Chargebacks are often associated with fraud, and while there certainly is a reason for this, there is a good side to them, as they can massively increase customer loyalty and confidence to shop in an ever-digitising world. Nonetheless, firms must understand how to navigate them properly or risk facing growing fraud figures, and a new report from payments giant, Mastercard, in partnership with Datos Insights delves further into this topic.
The report, titled The chargeback window of opportunity: A global view of the 2025 chargeback trends and how to turn them into opportunities, examined responses from 863 financial institutions, mid and large merchants in the US, UK, Brazil and Australia. The responses revealed that chargebacks have grown, as global volume predictions are now estimated to reach 324 million transactions in 2028, a double-digit increase over the 2025 forecast of 261 million.
In the last year alone, merchants have seen a 10 per cent increase in chargebacks. More worryingly though, almost half (45 per cent) of chargebacks were either first-party or third-party fraud. Consequently, organisations are looking at the tech they can use in the dispute process to combat the growing losses taking place from chargebacks.
The US and UK respondents revealed legacy tech was holding them back when dealing with disputes, while some issuers in Brazil stated they hadn’t adopted any tech to help prevent disputes yet.
Regional breakdown
The Mastercard report revealed which countries and regions were most likely to suffer from chargebacks in the coming years, as well as how costly these attacks would be. The Middle East and Africa is estimated to have chargebacks grow by 59 per cent in the next three years: more than any other region. The Asia Pacific region took second place (35 per cent) and Europe third (27 per cent).
Meanwhile, chargebacks are only estimated to grow by 22 per cent in Latin America and 16 per cent in North America.
However, the growth estimations of the number of chargebacks are not representative of the estimated value of chargebacks in the same time period. The report predicts that by 2028, North America will be facing $20.47billion in chargebacks – almost just as much as every other region combined ($41.69billion).
In terms of value, global chargebacks are set to reach $8.49billion in Latin America, $5.98billion in Asia Pacific, $3.59billion in the Middle East and Africa and $3.17billion in Europe.
Managing chargebacks
The chargeback process is time-consuming and costly, and therefore using legacy methods of dealing with disputes is not the most effective. Organisations are now looking to technology, like AI, to automate dispute resolutions and move away from the need for human agents. The report reveals there’s strong interest with
FIs in Australia and the UK to adopt these types of solutions to help better manage their budgets.
To reduce chargebacks, the report recommends three main ways in which merchants can collaborate with issuers to ensure chargebacks can be kept in check without diminishing the consumer experience:
- Real-time alerts: Near-real-time notifications can be sent to the merchant so they can act quickly to refund or cancel the customer’s order and avoid an unnecessary chargeback altogether.
- Giving cardholders digital tools: Providing tools through a card issuer’s banking app to help cardholders more easily recognise purchases means fewer disputes caused by transaction confusion. Offering subscription management tools can also help avoid disputes by giving consumers an easy way to pause or modify their plans
- Fighting first-party fraud with risk modelling and insights: This approach helps to spot and prevent first-party fraud and prove genuine transactions made by the cardholder.
