Inside the 2025 Chargeback Surge: 7 Trends Every Merchant Should Watch

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E-commerce is booming, and with it, so are chargebacks. Ethoca's recent 2025 State of Chargebacks report, produced in partnership with Mastercard, forecasts that global chargeback volume will grow 24% from 2025 to 2028, reaching around 324 million transactions. 

In monetary terms, annual chargeback losses are set to climb from roughly US$33.8 billion in 2025 to $41.7 billion in 2028. In other words, merchants face significantly higher dispute costs and operational strain this year. These trends underscore why Ethoca’s 2025 report is a must-read: It highlights new chargeback dynamics and how merchants must adapt.

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1. Chargebacks are Growing (and It’s Not Just Fraud)

Every merchant is feeling the squeeze. Many report dispute volumes up by double digits year-over-year. Notably, only about 45% of chargebacks are fraud-related; the majority arise from genuine customer issues. This can include billing descriptor confusion, unfulfilled expectations, or complicated refund processes. In practice, that means preventing disputes requires more than fraud tools alone.

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What to do:

• Treat disputes holistically. Audit your post-sale workflows (order confirmations, shipping, billing descriptors). Make sure customers recognize your charges on statements.
  
  
• Improve transparency. Use clear billing descriptors and detailed digital receipts so buyers immediately recognize transactions. This can cut down mistaken disputes.
  
  
• Streamline customer service. Offer easy refunds, cancellations, or exchanges for issues. The easier you make a return or fix a problem, the less likely a customer will ask the bank to do it.

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2. Digital Sales Fuel More Disputes

Today’s consumers transact mostly online. Roughly 63% of merchants’ transactions are card-not-present (CNP) purchases. Digital channels make purchasing effortless, but they also make disputing a charge as easy as tapping an app. For example, banks now let cardholders launch a dispute via mobile banking with one click. This shift has made chargebacks more prevalent and harder to prevent in the traditional way.

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What to do:

• Enhance transaction clarity. Provide rich order details to customers. Ensure your billing name and receipt info match your brand. If multiple entities (like marketplaces or travel intermediaries) are involved, work to make the end vendor clear on statements.
  
  
• Leverage data tools. Make purchase data available through customer portals or email. Encourage buyers to check their order history before disputing. For subscriptions, offer simple online management (pause or cancel). Clear communication can reduce friendly fraud.
  
  
• Optimize your process. Review how your refund and cancellation requests are handled internally. Every delay or confusion is a potential chargeback trigger. Strengthen your customer support so issues get resolved before a bank is ever contacted.

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3. Manual Dispute Processes Are Costly and Incomplete

Handling chargebacks by hand is grinding. Many midmarket merchants still rely on email and spreadsheets to track disputes. This means low-dollar claims often go unwon or get written off. Industry data show merchants write off roughly 11–19% of disputes as “not worth the effort” (especially very small ones). 

This means thousands of dollars can slip away unnoticed. Meanwhile, large merchants that do handle disputes typically win about half of the cases they challenge, suggesting even more revenue is recoverable than many think.

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What to do:

• Evaluate your thresholds. Don’t automatically ignore small-value chargebacks. Even $50 here and there adds up. Calculate your true recovery rate and revise write-off limits based on data.
  
  
• Automate and outsource. Adopt chargeback management tools or services. Automation can process low-value disputes quickly and cheaply. If it saves time and increases representment volume, it pays for itself. Consider success-based dispute providers, which allow you to contest more cases without expanding headcount.
  
  
• Monitor results. Regularly analyze representment outcomes by dispute size and reason code. Identify patterns where your team is underperforming. Use that insight to fine-tune processes or escalate cases that may have higher success rates.

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4. Watch for First-Party (Friendly) Fraud

Fraud is a big piece of the puzzle, but it looks different now. Both “true” fraud (stolen cards) and first-party fraud (a customer disputing a legitimate purchase) are rising. In fact, first- and third-party fraud together account for about 45% of all chargebacks.

Friendly fraud can stem from buyer’s remorse, confusion over a charge, or even deliberate abuse of the system. Banks and merchants see these trends clearly, but often use different language. For example, issuers may label up to 72% of disputes as fraud, far higher than merchants’ estimates. The upshot of this is that merchants can no longer treat all chargebacks as external fraud; many are due to avoidable issues or customer misunderstanding.

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What to do:

• Distinguish dispute causes. Tag chargebacks by reason whenever possible. If a customer says, “I never bought this,” but your records show delivery, that might be friendly fraud. Use order timestamps, IP data, or shipping info to rebuild the story.
  
  
• Improve customer reminders. Send order and shipping confirmations, and even periodic reminder emails for recurring charges. People often dispute forgotten subscriptions — a simple reminder can preempt a chargeback.
  
  
• Tighten returns/refund policies. Make sure cancellation and return processes are clear and easy. If customers have a smooth self-service return, they’re less likely to take it to the bank.

