Many things have already been said... and the fraud rate depends on your type of merchandise.
We run a consumer electronics site and found 20% of the orders to be fraudulent. We got hit 9 times in a row from the same person under different names and addresses... we fulfilled 3 orders (worth $4,000) ... which got charged back, have paid our school fees, learned our lessons, and improved our system. The latter would have detected order 2 and 3, plus the others we detected anyway.
The people who process the payments have now a good gut feel for the phoney ones.
My stance is too stuff credit cards altogether (will continue to accept these), and entice customers to pay via direct deposit into our account... quite a common option here in Australia. We are currently implementing a "Best Price" scheme, where the price is shown 2% less than the normal price, with a link "How to get the best price?"
It then explains to simply subscribe and receive a voucher, valid with any purchase from our store -- if payment is made via direct deposit. On checkout, the customer enters the code and gets 2% off.
What is the point: The customer makes 2%, we don't loose a penny, as we simply pass on the merchant fee we do not have to pay, and enjoy a risk-free payment transactions, without chargebacks :)
... and without violating the merchant conditions, which do not allow different pricing for payments with cards.
The problem with card-not-present transactions is that the merchant will have to put up with the loss. Card companies do next to nothing to prevent this from happening in the first place, such as checking against card holder's name and address... again at least here in Australia, where they hide behind Privacy laws... though a simple true/false check could avoid many fraudulent orders.
I have just tracked down the person, and reported her to the authorities. As it turns out, she is renown for this kind of thing, and has already committed online fraud offences worth over $100,000...
If horror stories are around, this is one of them.
All the best for your online ventures.