Chargeback Stats and Insights from Mastercard's State of Chargebacks Report

Earlier this year, Mastercard released the 2025 State of Chargebacks Report, which offers a detailed view into the trends shaping chargebacks and dispute resolution.

The report reveals how merchants are managing chargebacks and fraud, both internally and through outsourced partners, and the rising costs tied to dispute handling for both merchants and banks.

These insights can help merchants get a broader view of the global chargeback landscape, providing a big-picture perspective that informs chargeback management strategies.

The Coming Surge in Chargebacks

The report estimates that global chargeback volumes will reach 261 million in 2025. By 2028, that number is projected to hit 324 million—a 24% increase in just three years. The dollar value is also rising, expected to grow from $33.8 billion in 2025 to $41.7 billion in 2028.

One factor in this rise is the continued growth of digital commerce. About 63% of merchant transactions are now digital. With more purchases happening online, there's more potential for merchants to face disputes over claims of fraud, non-delivery, and more.

This digital shift also applies to disputes themselves. Most banks have made it easier for customers to dispute charges, including options in their online systems that eliminate the need for a call to customer service.

In the U.S., financial institutions are seeing a noticeable spike in disputes coming from mobile apps and online banking platforms as customers become more aware of these options. That convenience can lead to more disputes, whether justified or not.

This growth trajectory should be a wake-up call for merchants. The financial and operational burdens of chargebacks are expected to continue increasing, especially in environments where digital payments dominate.

What’s Driving the Disputes?

Chargebacks don't all come from the same source. The Mastercard report surveyed merchants and issuers about the causes of chargebacks and the two groups came to strikingly disparate conclusions:

Mastercard suggests several potential reasons for the mismatch. Merchants write off 16% of chargebacks rather than fully investigating or disputing them. This could skew their categorization.

Merchants may also be more motivated to analyze and label disputes precisely because chargeback ratios can impact their standing with payment processors. On the other hand, issuers might default to labeling many chargebacks as fraudulent when no clearer option exists.

According to Chargeback Gurus experts, another factor is that issuers will often take claims of fraud from their customers at face value, whereas merchants often have more information available that helps them correctly categorize false claims as friendly fraud.

Chargeback Impact by Industry and Region

The financial impact of chargebacks isn’t the same everywhere. On average, merchants in the U.S. face chargebacks worth $110, while those in the UK, Australia, and Brazil face slightly lower averages: $82, $91, and $94 respectively.

Different industries also show wide gaps in average chargeback value:

• Travel and hospitality: $120

• High-risk categories (e.g., gambling, crypto): $99

• Retail: $84

• Digital goods: $77

• Subscription services: $69

These differences in average value reinforce the idea that chargeback management strategies need to be tailored to the merchant. A high-dollar dispute at a hotel may justify more resources spent on representment, whereas a low-value subscription dispute might not be worth the time and money it would take to contest it.

Industry and regional variations show that a one-size-fits-all strategy won’t cut it, and these are far from the only factors. The evidence available for representment and the reason codes of the disputes will also impact the most effective course of action. Merchants need to look at their own chargeback metrics and tailor their responses accordingly.

Another data point that stands out: 13% of merchants report that chargebacks account for 2% or more of their total transaction volume. That’s not a small slice, and that 2% ratio would likely well exceed Visa's new 2.2% VAMP ratio limit once TC40 fraud reports are included.

The Chargeback Lifecycle

One interesting piece of information the report provides is a breakdown of how many chargebacks are resolved at each stage of the process. For example, 8% are resolved at the pre-dispute stage through tools like Consumer Clarity or Ethoca alerts. Another 18% are written off by the issuer. That leaves 74% escalating into full chargebacks.

Of those chargebacks, 46% (or 34% of total disputes) are accepted by the merchant. The other 54% are challenged in the representment process. Here’s how those play out:

• Issuers win in 75% of cases.

• Merchants win in 20% of cases.

• 5% of cases escalate to pre-arbitration or arbitration.

Curiously, many merchants surveyed reported winning more than 50% of the chargebacks they contest. The likely explanation is that the survey only included large and midsize merchants.

Even among those merchants, larger companies more often reported winning most of their chargebacks. 52% of large enterprises reported a win rate over 50% compared to only 36% of midmarket enterprises.

The numbers reported by issuers would include representment cases from smaller merchants that may have very low win rates. These merchants are often trying to contest chargebacks without the advantages provided by the dedicated internal teams or third-party experts used by larger companies.

Operational and Financial Cost of Chargebacks

Merchants are spending more money than every on chargeback management. Annual spending on chargeback technology and services among the surveyed merchants ranged from $100,000 to $500,000.

Across companies of all sizes, tech budgets are rising. Over 20% of enterprise merchants and 15% of midmarket firms reported that their chargeback tech costs grew between 10% and 24% in the past year.

Issuers also bear significant financial costs. Each dispute costs financial institutions between $9.08 and $10.32 to process. For banks, one full-time employee is needed for every $13K to $14K in annual incoming disputes.

Merchant Solutions: In-House vs. Outsourced

How merchants manage chargebacks and fraud varies. According to the report:

• 50% manage chargebacks in-house

• 50% outsource chargeback management

• 84% handle fraud management internally

• 16% outsource fraud management

For merchants, outsourcing offers a way to deal with the growing demands of chargeback defense without overwhelming internal teams or needing to hire new staff in a field where true expertise can be difficult to find.

Third-party chargeback management companies may also have tools and models built on data from millions of disputes, allowing them to analyze chargeback data more effectively and achieve higher revenue recovery rates. 

Conclusion

Chargebacks are becoming a bigger part of doing business, especially for companies operating online. With volumes and values rising, and dispute types shifting, merchants need to carefully consider how they'll handle this growing challenge.

Investing in internal tools and/or outsourced solutions can help reduce the burden. Looking closely at chargeback patterns can also guide smarter decisions about when to represent a case, when to automate, and when to write it off.

Chargebacks aren’t going away. But with better tools, clearer data, and focused strategies, merchants can do more than just absorb the cost. They can push back, and in many cases, win.