Stripe's Early Fraud Warning (EFW) system is built to alert you when a transaction is likely to result in a dispute, often before the actual chargeback is filed. It gives merchants a brief window to respond, like issuing a refund, in hopes of avoiding further problems. But here's where it gets tricky: even if you issue that refund, Visa might still count the transaction against your chargeback ratio.
If you're trying to avoid getting flagged under Visa's Dispute Monitoring Program (VDMP), just reacting to EFW alerts isn't enough. You need to understand how Visa calculates your dispute ratio and how those early warnings fit into the picture.
What is Stripe EFW?
Stripe EFW stands for Early Fraud Warning. It is a system that alerts you when Visa has received a report that a transaction might be fraudulent. These reports usually come from the cardholder's bank and are sent before a formal chargeback is submitted.
Common reasons an EFW alert is triggered:
- The cardholder reports the transaction as suspicious
- The card itself is compromised
- The transaction is flagged through fraud detection tools
Stripe passes this alert to you so you can take action, like canceling the order, stopping fulfillment, or issuing a refund.
How Stripe EFW Connects to Visa Dispute Monitoring
Visa's VDMP tracks how many chargebacks you receive each month compared to your total Visa transaction volume. If you hit 0.9 percent or more and have at least 100 chargebacks in a single month, you risk being placed in the program.
Here's the problem: refunds issued after an EFW alert don't always prevent a chargeback. And if a chargeback is filed, it still counts against your dispute ratio.
Even if you refunded the payment before the dispute was officially filed, Visa still includes it in your dispute calculation. That's why relying on refunds alone won't help you stay under threshold.
The Limitations of Refunding After an EFW
Many merchants believe that if they refund a transaction after getting an EFW, they'll avoid a chargeback. But cardholders may still file a dispute, either because they don't realize the refund was issued or because they want to double dip.
Stripe might label the chargeback as refunded in your dashboard, but it doesn't mean Visa won't count it. These cases still hurt your ratio.
So while refunds are sometimes effective, they are not a guaranteed fix.
Why EFWs Still Matter
Even though they don't guarantee dispute avoidance, Stripe EFW alerts are still useful. When used properly, they give you time to:
- Cancel unshipped or pending orders
- Block future transactions from suspicious cards
- Collect documentation in case a dispute is filed
- Identify repeat fraud attempts early
The alert is the warning sign. What you do with that warning determines the outcome.
How to Actually Reduce VDMP Risk
If your goal is to stay off Visa's radar, you need more than fast refunds. You need to be proactive and use EFW data wisely.
Here are steps that work:
- Set up automation when an EFW alert comes in. Flag the transaction, pause fulfillment, or block the customer.
- Monitor chargeback volume weekly so you're not surprised by your monthly ratio.
- Use pre-dispute tools like Order Insight and Rapid Dispute Resolution to resolve issues before they escalate.
- Analyze refund patterns. If you see repeat offenders, block those cards.
- Train your team to recognize high-risk transactions before they reach the point of an EFW.
EFW Helps, But Doesn't Erase Risk
Stripe EFW gives you a warning. That's all. It doesn't cancel disputes, and it doesn't protect your VDMP standing unless you act strategically. Visa still tracks every chargeback, refunded or not.
If you want to stay below the 0.9 percent dispute threshold, refunds need to be paired with better fraud detection, stronger buyer analysis, and better pre-dispute interception. EFW is a signal. The real protection comes from how you handle what happens next.
FAQ: Stripe EFW and Visa Disputes
What triggers a Stripe EFW alert?
An EFW alert is triggered when Visa receives a report of possible fraud, usually from the cardholder's bank. It may be due to a suspicious transaction ora compromised card.
Will refunding a transaction after an EFW prevent a chargeback?
Not always. If the cardholder proceeds with the dispute, the chargeback will still be filed, and Visa may still count it against your merchant account.
Does Visa exclude refunded transactions from dispute ratios?
No. Refunds do not remove transactions from Visa's monthly chargeback calculations unless the dispute is stopped in time. Even refunded transactions can still count.
Can I set up automation based on Stripe EFW alerts?
Yes. Stripe provides webhook support and API tools that allow merchants to take specific actions when an EFW alert is received, such as pausing orders or flagging accounts.
How fast do I need to respond to an EFW to avoid a chargeback?
There's no exact deadline, but acting quickly improves your chances. Some banks still allow chargebacks after a refund if the timing or communication is unclear.
Control the Risk After the Warning with Chargeblast
Stripe may warn you, but Chargeblast helps you act before it's too late. We monitor your EFW activity, identify refund-abuse patterns, and block fraud that might otherwise slip through. If your refund didn't stop the dispute, we help you fight it and keep it from counting toward your VDMP thresholds.
