By Gabe McGloin – Head of International Sales and Merchant Development for Verifi (

For the hospitality industry, the last 12 months have been more challenging than anyone could have predicted at the start of the pandemic.Walk down any high street, and the numerous ‘closed’ signs coupled with thin foot traffic help to illustrate the economic impact these businesses have endured.To make matters worse, as more food and drink establishments embrace online ordering and food delivery services, these businesses that are fortunate enough to remain open now face a new threat – charge- back fraud.


The previous year has altered behaviour in dramatic ways; both businesses and consumers have embraced online food ordering as a survival measure.Two-thirds of business leaders implemented or invested in app ordering systems in 2021, as well as on pay-by-app (54%), pay-by-phone (41%), and online booking systems (41%). And consumers have embraced the food delivery market, with over a quarter of Brits ordering deliveries for the first time, or more often than usual, during the first lockdown last year. Recent results from Deliveroo confirm this; orders doubled in the first 3 months of this year, a YoY increase of 130%2.

All of these factors align for an increase in chargeback fraud.


Sometimes true fraud occurs, and a stolen credit card is used to make an online purchase. In those cases, the business has no recourse except to return the funds if the customer disputes the transaction.The term “friendly fraud” is applied when the customer claims to not recognize a transaction or to have a problem with the purchase, which they may not be able to prove. For restaurants, a customer may claim that they didn’t place the order, didn’t receive part of or the whole order, or any number of reasons to be dissatisfied even though they’re actually happily fed. Customers who submit such a dispute are abusing the process by filing disputes with their issuer on legitimate transactions in order to get their money back.This practice is effectively delivery and takeaway dine-and- dash.

How restaurants can protect themselves from disputes

For restaurants, dispute management can mean taking pictures of all items in a takeaway order, so that evidence can be sent to customers who claim that all or part of their order is missing. Restaurants can also create a policy that requires the cardholder to pick up large orders in person and bring the transacting credit card. Doing so minimizes risk by turning a card-not-present transaction into a card-present one.

There is also risk for delivery services, such as Uber Eats and Deliveroo. If a customer disputes a food delivery transaction – fraudulent or not – the burden of chargeback liability falls on the delivery service, not the restaurant.


Every card network, like Visa and Mastercard, sets a threshold for a merchant’s disputes relative to their number of transactions.Additionally, acquirers will charge merchants fees to process the chargeback.To put it plainly, if a business receives too many disputes – fraudulent or legitimate – then that merchant would be burdened with greater cost and loss of revenue, and they could lose the ability to accept credit card payments on respective card networks.To lose that ability would cripple a restaurant.

Fortunately, issuer-merchant collaboration tools exist to bridge this gap.When a customer decides to file a dispute with their issuing bank, the issuer can contact the merchant to find out if they would rather simply refund the money instead of incurring a chargeback. In effect, the merchant is resolving the dispute at the pre-dispute stage – before it has a chance to escalate to a formal chargeback. In this way, merchants can protect their dispute ratio and reduce costs related to chargebcks.


As restaurants depend more on takeaway and delivery services, they are experiencing the natural trend of increased disputes alongside increased card-not-present transactions. Fortunately, by being prepared with the right technology and business practices, disputes don’t have to be another disruption to an industry finding its way in the new normal.

Gabe McGloin, Head of International Sales and Merchant Development for Verifi has a 23-year career in global e-commerce with key roles in Merchant, Payment Services/eWallet and Acquiring/Processing organizations. He has extensive experience in building and leading business support and subject matter expert teams, developing relationships with external stakeholders, and managing top revenue clients.

Gabe began his payments career with AOL Europe where he held a number of operations, relationship and business development roles. He then spent three years at PayPal Europe where he built the business unit supporting functions required to support the operations organization. Gabe then joined Chase Paymentech/JP Morgan where he spent nine years in card brand relationships, product, and client relationship management. He joined First Data in July of 2016 as VP Client Development, Global eCommerce where he led a team of Enterprise Relationship Managers and Client Services teams.