What Mastercard’s Chargeback Research Can Tell Us About Improving the Dispute Process

The total value of global chargebacks was $34 billion in 2025 according to a report by Mastercard and Datos Insights. And yet for merchants, that number is merely the tip of the iceberg. The full burden of disputes includes chargeback fees, fulfillment costs, staff time, and more.

These trends are prompting merchants to take a closer look at strategies that can help minimize chargebacks and improve customer outcomes.

A Mastercard-sponsored white paper produced by Javelin Strategy & Research examined the current dispute environment in detail, surveying both issuing banks and merchants. Its findings highlight opportunities to improve information sharing and alignment across the dispute process.

The research points to a clear opportunity: when issuers and merchants have better access to relevant transaction context earlier in the process, more disputes can be resolved before they become costly chargebacks

Consumers want an easy path to recover funds. Issuers want to protect cardholder relationships and fulfill regulatory duties. Merchants want to avoid the high cost of chargebacks, especially illegitimate ones.

Each goal is reasonable, but stakeholders often approach the dispute process with different information, priorities, and timelines. Let’s take a closer look at some of the report’s findings.

Disputes Often Begin with a Communication Gap

The first contact has an outsized effect on what follows. Javelin found that consumers bypass the merchant and go directly to the issuer in 75% of disputes. The merchant then loses an early opportunity to explain a billing descriptor, correct an order problem, issue a refund, or send a replacement.

That missed opportunity matters because merchants resolve 75% of inquiries when consumers contact them first. In 44% of those cases, answering a question settles the issue. A refund or replacement resolves another 31%. Only 25% proceed toward a chargeback after the merchant has been contacted.

The figures suggest that a a large share of dispute volume could be prevented earlier with better information upfront. For merchants, clear billing descriptors with contact information and accessible support can help a customer recognize a purchase or solve an issue before filing a dispute. On the issuer side, dispute intake processes at issuers could help solve more disputes if there was more detail about the purchase upfront.

Consumer Expectations Influence Issuer Decisions

The Mastercard-sponsored report shows that disputes are relatively common. Thirty-eight percent of consumers surveyed had disputed at least one transaction during the prior year. Around nine in 10 cases were resolved in the consumer's favor, and two-thirds of consumers identified an easy dispute process as a leading feature when selecting a new credit card.

Dispute outcomes can even affect card usage. Seventy-six percent of issuers saw increased card use after non-fraud disputes were resolved in the cardholder's favor, and 67% reported the same pattern for fraud disputes. When outcomes went against cardholders, 27% saw decreased use after non-fraud disputes and 24% saw a decrease after fraud disputes.

Those incentives help explain why issuers place a high value on speed and cardholder satisfaction. Because stakeholders may not always have access to the same information at the same stage of the process, decisions are sometimes made before all relevant transaction details are available. This highlights the importance of greater visibility and collaboration across the dispute ecosystem.

Chargebacks Cost Merchants Much More Than the Transaction Amount

Merchants reported average handling costs of $46 in external fees and $82 in internal expense for each chargeback, for a total of $128. In the US, the average chargeback amount is $110, which means that the total cost of a chargeback for merchants is more than twice the transaction amount on average.

Company size appears to affect these costs, but the relationship isn’t linear. Merchants with annual revenue from $100 million to $250 million reported average costs around $139 per chargeback, while those between $250 million and $1 billion reduced that number to $120. Among merchants with more than $1 billion in revenue, however, the figure rose to $233.

Across the survey sample, which consisted of 200 subscription and e-commerce merchants with $100 million or more in annual revenue, 35% described chargeback management as challenging or severely challenging. The largest merchants were especially likely to report the highest difficulty levels. To ease this difficulty, many merchants enlist outside help. 79% of merchants surveyed used a third-party service or platform to help manage chargebacks.

Friendly Fraud Is a Data Problem as Well as a Behavior Problem

The survey of issuers revealed a challenge when it comes to tracking friendly fraud. One in five financial institutions did not track the number of disputed transactions by individual accountholders. Among that group, 67% cited a desire to avoid inconveniencing customers with follow-up tracking. Without a customer-level view, issuers may have less context to identify repeat dispute patterns or distinguish isolated claims from recurring behavior.

Tracking does not establish intent on its own. It supplies context for consistent review, helps identify repeated behavior, and supports decisions that account for the full customer relationship.

Merchants also face a data gap when transactions occur through guest checkout. Account history can connect a disputed order with a known login, device, IP address, shipping address, a prior undisputed purchase, and confirmed delivery. Guest checkout reduces the available history, so merchants need other ways to retain reliable order, identity, authentication, and fulfillment records without adding unnecessary purchase friction.

A Coordinated Dispute Model Starts Before the Chargeback

Solving the chargeback challenge depends on decisions made across the transaction life cycle. Billing descriptors affect recognition. Authentication and account design affect the evidence available later. Fulfillment records support delivery claims. Customer service policies determine whether a complaint becomes a refund, replacement, or dispute. Issuer intake determines whether the merchant has a chance to respond before funds move.

Useful measures should therefore include steps taken before, during, and after a dispute arises. Both issuers and merchants agree that more data could make a difference. In the survey, 91% of issuers and 77% of merchants said sending data about shipping and delivery confirmation during settlement would help improve the dispute process. Many issuers and merchants also proposed sending more detailed purchase information during settlement. In addition, 82% percent of issuers and 68% of merchants suggested that merchants should be contacted earlier in the dispute process.

The report’s clearest message is that better outcomes depend on better cooperation. No participant has a complete picture when a dispute begins, and decisions made with limited information create unnecessary costs. Giving merchants and issuers timely access to the same transaction context could reduce avoidable chargebacks and produce fairer results for everyone involved.

To learn more, download the full report from Mastercard.