How fraud resolution shapes customer acquisition costs

As we enter a new year, cardholders across the world are reevaluating their finances and setting goals to save more, spend smarter and simplify their banking relationships. For many, trust is especially important when it comes to protecting their money from fraud. Yet for financial institutions, fraud is a security issue and competitive business challenge with direct implications for cardholder acquisition costs (CACs).

 

Industry research shows that the way banks handle fraud resolution has become one of the most consequential cardholder touchpoints in financial services. Cardholders expect their bank to go beyond prevention with swift, transparent, supportive resolution when fraud happens. How banks respond can determine whether a cardholder stays or goes.

 

Traditional fraud metrics focus on loss mitigation and case outcomes. But the introduction of the Fraud Resolution Experience Index reveals that cardholders truly judge their bank by how informed, supported and valued they feel during the process. This “experience score” is a powerful trust benchmark that is directly tied to spending behaviour, product engagement and loyalty.

 

Why does this matter for cardholder acquisition costs? Because replacing a lost cardholder is far more expensive than retaining one. Industry research indicates that a significant share of cardholders will consider switching banks after a frustrating dispute or fraud experience – and with CAC in financial services often exceeding several hundred dollars per new client, churn quickly adds up. For example, replacing even a modest cohort of dissatisfied cardholders can cost an institution well into five figures just to reacquire new clients.

 

Fraud handling is a strategic loyalty lever

 

In a landscape where switching banks takes just a few clicks, cardholders’ expectations have changed. Research shows most cardholders believe how their bank handles fraud matters more for trust than the fraud event itself. Transparency, speed and consistent communication aren’t optional, they are business differentiators.

 

When banks fail to deliver on these expectations, the impact extends beyond cardholder dissatisfaction. A poor fraud experience elevates the risk of churn, raises CAC as banks pour more into marketing to offset defections and suppresses lifetime value as disengaged cardholders adopt fewer products and services. It results in lost revenue today and lost opportunity tomorrow.

 

Turning disputes into a competitive edge

 

On the flipside, institutions that invest in modern fraud resolution, by leveraging real-time digital updates, automated provisional credits and empathetic communication, for example, can turn a negative event into a trust-building moment. These efforts help reduce churn, improve loyalty and decrease the pressure on acquisition budgets.

 

Importantly, cardholder experience doesn’t start and end with fraud resolution alone. It’s part of a broader financial relationship that cardholders evaluate as they audit their monetary goals each year. Delivering a frictionless, transparent fraud journey signals that a bank truly understands its cardholders’ interests, which in turn boosts brand preference and reduces the likelihood they’ll seek alternatives.

 

What banks should consider in 2026:

 

• Measuring trust: track experience metrics that reflect how cardholders feel during fraud resolution, not only how quickly cases close
• Streamlining communication: clear, consistent notifications reduce anxiety and build confidence, which drives reuse and product engagement
• Leveraging technology: automation and real-time tools help resolve disputes faster and more transparently
• Shifting mindsets: treat fraud resolution as a marketing and retention initiative, not just a risk control function

 

As financial institutions look to capture wallet share, those that elevate the fraud experience will not only protect cardholders but also their bottom lines by lowering acquisition costs and fostering long-term loyalty.

 

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Download the Fraud Resolution Experience Index to see how improving fraud experiences can lower acquisition costs and strengthen customer loyalty.

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by Aafie Somers, Content Marketing Manager, Quavo