relying on alerts alone
   • Ethoca and Verifi are not replacements for strong customer service. Continue offering easy cancellation and refund options.
3. Delaying responses
   • Alerts often require action within 24 hours. Delayed responses mean disputes still become chargebacks.
4. Not monitoring performance
   • Track how many alerts you receive, how many chargebacks you prevent, and what percentage of disputes are automatically refunded. Use this data to adjust rules and improve outcomes.

Benefits beyond chargeback reduction

Using Ethoca and Verifi does more than prevent chargebacks:

• Improved customer experience: Customers see clear order details, reducing frustration.
• Operational efficiency: Automated refund rules save your support team time.
• Better business reputation: Payment processors and banks see you as proactive and responsible, improving your chances of maintaining or even lowering your risk category over time.

How to decide if these tools are right for you?

Ask yourself:

• Do you have a recurring billing model?
• Are you selling to customers outside your local region?
• Do you experience chargeback rates above 0.8%?
• Are you in a high-risk industry (e.g., gaming, adult, CBD, travel)?

If the answer to any of these is yes, Ethoca and Verifi can be good investments.

Cost considerations

Both platforms charge fees:

• Ethoca: Typically, a fee per alert.
• Verifi: Fees for Order Insight and a per-transaction fee for RDR.
  However, these costs are often far lower than chargeback fees, which can range from $20 to $50 per dispute, not including lost revenue.
  

Final recommendations

1. Start with your payment provider. They may already support Ethoca and Verifi, making setup easier.
2. Invest in good data practices. Include detailed descriptors, refund policies, and terms in your order information.
3. Use automatic refund rules for low-value disputes. Save time and focus on high-value cases.
4. Monitor your results monthly. Look at chargeback ratios, refund amounts, and customer complaints.
5. Combine these tools with good customer support. Make it easy for customers to contact you and resolve issues before they go to their bank.

Bottom Line

Ethoca and Verifi are not optional add-ons for high-risk businesses; they are strategic tools that help protect revenue, maintain merchant accounts, and improve customer experience. By integrating them effectively, sharing accurate data, and acting quickly on alerts, you can significantly reduce chargebacks and keep your high-risk business running smoothly under a favorable tax and banking environment.

Need help setting up your Ethoca or Verifi account? Book a free consultation today, and our experts will help get it sorted.

For more industry insights, check out our article “Chargeback Ratios: How Much Is Too Much in 2025?”

Disclaimer

Widelia and its affiliates do not provide tax, investment, legal or accounting advice.  Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, investment, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Please consult https://widelia.com/disclaimer/ for more information.