Sardine | Issuing banks and fraud: what merchants often miss

Today I am talking about issuing banks and fraud and why one of the biggest missed opportunities in the payment ecosystem is how little each side really understands the other. Because that is really the issue here. Merchants, issuers, card brands, and fraud teams are often working against the same fraudsters and dealing with the same customers, but they are still operating in silos that create misunderstanding, friction, and missed opportunities to prevent fraud more effectively.

In this episode of Fraudology, I talk with fraud-fighter Robby Perry to learn more about how issuing banks approach fraud prevention. Robby is now a fraud advisor for fraud tech company SentiLink, and before that he held roles in investigations and fraud at Chase, Capital One, and Walmart. That gives him a uniquely useful perspective because he has seen fraud from the issuer side and understands how card companies think about risk, investigations, and policy.

In this conversation, Robby explains some of the biggest differences between fighting fraud for a credit card company and fighting fraud for card-not-present merchants. He also talks about the biggest motivation driving most issuers, why most do not make merchant issuer collaboration a priority, and what both sides tend to misunderstand about each other. And this matters. Because issuing banks and fraud teams do not need to agree on everything to learn from each other. But if both sides want better outcomes in ecommerce payment fraud, they need to understand how the other side is actually operating instead of assuming.

Here is what that fraud lens means in practice:

Issuing banks and fraud teams often optimize for different goals, even when facing the same fraud activity
Card issuer fraud strategy is shaped by incentives and policies that merchants do not always see clearly
Merchant issuer collaboration is limited partly because both sides misunderstand the other’s priorities
Fraud silo challenges make payment ecosystem fraud harder to reduce across the board

What you’ll hear in this episode:

What some of the biggest differences are between fighting fraud for a credit card company and for CNP merchants
What motivates most issuers and how that affects fraud prevention at issuers
Why merchant issuer collaboration is not a priority for most issuers, and why Robby still recommends more of it
What some of the biggest merchant fraud misconceptions are about issuers
What payment fraud insights both sides can gain from understanding the issuer perspective on fraud

You should listen to this episode if you:

Work in fraud, payments, ecommerce, or banking and want to better understand issuing banks and fraud
Need insight into card issuer fraud, issuer fraud policies, and fraud operations at banks
Want a better view of merchant issuer collaboration, bank merchant relationships, and fraud silo challenges
Care about CNP fraud prevention, bank fraud investigations, and ecommerce payment fraud
Are interested in payment ecosystem fraud and want clearer payment fraud insights from the issuer side

Make sure you subscribe to the Fraudology Podcast to be alerted when Part 2 of this interview is released.

Episode notes & key takeaways

Issuers and merchants are fighting the same fraud from very different operating models

Let’s break this down. One of the most important realities in fraud is that even when issuers and merchants are looking at the same transaction, they are not looking at it through the same lens.

That matters because issuing banks and fraud teams have different responsibilities, different constraints, and different definitions of success. A merchant may care most about fulfillment loss, chargebacks, customer friction, and approval rates. An issuer may be more focused on cardholder protection, portfolio risk, fraud loss management, and policy consistency across a much broader set of transactions.

This is exactly why the gap in understanding matters. If each side assumes the other is using the same priorities, they will keep misreading each other’s decisions.

Issuing banks and fraud teams often evaluate the same event through very different incentives
Card issuer fraud priorities are not always aligned with merchant operational priorities
Payment ecosystem fraud gets harder to manage when both sides assume shared goals where they do not exist
Merchant fraud misconceptions often begin with not understanding the issuer operating model

Issuer fraud strategy is shaped by what matters most to the bank

This is where things get especially useful. Robby talks through the biggest motivation driving most issuing banks, and that matters because so many of their policies and decisions make more sense once you understand that underlying driver.

Here’s what is actually happening. Issuer fraud policies are not built only around what would be most helpful to merchants. They are built around what the bank believes best protects its cardholders, balances loss exposure, and supports its broader business and regulatory obligations. That can make some issuer decisions frustrating from a merchant perspective, but it also makes them more understandable.

This is exactly why issuer perspective on fraud matters so much. If merchants want better alignment, they first need to understand what the issuer is actually optimizing for.

Fraud prevention at issuers is shaped by issuer-side business and customer priorities
Issuer fraud policies often reflect goals merchants are not directly measuring
Card company fraud strategy becomes easier to understand when the issuer’s core motivation is clear
Payment fraud insights improve when merchants understand what drives issuer decisions

Collaboration is limited not only by systems, but by incentives and habit

Another major theme in this episode is why merchant issuer collaboration is usually so limited. And honestly, this is one of the clearest examples of how fraud silo challenges persist even when better cooperation could help.

At first glance, it may seem obvious that issuers and merchants should work together more often on fraud cases and investigations. In practice, though, most issuers do not treat that as a top priority. That is partly because the systems are separate, partly because the incentives are different, and partly because the industry has developed habits that reinforce distance rather than partnership.

That said, Robby also gives strong examples of why more collaboration can still be valuable. Even if it is not the current norm, there is still a lot each side could gain by understanding the other better.

Merchant issuer collaboration is often limited by incentives as much as by process
Fraud silo challenges persist because the ecosystem is not designed for easy cross-party coordination
Bank merchant relationships are often more reactive than collaborative
Payment ecosystem fraud could be addressed more effectively with better information exchange

Misconceptions between issuers and merchants create avoidable friction

One of the most useful parts of this conversation is hearing what each side tends to get wrong about the other. That matters because payment friction is not always caused by bad process. Sometimes it is caused by bad assumptions.

Merchants may assume issuers are indifferent to merchant pain or unwilling to engage. Issuers may assume merchants do not understand the broader fraud and customer protection context they are operating in. Both sides may be partly right sometimes, but the larger problem is that these assumptions harden into a kind of default mistrust.

This is exactly why conversations like this are useful. They help replace vague frustration with clearer mental models.

Merchant fraud misconceptions can distort how merchants interpret issuer decisions
Issuers may also misunderstand the operational pressure merchants face in CNP fraud prevention
Fraud silo challenges get worse when assumptions replace real understanding
Bank fraud investigations and merchant fraud operations both benefit from clearer cross-ecosystem context

The bigger lesson is that understanding the other side makes you better at your own job

The broader takeaway from this episode is pretty simple. Even if issuers and merchants never become perfectly aligned, understanding the other side still makes you stronger.

If you are a merchant, knowing how fraud operations at banks work helps you interpret declines, disputes, and issuer behavior more accurately. If you are on the issuer side, understanding merchant realities helps you see the downstream operational consequences of fraud decisions more clearly. That does not erase the structural gaps, but it does improve the quality of decision-making inside them.

That is really the point of this conversation. Better fraud work often starts with better perspective.

Issuing banks and fraud teams do not need identical goals to benefit from understanding each other
Payment fraud insights improve when ecosystem participants learn beyond their own silo
Card issuer fraud strategy becomes more actionable for merchants when it is better understood
CNP fraud prevention gets stronger when merchants know more about the issuer side of the equation

The bigger theme in this episode is that fraud in the payment ecosystem is made harder by the fact that the people fighting it often do so from isolated vantage points. Robby brings a very useful issuer-side perspective to that reality, and that is what makes the conversation valuable. The real takeaway is that merchants and issuers may never operate the same way, but they can both get better results by understanding why the other side does what it does.

Issuing banks and fraud: How card issuers fight fraud and where merchants misunderstand them