Fraud Detection Rate is the percentage of actual fraudulent transactions that your fraud prevention system successfully identifies and blocks before they cause financial loss.

Calculate it as: (Fraudulent transactions detected / Total fraudulent transactions) × 100. A 95% fraud detection rate means 5% of fraud slips through undetected. For most fintechs, acceptable rates range from 90-98% depending on transaction type and risk tolerance.

The tension every CX leader faces: higher detection rates typically mean more aggressive rules, which increase false positives and create friction for legitimate customers. A 99% detection rate sounds impressive until you realize you're declining 1 in 10 good transactions. The goal isn't maximum detection—it's optimal detection balanced against customer experience.

Your fraud detection rate should be measured across transaction types separately. Card-not-present transactions, account takeovers, and new account fraud each have different baseline rates and require different thresholds. Blending them into a single metric obscures where your actual vulnerabilities are.

Related terms: False Positive Rate (Fraud), Chargeback Rate, Account Takeover Rate