Learn about the operational challenges and risks associated with the fraud & dispute process for banks and explore strategies and best practices benefitting both banks and their cardholders.

Fraud & Disputes

In today’s digital age, global interest in chargebacks has surged due to the exponential growth of online commerce. Cardholders are increasingly aware of their rights and are quick to initiate chargebacks in cases of dissatisfaction or suspicion of fraud. As consumers grow savvier, banks and financial firms face complex challenges when addressing their rights.

As mentioned, we see a growing trend in the soaring popularity of chargebacks. This mechanism allows credit card users to dispute charges on their accounts and get refunded on their transactions for goods and services that didn’t meet their expectations or weren’t received. 

Chargeback chaos – 2 in 5 Undisputed by Merchants

A report from Mastercard shows that chargeback volumes will reach 

, three-in-four Americans and Brits filed a chargeback last year and more than 

 reported seeing as many or more chargebacks compared to 2022. 

Unsurprisingly, the cost of settling these transaction disputes is huge, costing the payments industry

. The burden of these costs, which will continue to rise each year, is split between banks and merchants.  Yet the burden of debt recovery is often carried by the banks.

Typically, if there’s an issue with a purchase, the cardholder will first try to fix the problem directly with the merchant. If the merchant does not agree to refund or resolve the issue, the cardholder can then initiate a chargeback request with their bank, which will look into and possibly reverse the transaction.

This process is supported by the rules of major credit card networks like Visa and Mastercard. The customer’s bank will request the funds from the merchant’s bank, not the merchant directly. Therefore, the funds can still be recovered even if the merchant has gone out of business.

The Financial Impact and Strategic Response

With the rise of chargeback requests, banks now find themselves at a crossroads, tasked with the challenge of streamlining processes and operational costs while steadfastly safeguarding consumer rights. On a more positive note, the rise in consumer awareness also provides a unique opportunity to refine their chargeback processes. By enhancing their systems and moving away from manual procedures – which require a lot of resources and money, banks can improve customer loyalty and bolster the appeal of card payments.

An effective response to these challenges requires a multifaceted approach:

Banks should invest in educating both merchants and consumers about the chargeback process to reduce the number of chargeback requests that come through. For merchants, this would include guidance on personalizing the customer experience, such as live, round-the-clock service, offering free no-questions-asked return policies, and ensuring accurate descriptions for goods and services. For consumers, education efforts would focus on when a chargeback is appropriate and the consequences of fraudulent disputes.

Financial institutions must continue to enhance their fraud detection capabilities. This includes leveraging artificial intelligence and machine learning to identify patterns indicative of chargeback fraud. Fortunately, cutting-edge fintech technology is available that can help financial institutions manage fraud detection more effectively and improve their operational efficiencies.

Simplifying the dispute resolution process can benefit all parties involved. For consumers, a more straightforward process reduces frustration and builds trust. For merchants, a more efficient system means quicker resolutions and less time spent contesting chargebacks. At the moment, most banks have outdated software in place to manage this process; it’s still manual and people-driven. The rapid growth in card payments (and therefore also disputes and rule updates) is fuelling demand for a digital compliance solution that can help banks save money and keep customers loyal.

Banks should work closely with merchants to share data and insights related to chargeback fraud. This collaboration can help identify common vulnerabilities and develop industry-wide strategies to combat fraudulent disputes.

Financial institutions may need to reconsider their policies around chargebacks. This could involve stricter guidelines for initiating a dispute and enhanced verification processes to confirm the legitimacy of a claim.

As the popularity of digital payments increases globally, consumer-initiated chargebacks will also continue to grow as more people become aware of their financial protection rights.  Banks are now urged to be more alert and proactive in handling these increases to protect both their operations and their customers in an e-commerce environment.

Managing chargebacks requires investment in technology and the involvement and collaboration of all parties and stakeholders within the payment ecosystem. By putting strong preventative strategies in place, banks and financial institutions can lessen their vulnerability, enhance their services and create a more secure space for the digital age. Achieving this will not only boost customer satisfaction but also strengthen consumer confidence in digital payment platforms.

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The rise in chargeback awareness and its impact on banks

In this section, you can read featured success stories from banks that have leveraged our products.

Success Stories

 embarked on her career in the payment sector in 2000 as a fraud analyst at Swisscard. Starting in 2006, within GE Money Bank AG and later Cembra Money Bank AG, with a diverse range of roles spanning across fraud & chargebacks, operational processes, strategy & controls, she transitioned to scheme compliance in early 2022. Since November 2023, Claudia has been serving as card scheme manager at PostFinance.

 entered the financial industry in 2007 as Risk Manager and later as the Head of Risk Management at SIX Payment Services (Worldline). His journey continued as a card schemes relationship manager at SIX and the Nexi Group. Alain has been a card scheme manager at PostFinance since November 2023.

