Reviewed by Mayer Hyman, Payments Specialist | Reviewed for accuracy July 2026
Key Takeaways
- US merchants lose $4.61 for every $1 of fraud they experience, a 37% increase from five years ago (LexisNexis True Cost of Fraud Study, 2025).
- A single chargeback can cost a merchant up to 3.4 times the original transaction value once fees, labor, and lost processing volume are counted (Mastercard, 2025).
- 51% of small employer firms cite uneven cash flow as a financial challenge, and 56% cite paying operating expenses (Federal Reserve 2025 Report on Employer Firms).
- Growth capital isn’t only what a lender wires you. It’s also the cash you keep because it never left in fees, fraud losses, or slow settlement.
Capital Efficiency Is About More Than Financing
Capital efficiency means keeping more of the revenue a company already generates, instead of losing it to fees, fraud, and slow settlement, before ever taking on financing. Ask any founder what a growing company needs and “access to capital” is usually the first answer. Most of that conversation defaults straight to financing: lines of credit, revenue-based advances, equity rounds, SBA loans. All of that matters. But it skips a quieter lever that’s fully within a company’s control long before it talks to a lender: how much of its own revenue it actually keeps.
Every business already generates capital every time a customer pays. The question is how much of that payment survives the trip from checkout to bank account. Processing fees, chargebacks, fraud losses, and slow settlement times all take a bite before the money is usable. For a growing company, plugging those leaks is capital efficiency, and it’s available immediately, without a credit application.
Where Revenue Quietly Leaks Out Before It Becomes Working Capital
The Federal Reserve’s 2025 Report on Employer Firms found that 51% of small employer firms cite uneven cash flow as a financial challenge, and 56% cite trouble covering operating expenses (Federal Reserve 2025 Report on Employer Firms). Those aren’t abstract numbers. They describe a business that made the sale, did the work, and still doesn’t have reliable access to the money.
Fraud and Chargebacks Eat Into Margin Directly
Fraud is one of the more expensive leaks, and it’s gotten worse, not better. US merchants now lose $4.61 for every $1 of fraud once you count the transaction, fees, and operational cost of dealing with it, up 37% from five years earlier (LexisNexis True Cost of Fraud Study, 2025). Chargebacks compound the problem. Mastercard’s own 2025 analysis puts the true cost of a single chargeback at up to 3.4 times the transaction value once network fees, staff time, and the downstream effect on processing relationships are factored in (Mastercard, 2025).
Neither of those costs shows up as a single line item on a bank statement. They show up as thinner margins and a working capital position that looks worse than the sales numbers suggest it should. A company fighting an elevated chargeback rate or absorbing avoidable fraud losses is effectively financing that loss out of its own cash reserves, at a much worse rate than any loan would carry.
Settlement Speed Determines How Long Revenue Sits Unusable
The other leak is time. Money that’s been charged to a customer’s card but hasn’t settled into the merchant’s account yet isn’t available for payroll, inventory, or anything else. Slower settlement cycles, batch delays, manual reconciliation between a payment gateway and the accounting system, all stretch out the gap between “we made the sale” and “we can spend that money.” For a business scaling quickly, that gap is where cash flow problems start even when revenue is climbing.
Efficient Processing as a Capital Efficiency Strategy
None of this replaces financing when a company genuinely needs outside capital for a big expansion, equipment purchase, or acquisition. But before or alongside that conversation, it’s worth asking how much of the company’s own cash is currently being lost to preventable processing costs. Lowering an elevated chargeback rate, tightening fraud screening, and shortening settlement time all put money back into the business without adding a single dollar of debt or diluting equity.
Cartis Payments works on that side of the equation as a payment processing provider, not a lender. Cartis pairs card processing and payment gateway infrastructure with fraud protection and chargeback management, so merchants and ISVs can see where revenue is actually leaking and close those gaps directly, rather than borrowing to cover a shortfall that better processing could have prevented in the first place.
Questions Worth Asking Before Looking for Outside Capital
- What is our actual chargeback rate, and how does it compare to our industry’s typical range?
- How many days pass between a customer’s payment and that money being usable in our account?
- Are fraud losses being tracked as a cost of doing business, or are they hiding inside “shrinkage” or write-offs?
- Is our current payment gateway giving us fraud protection and dispute management as part of the same system, or are we stitching together separate tools?
- Would fixing processing inefficiencies close some of the cash flow gap we’re trying to solve with financing?
The Bigger Picture on Growth Capital
Access to capital will always matter for companies trying to scale. But capital isn’t only what shows up after a financing conversation. It’s also what a company keeps because it wasn’t lost to fraud, absorbed by a chargeback, or stuck in a settlement queue for an extra few days. Growing companies that treat payment processing as a cash flow lever, not just back-office plumbing, tend to need less outside financing to fund the same growth.
FAQ
Does better payment processing actually replace the need for financing?
No. For major growth investments, financing is often still necessary. But reducing fraud losses, chargebacks, and settlement delays recovers cash a company already earned, which can lower how much outside capital it needs and when it needs it.
How much does fraud actually cost a merchant beyond the stolen transaction?
US merchants lose $4.61 for every $1 of fraud once fees and operational costs are included, a 37% increase over five years, according to the LexisNexis True Cost of Fraud Study.
Why do chargebacks cost more than just the disputed amount?
Mastercard’s 2025 analysis found a single chargeback can cost up to 3.4 times the original transaction value once network fees, staff time spent fighting disputes, and the impact on processing relationships are included.
What’s the first thing a growing company should check about its own cash flow before seeking outside capital?
Start with chargeback rate, fraud loss trends, and how many days pass between a sale and usable cash. Those numbers often reveal recoverable cash flow before a financing conversation is even necessary.
