Weekly Wins, Realizations & One Hard Truth About Fraud

This week has been a whirlwind of connection, and I bet you’ve had those moments too when you feel your hard work starting to click.

I’ve been jumping on discovery calls left and right, and every chat reinforces something I’ve learned:

The more I share my ideas, whether it’s on LinkedIn or lately, dipping my toes into Reddit, the more I attract the right people.

These are the folks who get what I’m building, and who vibe with my vision for fintech and tech.

It's always been about showing up consistently, even in new spaces, with the same clarity and passion.

And it’s paying off new conversations, new opportunities, new energy.

What’s been really interesting, though, is a theme that keeps popping up in my talks, especially with people in tech and AI.

There’s this shared belief that the future of services - fintech included - isn’t just about slick algorithms or flashy apps.

It’s about human-to-human connection, and building trust through real interactions.

That’s where I’m doubling down, and maybe you’re feeling that pull too, focusing on the relationships that drive your business forward.

But let me shift the topic and talk about something that doesn’t get enough airtime until it’s a full-blown problem:

Who’s on the hook when fraud hits your fintech platform? If you’re not crystal clear on the answer, this could cost you more than you realize. Let’s break it down and make sure you’re covered.

The Trap of Fraud Liability in Fintech

Let’s say you’re running a fintech startup - maybe a platform that handles UPI payments, investor onboarding, or peer-to-peer lending.

You’ve partnered with a payment processor to keep transactions smooth, and you’re thinking, “Fraud? That’s their job to handle, right?” It’s a natural assumption.

You’re focused on building your product, not policing every transaction. But the reality is, if a scammer slips through with a stolen card or a fake account, you might be the one left holding the bag - not your processor.

The problem? Most founders treat fraud liability like a minor detail, not a line item that needs serious attention.

They assume their processor has their back, but assumptions don’t hold up when regulators, clients, or banks come knocking.

In India, where RBI, SEBI, and the DPDP Act are tightening the screws on anything financial, a vague contract could leave you exposed to massive losses or legal headaches.

But you don’t have to learn this the hard way. With a few smart moves, you can protect your business and keep fraud from affecting your profits.

My 3 Steps to Protect Your Fintech Platform from Fraud Liability

To make sure fraud doesn’t become your problem, you need to get proactive with your contracts and your processor relationship.

These 3 steps are made for fintech founders like you, and I’ll explain why each one is critical to keeping your business safe and your margins intact.

1. Stop Assuming Your Processor Is Your Safety Net

The first step is a mindset shift: your payment processor is a partner, not your insurance policy.

Don’t assume they’ll absorb fraud losses just because they handle transactions.

Instead, dig into their contract and look for phrases like “merchant liability” or “chargeback responsibility.” If it says you’re on the hook, you need to plan for that.

This is huge because processors often shift as much risk as possible to you - it’s just business for them.

Let’s say a fraudulent transaction slips through, and the cardholder disputes it.

If your contract makes you liable, you’re not just losing that transaction’s value; you could be hit with chargeback fees, withheld funds, or even frozen accounts.

In fintech, where cash flow is king, that’s a hit you can’t afford. By recognizing that fraud protection isn’t automatic, you’re taking the first step to negotiate better terms or at least prepare your business for the reality.

2. Scrutinize the Fine Print and Ask Tough Questions

Before you sign with a processor, read every word of their contract, especially the parts about disputes, reserves, and chargebacks. Then, ask direct questions to clear up any gray areas:  

• What does “withholding funds” mean in practice? Can they freeze your entire account over one bad transaction?  

• Can they offset fraud losses from unrelated transactions, dipping into your legit revenue?  

• Is there a cap on their liability, or are you carrying all the risk?

This step is critical because the fine print is where processors hide their leverage.

Maybe you’re planning to scale your platform and process thousands of transactions a month.

If fraud hits and your contract lets the processor withhold funds at their “sole discretion,” you could be stuck without cash to operate, even if the fraud was a tiny fraction of your volume.

Asking these questions upfront forces clarity and might even push the processor to offer better terms.

At the very least, you’ll know exactly what you’re signing up for, so you can budget for fraud risks instead of being blindsided.

3. Add Protective Clauses to Your Contract

To take control, include specific clauses in your processor agreement or client contracts. Try something like:  

• “The Processor’s liability for fraud shall not exceed 0.5% of total transaction volume per month.” Or:  

• “The Merchant reserves the right to contest chargebacks. The Processor must respond to disputes within 14 business days.”

Clauses like these are fair and also protective. The first one caps how much fraud loss you’re responsible for, so a single bad transaction doesn’t wipe out your profits.

This is key in fintech, where fraud can spike unexpectedly, especially with high-volume platforms.

The second clause ensures you have a voice in disputes, forcing the processor to work with you instead of making unilateral calls.

Without these, you’re at the mercy of their policies, which are rarely designed to favor you. These lines give you leverage, protect your cash flow, and show partners you’re serious about managing risk.

Your Quick Checklist to Stay Fraud-Proof

Here’s a simple rundown to make sure you’re covered:  

• Don’t assume protection: Treat your processor as a partner, not a fraud shield.

• Read the fine print: Check for liability, chargebacks, and fund withholding terms.  

• Add protective clauses: Cap fraud liability and secure your right to contest disputes.

Don't just hope fraud won't hurt you, or touch your business, but instead take active decisions to prevent that from happening.

Clarity In Fintech Is Non-Negotiable

The bottom line is, in fintech, assuming your payment processor will handle fraud is like assuming your content will go viral without posting - it’s wishful thinking that won’t survive reality.

Let’s say you’re planning to grow your platform, maybe onboarding bigger clients or processing more transactions.

A contract that leaves fraud liability vague could cost you thousands, tank your cash flow, or even land you in a regulatory mess if RBI or SEBI starts asking questions.

But with clear terms and proactive questions, you’re turning a potential disaster into a manageable risk.

Think about it like the consistency you’ve been pouring into your business - showing up day after day, posting, connecting, building.

That’s what’s gotten you this far, whether it’s landing new opportunities or growing your fintech platform.

Now, apply that same discipline to your contracts. Don’t let “I thought they knew” be your downfall.

Read the fine print, ask the tough questions, and add clauses that protect your margins.

It’s a small effort that could save you from a world of pain and keep your business thriving.

So, next time you’re reviewing a processor agreement or drafting a client contract, take a moment to nail down the fraud details.