The True Cost of Fraud: Why €100 Lost Actually Costs You €250

You think you lost €100 to a fraudulent transaction? Think again.

Picture this: It's Monday morning. You're reviewing last week's orders when you notice a chargeback notification. €100. "Not great, but manageable," you think. You move on with your day.

But here's the uncomfortable truth that most e-commerce businesses, SaaS platforms, and marketplaces miss: that €100 fraud actually cost you €250 to €300—or even more.

Sound dramatic? Let's break down the math that keeps fraud prevention experts up at night.

The Visible Loss: Just the Tip of the Iceberg

When fraud hits, the immediate damage seems straightforward:

• Transaction amount: €100
• Product or service lost: Already shipped or delivered

Most merchants stop their calculation here. That's the first mistake.

This visible loss represents only 30-40% of the actual cost. The real financial damage lurks beneath the surface, silently draining your margins and threatening your payment processing relationships.

The Hidden Costs: Where Your Money Really Disappears

1. Chargeback Fees (€15-€100 per case)

Every chargeback triggers automatic fees from your payment processor. These range from €15 for low-risk merchants to €100+ for high-risk industries. This fee applies even if you win the dispute.

For our €100 fraud: Add €25 in chargeback fees.

2. Shipping Costs (€5-€20)

That package you sent? You paid for shipping. Fraudsters don't reimburse courier fees.

For our €100 fraud: Add €8 in shipping costs.

3. Product Cost (30-70% of sale price)

You didn't just lose the sale price—you lost the actual product. Depending on your margins, this could represent 30-70% of the transaction value.

For our €100 fraud: Add €40 in product cost (40% margin assumption).

4. Payment Processing Fees (1.5-3.5%)

Your payment gateway already deducted their fees from the original transaction. They don't refund these when fraud occurs.

For our €100 fraud: Add €2.50 in processing fees.

5. Customer Acquisition Cost (Wasted)

You spent money acquiring this "customer" through ads, SEO, or marketing. That investment is now worthless.

For our €100 fraud: Add €30 in wasted CAC.

6. Investigation & Administrative Time (1-3 hours per case)

Someone on your team needs to:

• Investigate the transaction
• Gather evidence for the chargeback dispute
• Communicate with the payment processor
• Update internal systems
• Document the case

At €30/hour, even 2 hours of work adds up quickly.

For our €100 fraud: Add €60 in team time.

7. Chargeback Ratio Impact (The Silent Killer)

Here's where it gets serious. Payment processors monitor your chargeback ratio closely. Exceed 0.9-1% of your total transactions, and you'll face:

• Increased processing fees (0.5-2% markup on all transactions)
• Rolling reserves (10-20% of revenue held for 6-12 months)
• Account termination (in extreme cases)

A single fraud case pushes you closer to these thresholds.

For our €100 fraud: Potential future cost = €500-€5,000 depending on volume.

The Domino Effect: Long-Term Consequences

Beyond immediate costs, fraud creates a cascade of problems:

Operational Strain

• Team morale suffers when dealing with repeat fraud
• Time diverted from growth activities to fraud management
• Customer service resources wasted on fraud-related inquiries

Reputational Risk

• High fraud rates signal poor security to payment partners
• Potential customers see negative reviews from fraud victims
• Card networks may flag your business as high-risk

Opportunity Cost

• Capital tied up in disputes could fund inventory or marketing
• Management attention diverted from strategic initiatives
• Defensive posture prevents aggressive growth moves

The Real Math: €100 Becomes €250+

Let's add it all up for our "simple" €100 fraud case:

That's 2.65x the transaction value—and we haven't even factored in the long-term impacts on your processing rates or account standing.

For businesses operating on thin margins (typical e-commerce margins are 10-15%), you'd need to generate €2,650 in legitimate sales just to recover from this single €100 fraud.

Why Most Businesses Underestimate Fraud Costs

Three reasons explain this dangerous blind spot:

1. Fragmented data: Costs are scattered across departments (finance, operations, customer service)
2. Invisible future costs: The impact on processing rates appears months later
3. Normalization bias: "It's just part of doing business online"

But here's the reality: accepting fraud as inevitable is accepting 2.5-3x losses on every fraudulent transaction.

The Solution: Prevention Pays for Itself

Consider this scenario:

• 100 fraudulent transactions per month at €100 each
• Apparent loss: €10,000
• Actual loss: €26,500

If you could prevent just 80% of these cases, you'd save €21,200 per month (€254,400 annually).

Modern fraud prevention tools cost a fraction of these losses. Most solutions charge 0.1-0.5% of transaction value or a small fixed fee per check—dramatically less than the 265% cost of letting fraud through.

What Effective Fraud Prevention Looks Like

The best solutions combine:

• Real-time risk scoring: Analyze transactions instantly using AI and machine learning
• Device fingerprinting: Identify suspicious devices and patterns
• Behavioral analysis: Detect anomalies in user behavior
• Global fraud databases: Cross-reference against known fraudsters
• Customizable rules: Adapt to your specific business and risk tolerance

Take Action: Calculate Your Real Fraud Cost

Use this formula to calculate your actual fraud burden:

Real Fraud Cost = (Fraud Volume × Transaction Value) × 2.5

Then ask yourself:

• Can you afford to keep losing 2.5x on every fraud case?
• How much would saving 80-90% of these losses impact your bottom line?
• What could you do with an extra €250,000 annually?

Stop the Bleeding: Protect Your Revenue Today

Every day without proper fraud prevention is a day you're paying the 2.5x tax on fraudulent transactions. The question isn't whether you can afford fraud protection—it's whether you can afford to keep operating without it.

Fraud Shield by Orylo helps e-commerce businesses, SaaS platforms, and marketplaces stop fraud before it costs you 2.5x. Our AI-powered solution catches fraudulent transactions in real-time, protecting your revenue, your margins, and your payment processing relationships.

Don't let fraud silently drain your business. The true cost of doing nothing is far higher than you think.