The challenges of scheme compliance before Kajo 

One significant hurdle we faced was the sheer volume of announcements that required manual review and distribution among several stakeholders, consuming significant time and resources. Additionally, the absence of an audit trail made it difficult to effectively track changes over time.

Close communication with our teams  (email or monthly meetings)to monitor the progress was also rather daunting, given the multitude of announcements to track.

Overall, the process was manual, time-consuming, and susceptible to errors.

We had two primary objectives: streamlining our process and enhancing our auditing capabilities.

We recognised the need for a centralised solution that could help to efficiently manage the various aspects of compliance, thus reducing manual efforts and improving overall efficiency.

Secondly,  to maintain transparency and accountability within our compliance operations, we were looking for an auditing option that would enable us to record, track, and access the history of actions and communications for reference purposes. 

Kajo proved to be the ideal solution for addressing both needs: 1) to streamline operations and eliminate redundant tasks, and 2) to provide a comprehensive audit trail of all compliance-related decisions and activities. 

The onboarding experience and adoption across the organisation

The onboarding process and transition to Kajo was smooth and seamless. 

Kajo’s self-explanatory and user-friendly interface made it easy for our team to grasp its functionalities. After completing only a few quick training sessions to familiarise the team with Kajo, they quickly adopted and began using it right away.

The process improvements after the roll-out of Kajo 

The implementation of Kajo has indeed brought about a significant transformation in our scheme management process. Gone are the days of exhaustive analysis of every single bulletin. 

With Kajo, the platform streamlines the identification of subject matter experts, automates task distribution, and facilitates feedback and progress tracking. The comments feature fosters seamless communication among stakeholders, while the overview of effective bulletin dates ensures alignment on deadlines across different functions. 

This centralised approach provides us with an accessible overview of our compliance status, aiding in prioritising key topics and significantly reducing the risk of missing actions or due dates.

As Kajo is constantly evolving with new features, we expect even more improvements in our process. For example, we are looking forward to the upcoming release of Kajo with self-servicing capabilities, which will further enhance our efficiency and effectiveness in scheme management.

Our experience working with the Rivero team has been exceptional. We would give them a solid 10 out of 10. Whether it's a technical inquiry or clarification on an announcement, the Rivero team is very supportive and responsive.

Additionally, we can always share product feedback and feature ideas and the Rivero team always listens and addresses our suggestions.

PostFinance's roadmap to success with Kajo

PostFinance Kajo Success Story

Mastering scheme compliance: PostFinance’s roadmap to success with Kajo

Deciding between building an in-house dispute management solution or outsourcing can be a pivotal choice for financial institutions. Each option carries its unique set of benefits and challenges, which not only influences operational efficiency but also customer satisfaction and bottom-line results.

Our FAQ document addresses the crucial questions and considerations faced by financial institutions when evaluating whether to build a custom dispute management solution or procure a service from an external provider.

You will discover discussions on several key factors, including:

Our comprehensive FAQ aims to equip you with the knowledge needed when weighing each option, ensuring that you consider all aspects crucial to maintaining and enhancing your operational capabilities.

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Build or buy? Evaluating dispute management solutions for banks

We are thrilled to share that Enfuce has selected Rivero as its partner to enhance efficiency in their scheme compliance process.

Our all-in-one scheme compliance solution, Kajo, will enable Enfuce to empower their organisation to mitigate the risk of non-compliance.

We’re thrilled to announce that Enfuce has selected Rivero as its partner to drive greater efficiency and control in scheme compliance management. By implementing Rivero’s all-in-one compliance solution, Kajo, Enfuce will empower its organization to stay fully aligned with payment scheme requirements while significantly reducing the risk of non-compliance. 

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Enfuce Chooses Rivero and Kajo to Streamline Scheme Compliance

Chargeback fraud has become a significant challenge in the digital age of commerce. It occurs when a cardholder makes a purchase with their credit or debit card and then requests a chargeback from the issuing bank after receiving the goods or services, claiming that the transaction was fraudulent or the product was never delivered. ​​

In some cases, the consumer might have forgotten about the transactions, or a family member might have performed the transaction without their knowledge, the so-called “friendly fraud” or “family fraud”. However, in other cases, fraudsters might misuse the cardholder protection rules of the schemes to dispute legitimate charges to their cards. 

