Digital Payment Fraud Calculator

A chargeback doesn't just cost the transaction's face value — the merchant also loses the merchandise (already shipped in most card-not-present fraud), pays return shipping or absorbs the loss entirely, owes the chargeback fee on top, and spends staff time disputing or writing off the case. LexisNexis's annual Cost of Fraud survey pegs this all-in multiplier at roughly $2.94 per $1 of fraud for typical e-commerce merchants, which is why the 'true cost' output runs nearly 3x the 'gross fraud loss' line even though both start from the same fraudulent-transaction count.

The tool's savings come from the fraud it catches (true cost avoided) minus three things: the fraud it misses, its own subscription fee, and the revenue lost when it wrongly blocks legitimate orders. If your false-positive rate is set high relative to your fraud rate, the false-positive revenue loss can exceed what the tool saves in blocked fraud, since legitimate orders usually far outnumber fraudulent ones even at a 'bad' fraud rate. That's exactly the scenario worth checking with the ROI output before signing a contract.

One basis point equals 0.01% of transactions, so a fraud rate of 10 bps means 1 in 1,000 transactions is fraudulent, and the calculator's default assumes e-commerce's typical 10-20 bps range. It multiplies this rate directly against your monthly transaction count (volume divided by average ticket size) to estimate how many fraudulent orders you're processing before any prevention tool intervenes.

They're tracked separately in this model. The true fraud cost multiplier (2.94x) already accounts for typical operational and fee overhead in the aggregate, but the calculator still adds the chargeback fee per dispute as its own line item in the total cost, since that's a fixed, known dollar amount charged by your processor per fraudulent transaction regardless of the merchandise value involved.