The world of commerce has transformed dramatically over the past few decades. As consumers, we’ve gone from handing over cash or checks in brick-and-mortar stores, to tapping cards, clicking buttons online, and scanning our phoness.

The evolution towards digital payments and online retail has brought about many conveniences, but also new challenges as the volume of payments increases and becomes digitized. One of those is the complex process between retailer, bank, and card issuer around disputed transactions, which is known as a chargeback. Chargebacks take place when a customer questions or challenges a charge from their bank or card issuer, triggering a potential refund for their goods or services, as well as fees and revenue losses for merchants.

Managing chargebacks responsibly is a tricky balancing act. Customers rightly want protection and recourse in case of issues like fraud or mistakes, and Mastercard affords valuable protection benefits. Yet chargebacks also open the door to first-party fraud, where consumers abuse dispute rights to get items or services for free. And they’re increasing in number, with 337 million individual chargeback cases expected by 2026, up 42 per cent from current figures.

Meanwhile merchants are often stuck in the middle, struggling under the weight of costly chargeback fees and lost revenue, even when they haven’t actually done anything wrong. Ten billion dollars of chargebacks will be made worldwide this year, with the impact most keenly affecting merchants. If they receive chargeback data too late from the banks involved, they may have already shipped items to customers that end up being refunded anyway.

In 2019, recognizing this growing need for better collaboration, data sharing, and clarity around transactions, Mastercard acquired Ethoca, which provides services to help reduce digital commerce fraud, prevent disputes, and improve experiences for all involved. Ethoca acts as a secure communication bridge between merchants, card issuers, and customers. The goal is to close information gaps, speed up resolutions, and reduce chargeback volumes for merchants and banks.

It does this through a number of ways. Ethoca Consumer Clarity provides cardholders with clear, recognizable information about purchases within their banking apps. It is a card-agnostic solution which can work across any payment network, not only Mastercard’s. Rather than receiving unrecognisable names or codes of businesses and reference numbers, Consumer Clarity provides GPS co-ordinates, shop names, brand logos and digital receipts to jog shoppers’ memories about where they’ve been and what they’ve bought.

This slick, automated solution—now available to a growing number of consumers—cuts down on mistakes and good-faith disputes by giving quick confirmation of where, when, and what people paid for—stopping people from making mistaken claims when they shouldn’t. The system is available globally, and includes purchase details for more than 145 million merchant locationss.

At the same time, in the background, another Mastercard innovation links up issuers, acquirers, and merchants so they can share confirmed fraud and dispute data in real time through an API or portal. As soon as a customer flags suspicious activity to their bank, Mastercard alerts enable merchants to take actions, such as stopping shipments, processing refunds, and preventing costly chargebacks. Used by more than 5,100 issuers and more than 10,000 merchants worldwide, it speeds up the dispute resolution process to draw down pain points for all those involved.

The results speak for themselves in terms of reduced disputes and recovered revenues. Mastercard Ethoca has helped merchants resolve billions in chargebacks before they occurred. The alerts tool has deflected $1.6 billion in fraud in the last year alone.

In one case study, a luxury fashion retailer was dealing with thousands of chargebacks a month before adopting Ethoca’s solutions, with the average chargeback valued at $625. Across a year, the company prevented $7.5 million in fraud alone.

While chargebacks will likely always be part of commerce, Mastercard Ethoca helps businesses navigate this reality more smoothly and collaboratively. Instead of a zero-sum game between merchants, banks, and customers, all parties involved can focus on real fraud and mistakes—not revenue losses or false disputes.

And as more commerce continues to move to online, mobiles, and digital platforms, having fast connections and data clarity is critical. Mastercard Ethoca integration means merchants can sell confidently across channels, knowing they’ll have support reducing chargeback risks. It’s also backed by the broader Mastercard network, offering AI-enabled solutions that provide assurance from beginning to end.

Recently, Mastercard took this a step further, announcing a new AI-enabled solution—underpinned by Consumer Clarity—that helps reduce the time merchants spend resolving complex disputes. Known as the First-Party Trust program, it combats the surging trend in first-party or 'friendly' fraud, where genuine transactions are mistakenly or intentionally challenged by cardholders. It will go live in the US next year and then roll out globally.

It’s not just merchants and retailers that Ethoca protects and aids. It’s shoppers who can be more confident that their transactions are tried, true, and tested. This simple, intuitive solution offers a light touch but full-featured approach to security—important at a time when 75 per cent of cardholders want digital banking tools and features that are easy to use, and half will consider switching if they don’t get that.

Ethoca synthesizes billions of transaction data points and connects millions of merchant locationss with thousands of banks worldwide. And as the digital payments space has evolved, the rise of e-commerce is helping to bring this futuristic technology into the present, enhancing human experiences and relationships—and enriching the transaction experience for all.

To find out more, visit ethoca.com