Such dishonest practice is most likely to strike during peak shopping periods such as the holiday seasons, Black Friday, and Cyber Monday. During these times, transaction volumes surge, providing a cover for fraudsters to dispute legitimate charges. Retailers, already dealing with increased sales activity, may not have the time or resources to scrutinise these requests as closely, leading to higher instances of chargeback fraud.  

This not only results in a loss of revenue for the merchant but also in additional fees and operational costs for card issuers and banks to process those claims.

The rise in chargeback fraud is worrying and hurting the whole payment ecosystem. First, it undermines the trust between consumers, merchants, and banks. Second, it increases operational costs for banks and merchants as they have to spend resources to process those chargebacks. Lastly, it potentially inflates prices for all consumers, as businesses often pass these costs on to their customers.

Card issuers and banks are at a critical juncture with the increasing prevalence of chargeback fraud. While the growing consumer awareness of chargeback rights has been beneficial in empowering customers, it has also opened the door to fraudulent disputes. Processing payment disputes is increasingly a burden on banks. We have observed small to medium-sized banks in central Europe with a team of 20-30  solely dedicated to managing fraud and cardholder disputes.

This situation calls for a careful balancing act. Banks and card issuers need to protect their customers from genuine fraud while also safeguarding themselves and merchants from illegitimate chargebacks. What can be done? 

#1 Streamline fraud and dispute management process 

Most issuers agree that their existing internal processes and chargeback solutions do not allow for process automation or efficiency gains. Without improvement in their processes and internal tooling, there is a risk of having a huge backlog of claims that cannot be processed in time (chargeback is a time-sensitive process). Therefore, banks have to write off such fraud claims (refund the cardholders) without being able to analyse them.

By making the process more efficient and leveraging modern solutions to automate repetitive parts, banks can better allocate their resources and reject unjustified claims with no chargeback rights (e.g., an authorised Card Not Present transaction has no chargeback right).

To circumvent the costs and operational challenges of unjustified/fraudulent chargebacks, it is important to examine transactions and cardholder statements for signs of chargeback fraud. One way to do this is to leverage domain-specific chatbots that are built based on the dispute rules of payment networks. Such chatbots can challenge cardholders when they want to dispute a transaction that has chargeback fraud indicators, such as repeat transactions at the same merchant without previous disputes, card-on-file transactions, and purchases of digital goods on e-commerce platforms like app stores.

Striking a balance between rigorously investigating potential fraud and maintaining a positive cardholder experience is key. Therefore, offering in-depth transaction insights can serve as a powerful tool in identifying more concrete signs of friendly fraud, thereby facilitating a more effective and nuanced approach to dispute resolution.

#3 Provide in-depth transaction data sharing and security

Cardholders might initiate unjustified disputes over charges they don’t recognize due to forgetfulness, confusing merchant identifiers, or transactions made by relatives without their knowledge. To mitigate such claims, issuing banks can offer comprehensive transaction details, facilitating easier identification by the cardholder or prompting discussions among family members.

 (owned by Visa), it’s now feasible to equip cardholders with extensive transaction insights. This can include presenting an alternate name for the merchant, showcasing the merchant’s logo, and providing contact information, physical address, or specifics about the purchasing device. For certain retailers, it’s also possible to access a digital receipt outlining the purchased items or services. Such measures can jog the cardholder’s memory about the transaction, reducing the likelihood of unfounded disputes.

As digital transactions continue to grow, the potential for chargeback fraud also rises. By proactively addressing the challenges of this crime, banks can safeguard their operations, minimise losses and protect their cardholders.

The battle against chargeback fraud requires collaboration from all stakeholders in the payment ecosystem. By implementing these recommendations, issuing banks can not only mitigate the risks associated with chargeback fraud but also enhance their service offerings, fostering a safer and more trustworthy environment for digital transactions and a happier, more loyal customer base. 

Chargeback fraud has become a significant challenge in the digital age of commerce. It occurs when a cardholder makes a purchase with their credit or debit card and then requests a chargeback from the issuing bank after receiving the goods or services, claiming that the transaction was fraudulent or the product was never delivered. ​​



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How banks can effectively manage chargeback fraud

Learn about the operational challenges and risks associated with compliance with payment networks like Visa and Mastercard and find out how to simplify this process and make it more manageable and efficient.

Scheme Compliance

In the financial sector, particularly within card payment operations, compliance is essential to maintaining operational integrity and customer trust. Adhering to the licensing rules of international payment networks like Mastercard and Visa is crucial, since non-compliance can lead to substantial financial penalties, and, in severe cases, even result in the restriction or loss of licences.

However, the implications extend beyond financial penalties. Non-compliance can disrupt business operations, damage reputations, and deteriorate customer relationships by causing payment delays and transaction issues.

