False decline cost calculator for fraud screening
Enter your monthly volume, fraud rate, screening performance and costs. See what declined good customers cost beside fraud stopped, and the break-even false-positive rate.
Monthly false-decline cost
The good customers declined cost €38,021 a month, 1.7 times the €22,500 of fraud the screening stops. At a false-positive rate of 1.00%, it pays only below 0.59%.
What screening stops and costs
The top bar shows fraud stopped in a month, the middle bar shows what declined good customers cost, split into margin lost now and customers who do not come back, and the bottom bar shows fraud that still gets through.
Monthly figures
| Fraud transactions | 300 |
| Fraud caught | 225 |
| Fraud missed | 75 |
| Good transactions declined | 497 |
| Good declines per fraud caught | 2.2 |
| Precision | 31.2% |
| Fraud stopped | €22,500 |
| Fraud still lost | €7,500 |
| Lost margin | €11,928 |
| Customers who leave | 174 |
| Future margin | €26,093 |
| Monthly false-decline cost | €38,021 |
| Net result | −€15,521 |
| Break-even false-positive rate | 0.59% |
The figures paste as a two-column table into a spreadsheet or a document.
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Show calculation
Fraud transactions = Monthly transactions × Fraud rate Fraud caught = Fraud transactions × Fraud catch rate Good transactions declined = (Monthly transactions − Fraud transactions) × False-positive rate Loss per fraud = Average transaction value + Chargeback fee Fraud stopped = Fraud caught × Loss per fraud Lost margin = Good transactions declined × Average transaction value × Good transaction margin Future margin = Good transactions declined × Share of declined customers who leave × Future margin per customer who leaves Monthly false-decline cost = Lost margin + Future margin Break-even false-positive rate = Fraud stopped ÷ ((Monthly transactions − Fraud transactions) × (Average transaction value × Good transaction margin + Share of declined customers who leave × Future margin per customer who leaves))
Every rate and cost is your own. This covers one month, with no review queue, step-up checks or recovered chargebacks.
False decline cost in fraud screening
False-decline cost is the margin lost when good transactions are declined, plus the future margin from customers who do not come back. The calculation uses your monthly transaction volume, fraud rate, screening rates and costs.
Comparing false-decline cost with fraud stopped shows how the two sides weigh against each other. The break-even false-positive rate shows where the screening stops paying based on the figures you enter.
False decline questions
How much do false declines cost a business?
The cost includes lost margin on good transactions declined and future margin from customers who do not come back. The calculator works it out for a month using your figures.
How do I calculate false-positive cost in fraud screening?
Multiply good transactions by the false-positive rate to find good transactions declined. The cost adds their lost margin to the future margin of customers who do not come back.
Why can declined good customers cost more than fraud stopped?
A declined good transaction loses its margin. If the customer does not come back, their future margin is counted too, so false-decline cost can exceed fraud stopped.
What false-positive rate can a fraud rule afford?
The break-even false-positive rate compares fraud stopped with the margin and future margin lost when good customers are declined. The calculator works it out from the rates and costs you enter.
How many good customers are declined for each fraud caught?
Divide good transactions declined by fraud caught. The calculator shows this figure for the rates you enter.