Prevention service
What is a prevention service?
Prevention service is a third-party network that notifies merchants of payment disputes before they escalate into formal . When a contacts their issuing bank to dispute a transaction, the prevention service intercepts this inquiry and alerts the merchant, who gets a short window to resolve it directly.
Prevention services sit between the and the merchant, on alert networks operated by or partnered with the card schemes. The merchant resolves an alert by refunding the transaction, which closes the at the inquiry stage. Because the dispute never becomes a chargeback, it never posts to the merchant's chargeback record and never counts toward the ratio the schemes monitor.
Key facts
- Also known as: chargeback alerts, dispute alerts, prevention alerts
- Response window: typically 24–72 hours from the alert, varying by network and alert type
- Main networks: Ethoca Alerts (Mastercard), Verifi Rapid Dispute Resolution (RDR) on Visa, and the (CDRN), which covers issuers across more than one network
- Resolution method: a merchant-issued , either sent manually or triggered by a rule set in advance
- Applies to: card-not-present merchants, particularly subscription and digital-goods businesses exposed to
- Doesn't cover: disputes already filed as chargebacks, which move into the representment cycle instead
How it works
- Cardholder raises a dispute. The cardholder calls their issuing bank about a charge they don't recognize or want reversed.
- Issuer routes it to the alert network. Rather than opening a chargeback straight away, the issuing bank sends the dispute details to the prevention service network.
- Merchant receives the alert. The alert carries the details needed to match it to an order: amount, transaction date and billing descriptor.
- Merchant resolves or lets it proceed. Issuing a refund settles the dispute at source; taking no action lets the case continue into the normal chargeback cycle.
- Chargeback is prevented. If the refund lands inside the response window, the issuer closes the case and the chargeback never appears on the merchant's record.
Alert types differ in how much the merchant does. Ethoca Alerts and CDRN notify the merchant and wait for a response. Verifi's RDR resolves automatically against rules the merchant defines in advance, refunding qualifying disputes without a manual step.
Why it matters
- The dispute stays off the chargeback ratio. A resolved alert is recorded as a refund, not a chargeback, so it doesn't count toward the the schemes use to trigger monitoring programs.
- The chargeback fee is never assessed. charge a per-chargeback fee on top of the disputed amount. Resolving at the alert stage means the transaction is refunded and no chargeback is raised to charge a fee against.
- The case closes before the dispute cycle starts. An alert ends the dispute at the issuer inquiry stage, ahead of representment, and , each of which adds its own fees and evidence work.
- Friendly fraud is contained at source. Subscription and digital-goods merchants collect disputes from cardholders who forgot a rebill or didn't recognize the descriptor. A refund at the alert stage ends those cases without a scheme-level dispute record.
Common issues
- Every accepted alert is a refund. Resolving an alert means returning the money, including on transactions the merchant would have won at representment. Accepting every alert automatically writes off that revenue.
- Coverage is limited to participating issuers. Not every issuing bank feeds every alert network, so a share of disputes still reaches the merchant only as chargebacks.
- The window is tight. A refund issued after the response window closes doesn't stop the chargeback, and the merchant ends up paying both the refund and the chargeback.
- Duplicate and stale alerts arrive. Alerts land for transactions already refunded or already charged back, which makes matching against the necessary before any action is taken.
- Alerts are priced per delivery. Networks charge for each alert sent, whether or not the merchant acts on it, so high alert volume carries a standing cost.