, which serves as a comprehensive guide for scheme compliance managers to ensure compliance is managed efficiently. This checklist is designed to simplify the challenges of compliance through a structured approach, including everything from governance and reporting to effective management of waivers and variances.

In the financial sector, particularly within card payment operations, compliance is essential to maintaining operational integrity and customer trust. Adhering to the licensing rules of international payment networks like Mastercard and Visa is crucial, since non-compliance can lead to substantial financial penalties, and, in severe cases, even result in the restriction or loss of licences.



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The ultimate scheme compliance checklist for financial institutions

An article published by McKinsey & Company highlights the critical opportunity for banks to enhance customer relationships while reducing operational costs. 

Although payment disputes occur in less than 1% of transactions, their impact on customer trust and loyalty is profound. The article mentions that by reimagining the dispute resolution process, banks can not only mitigate the frustration and inconvenience associated with these disputes but also seize a valuable chance to strengthen their bond with customers.

➤ Complex Operating Models: Traditional structures create a fragmented chain of responsibility, leading to customer dissatisfaction and inefficiency.

➤ Overprocessing of Disputes: A one-size-fits-all approach to disputes, regardless of context, increases volumes and pressure on teams, affecting efficiency and regulatory compliance.

➤ Over-reliance on Case-Management Systems: While case-management systems were expected to reduce costs, their effectiveness is limited without integration into broader systems for a streamlined resolution process.

➤ Increasing Regulatory Focus: Tightened regulations demand quicker dispute resolutions, pushing banks towards faster credit provision without addressing root causes.

According to McKinsey, leveraging automation can reduce dispute-resolution cycle times, boost operational efficiency, and improve the overall customer experience. Here is how:

➤ Dispute Management: Automation can streamline the entire process, from initial complaint to resolution, ensuring a smoother, more efficient pathway.

➤ Dispute Processing: Automated systems (e.g., Virtual Agents/Chatbot) can gather necessary information and prepare cases for human processing, streamlining the initial stages of dispute resolution.

➤ Post-Dispute Processing: Handling the issuance of credits and communicating updates to customers, improving the post-resolution experience.

➤ Dispute Support: Intelligent support tools, such as virtual agents or chatbot functions in the bank’s app or portal, to resolve customer queries during the dispute-research process.

Furthermore, McKinsey underscores the financial and relational benefits of refining the dispute resolution process. Quick resolutions and provisional funds can transform negative customer experiences into loyalty-building moments. This not only solidifies customer relationships but also offers substantial cost reductions. The top 15 US banks spend about $3 billion annually on dispute processing, and McKinsey suggests that implementing next-generation operating models could reduce these costs by 25 to 40 percent. By simplifying and automating the process, banks can achieve better outcomes, reducing the incidence of incorrect dispute resolutions, which affect up to 10 percent of cases for some banks.

Redesigning the dispute resolution process, though challenging, holds the potential to significantly enhance customer loyalty, operational efficiency, and financial performance.

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Reimagining dispute resolution: strengthen customer relationships and cut costs

 began his career in the payment sector at Cornèr Bank in 1992, starting out as a programmer. Over the years, he gradually transitioned to the business aspects of payments. For the past 12 years, he has been dedicated to his role as head of IT card management and scheme compliance manager at Cornèrcard and stepped into the Vice President position in 2020.

 has worked at Cornèr Bank for more than 21 years, starting out as a Divisional Financial Controller. He transitioned into the scheme compliance domain in 2017 and has been a scheme compliance manager since then, ensuring the banks' adherence to the payment networks’ standards and regulations. 

Christian Tessari (left) and Francesco Di Meo (right)

What challenges have you been facing in managing compliance with payment networks?

The organisation and scheme management processes were becoming increasingly complex, leading to an escalating workload each year. We had a large team dedicated to analysing scheme announcements, holding monthly meetings, manually downloading these announcements, and individually checking them. 

This process also involved meticulously tracking the responsible stakeholders, timelines, and deadlines. However, the manual nature of these tasks presented risks, especially when issues arose, making it challenging to trace back to the root of decisions and understand the reasoning for a compliance oversight. 

In an effort to streamline our processes, we transitioned from using spreadsheets to adopting other tools. Despite these efforts, managing these tasks remained cumbersome. Our goal was to consolidate all relevant information in one place, ensuring clear accountability for each decision.

We recognised the need for improvement but were not aware of any solutions on the market that could help us. When we learnt about Kajo, we realised that Kajo could very well address our needs and help us with the challenges we were facing.