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5. High-Value Verticals Need Extra Focus

Insight: Some industries naturally see higher chargeback rates and values. Ethoca’s research highlights that travel and hospitality merchants have the highest average chargeback value of about $120 per case. 

Other sources note that online gaming, gambling, and crypto exchanges face similarly high values. Retail e-commerce disputes average around $84, while digital goods and subscription services typically see smaller per-incident amounts (roughly $65–77). Recurring billing models and indirect sales channels (like travel agencies or app stores) often add friction and confusion, leading to more disputes.

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What to do:

• Benchmark your industry: Compare your chargeback rate and win rate to peers. If you’re in travel, digital goods, retail, or subscriptions, expect tougher odds and plan accordingly.
  
  
• Address sector-specific triggers: Customize your strategy to common pain points. For example, airlines might over-communicate itinerary changes; subscription services should make canceling easy and transparent. Retailers should provide tracking details and clear return instructions. Tailored solutions prevent disputes and strengthen representments.
  
  
• Use relevant evidence: When disputing, leverage the right documentation. Travel merchants can provide booking records or updated policies; subscription services can show login or usage history. Strong, industry-specific evidence can tip the scales in your favor.

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6. Don’t Overlook Low-Value Chargebacks

Low-value disputes can feel like a hassle, but together they’re a big hit. Even if a single digital goods sale averages only ~$65, a high volume can amount to substantial losses. Some merchants tacitly accept 10–20% of small disputes as a cost of doing business. 

Yet with chargeback technology and alert systems, it’s now possible to fight more of these cheaply. For example, merchants using third-party dispute tools report much higher coverage of small claims and better overall win rates.

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What to do:

• Prioritize strategically. Include the monetary amount in your dispute triage. However, don’t assume all small cases are unwinnable. If the merchandise or subscription value is covered by fees, or it’s easy to reship/replace, contest it.
  
  
• Leverage automation. Use software or services that automatically file representments on low-value disputes. This takes the manual burden off your team while still recovering money.
  
  
• Revisit write-off policies. Instead of a blanket “write-off if under $X,” base thresholds on real data. Consider variable cost models (pay-per-win) so you can pursue more cases without fixed costs.

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7. Leverage Real-Time Alerts and Transparency

New tools give merchants a valuable early warning. Chargeback-prevention services like Ethoca alerts and Verifi’s RDR alerts notify you immediately when a cardholder disputes a charge, before it becomes a full chargeback. 

Mastercard’s research notes that deploying dispute-management solutions with real-time alerts and clearer transaction data can significantly reduce costs. In practice, merchants who act on alerts by refunding or clarifying charges can avoid many chargebacks altogether. Similarly, providing rich merchant data (logo, product info, contact details) helps cardholders recognize charges, cutting down confusion-driven disputes.

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What to do:

• Sign up for alerts. Enroll in industry alert programs if you haven’t (e.g., Ethoca, Visa’s RDR). These give you a heads-up so you can resolve issues immediately.
  
  
• Enrich transaction data. Work with your acquirer to send transaction details to card-issuing banks (merchant name, product, order date). Many chargebacks happen because the statement descriptor is vague. Extra data can help cardholders recall the purchase.
  
  
• Use a chargeback platform. Adopt a chargeback management system that integrates alerts, automated form-filling, and expert guidance. This ensures you capture every dispute notification and speed up responses. The ChargebackStop platform, for example, supports Ethoca and Verifi alerts and automates representment workflows.

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Next Steps for Merchants

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1. Audit your chargeback performance. Measure your chargeback rate, representment success, and how much revenue you’ve recovered vs. written off. Identify the biggest gaps (e.g., too many small losses or poor win rate on disputes).

2. Proactively prevent disputes. Implement real-time alert programs and improve receipt clarity (branding, item details). Make your refund/cancellation process customer-friendly to defuse issues early.

3. Automate and optimize your process. Use a unified chargeback management solution or service. Automate routine tasks like gathering evidence and filing representments, so you can contest more cases without adding staff.

4. Train your team. Make sure your customer service, finance, and fraud teams understand the latest dispute rules and tools. Consistent handling and documentation of transactions are key to winning disputes.

5. Partner with experts or tech providers. Whether using an outsourced service or software, ensure your partner supports the major alert networks (Ethoca, Verifi RDR, etc.) and provides data analytics. A specialized team can help you stay ahead of evolving fraud patterns.

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TL;DR?

Chargebacks are a serious, strategic issue. They shouldn’t be seen as a cost of doing business. 

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ChargebackStop offers the kind of proactive, data-driven solution this new landscape demands. Our platform combines real-time dispute alerts with end-to-end automation, so merchants catch problems early and build the strongest possible cases. 

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We fully support industry alerts (including Visa’s RDR and Mastercard’s Ethoca alerts) and automatically gather order and customer data for every dispute. This leads to higher win rates and fewer manual headaches. 

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Ready to learn more? Book a demo and see how ChargebackStop helps reclaim revenue and streamline your chargeback response process.

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