With Kajo, we not only streamlined and centralised our scheme compliance process in one place but can now keep a good audit trail of all compliance-related decisions and activities. This allows us to easily review and understand the rationale behind each compliance decision and action.

How was the onboarding process? Did you face any challenges in the adoption of Kajo across your organisation?

Initially, it was a challenge for our team. However, that sentiment faded when Kajo showed its value to the stakeholders. Kajo's capabilities in streamlining the process and distribution of schemes-related announcements and activities convinced the stakeholders.

In addition, Kajo's simple and user-friendly interface made the onboarding process for new team members very easy and accelerated the adoption of the product across the organisation.

How did the process improve after the adoption of Kajo?

Kajo has transformed our approach to scheme compliance management, making it more efficient and reliable. For example, by integrating Kajo and tailoring it to our company's compliance framework, we no longer have to sift through information irrelevant to us. Kajo filters out irrelevant scheme announcements, making it easier for us to focus on updates and mandates impacting our business. In addition, the reminder system for overdue tasks has been particularly beneficial in preventing missing deadlines.

Could you please share your experience working with Rivero?

We have had a very positive experience working with Rivero. The Kajo team is very responsive and knowledgeable. They have always helped us when we had questions or faced issues. The team's openness to feedback and continuous updates based on our needs have made Kajo an indispensable tool for our compliance management.

A sit-down with Francesco di Meo & Christian Tessari on their experience with Kajo


Cornèrcard Success Story

Simplifying scheme compliance: Cornèrcard's success with Kajo

Sandra has built a solid career in the finance industry, accumulating more than 20 years of experience. She joined Bank Frick in 2019 and has since been responsible for managing compliance and underwriting operations in e-commerce.

Please tell us about the challenges you were facing in the scheme compliance process.

Before adopting Kajo, we dealt with a lot of manual tasks. We needed to constantly monitor the Mastercard and Visa portals for all the latest updates, examine all information thoroughly, and identify the parts relevant to our role as a European acquirer. This process also required us to determine which teams in our company would be affected, inform them about the updates, and ask for their feedback on the compliance status.

When multiple departments were involved, we actively reached out to each stakeholder and held frequent internal meetings to keep everyone informed and clear about their tasks. This process was also quite time-consuming.

The administrative work and communication were getting heavier, given that the schemes’ frequency of publishing new compliance requirements was not slowing down. 

In addition, the varying methods of managing and tracking compliance within our team sometimes added to the complexity.

We had been seeking a long-term solution to streamline our processes, yet we did not find one until we encountered Rivero, a European FinTech.

The simplicity and user-friendliness of their system stood out to us. Instead of an overly complex compliance solution with unnecessary features, we wanted a straightforward solution dedicated to scheme compliance.

How did Kajo help with operational efficiency in the scheme compliance process?

Kajo has notably streamlined our processes. Distributing bulletins and informing various impacted stakeholders is now as simple as a click of a button. I can effortlessly review Kajo's suggestions about the impacted stakeholders and ensure that the relevant people are assigned to the bulletin or determine if someone else needs to be involved. 

The bulletin overview greatly aids in tracking our compliance status, clearly showing what has been completed and what is still pending. This level of visibility is essential, especially when involving multiple departments. We sometimes have compliance requirements that involve several teams, including operations, risk, compliance, and finance. Kajo has made collaborating in these cases much more efficient compared to past experiences.

Moreover, Kajo notifications make it easy to track when a stakeholder provides feedback and when a task is completed. 

The way we communicate and collaborate on the compliance requirements within the organisation has improved significantly. Previously, numerous meetings and calls were necessary to ensure everyone had the same understanding of the tasks. Now, we efficiently use features like notes and comments in Kajo to communicate and stay informed about the compliance activities of other teams on the same requirement.

Adopting Kajo has enhanced our processes and work practices and has brought about notable improvement. Getting started with Kajo was relatively easy, and the feedback from everyone in our organisation has been positive, regarding the solution as simple, easy to navigate and intuitive.

What is your experience working with Rivero?

Working with Rivero has significantly streamlined and simplified our processes. The tool is very user-friendly. Kajo is a straightforward solution which focuses on scheme compliance. Tracking tasks and gaining a comprehensive view of the status of each department and all individuals involved is very easy. 

The Kajo team and customer support receive a five-star review from me. Their solution-oriented approach makes working with them a delightful experience.

An interview with Sandra Willi, scheme compliance and underwriting operations manager at Bank Frick.

Bank Frick Success Story

How Kajo helped Bank Frick simplify the compliance process with payment networks

Simplifying payment operations for banks — scheme compliance, dispute management, fraud recovery and industry trends.