2019 Chargeback Field Report


The 2019 Chargeback Situational Field Report, brought to you by Card Not Present® and Chargebacks911®, is a comprehensive report offering a cross-view of the state of chargebacks and chargeback management in card-not-present payments. Researchers surveyed merchants in a wide range of verticals to identify relevant facts and figures concerning chargebacks, disputes, and fraud, plus the tools, services, and solutions employed for fraud detection and chargeback management.

We promoted the survey in conjunction with Card Not Present to diversify the pool of participants across various industries, scales, and chargeback risk levels. The results generated represent a cross-section composed of more than 200 online, multichannel, and mobile commerce merchants, but this is by no means a comprehensive report: the sample group was small, both for practical reasons and because we generally chose to NOT solicit Chargebacks911 clients for participation.

If bias in these results exists, it’s through the disproportionate inclusion of merchants who are proactive in their efforts to address disputes.

Regardless, the results indicate that merchants continue to struggle with managing chargebacks, as the majority feel they lose most of their cases. Merchants also largely believe that friendly fraud is the primary source of disputes, yet comparatively few report using any chargeback reduction tools.

We’ve also included a section focusing on the new tools and regulations that have been introduced into the payments sphere within the last few months. Based on our sampling, earlier changes such as VCR appear to be having a limited effect on merchant chargeback rates, while newer tools like VMPI are still not on merchant’s radar in a significant manner.

Please note that not every participant answered every question, and that for both clarity and ease of use, we've made the decision to round all percentages to a whole number. The combination of these two factors may cause some totals to be more or less than exactly 100 percent.

Key Takeaways

The majority of respondents in our survey dispute at least some chargebacks, with most reporting they only dispute a portion of their total chargebacks.

Many participants do not track second-chargebacks, which makes calculating effective win-rates inaccurate.

The majority of respondents are attempting to manage chargebacks in-house; most are not utilizing any third-party chargeback management solution, which at least partially explains the low success rate.

Those using a third-party solution reported winning a higher percentage of disputes than those relying solely on in-house teams, compared to overall chargeback volume.

Identifying friendly fraud and managing the dispute process were reported as the biggest challenges facing merchants.

Most respondents were aware of the Visa Claims Resolution policy changes, but few reported a decline in chargebacks resulting from the rules. This may be, in part, because very few merchants report using VMPI to prevent chargebacks.

A minority of respondents were aware of Mastercard’s Dispute Resolution Initiative and very few of those reported observing any meaningful impact from the changes.

On average, respondents in our survey believed that third-party, criminal fraud was responsible for a minority of their chargebacks; the reality showed that friendly fraud was the greater culprit.

More than half of all respondents report an increase in the instances of friendly fraud over the past three years, while a small minority reported a decline during the same period. Of those reporting an increase, cited somewhat alarming average stats.

Participants using chargeback alerts reported a modest average reduction in chargebacks.

About the Study

Methods and Limitations

At Chargebacks911, we take pride in the wealth and accuracy of our chargeback data. Having said that, any attempts to quantify or describe chargebacks relying solely on an individual perspective can create conflicting and seemingly unreliable data, which is why we chose an additional method—separate from our interpretation or bias—to collate results.

This report attempts to understand chargebacks from the merchant perspective. It is based on a survey which included respondents from businesses of all sizes, mainly (but not exclusively) within the card-not-present (CNP) payments space. We went to great lengths to ensure that the sample set is as random, and as representative of the average merchant as possible.

Please note that no big box brands were selected for participation.

This approach had a few advantages, but also has some disadvantages as well. For example:

Because the report is based on a survey, it necessarily relies on self-reported data. Often, some or all of this information may be inaccessible to the person completing the survey.

To remove as much bias as possible, we deliberately did not ask our clients to participate in the survey, instead reaching out to CNP and leveraging other marketing resources. While making the report more balanced, it also resulted in a smaller data set—roughly 200 respondents.

Finally, despite all of our efforts, some bias will still exist in this report. Some participates will undoubtedly be more forward leaning and more proactive towards chargebacks—for example, participants willing to fill out a survey are more likely to dispute chargebacks and more likely to utilize chargeback remediation solutions.

Despite the potential drawbacks, we still think believe this report to be a representative window into the current state of chargebacks. With that in mind, we’ll now turn to demographics for the study.

Demographics & Sample

Smaller companies provided the greatest number of responses. A little more than one-third of represented organizations have 50 or fewer employees, and around 20 percent have 1000 employees or more. Given that there are a lot more “small companies” than there are large ones, we think that is appropriate.

Nineteen percent of respondents reported at least $100 million annually in online revenue, with 24 percent earning at least $50 million annually. Approximately 35 percent reported between $5 and $10 million annually.Organizations participating in the survey reported average order values that ranged from $50 or less (22 percent) to $500 or more (17 percent) with the majority falling between those extremes.

Nearly half of our respondents currently accept payments via eWallets, such as PayPal or Apple Pay. Only a few companies seem to be accepting cryptocurrency such as Bitcoin. The latter involves a straight-up exchange (the same a cash), making chargebacks impossible.

Besides credit cards, which of the following payment methods do you accept?

eWallets (PayPal, Apple Pay)
Cryptocurrency (Bitcoin)

While almost all of the survey respondents reported receiving chargebacks, just how many they received varied greatly. Roughly one third of our sample reported receiving over 75 chargebacks per month. Of the respondents within our sample group reporting under $1 million in revenue, less than 10 percent dealt in physical goods, and even a smaller number sold physical goods exclusively.

The type of goods sold also has an obvious impact on chargebacks, as well: nearly 90 percent of respondents dealt with software, services, and/or digital goods—even if not exclusively (many participants sell in multiple categories).

In which product categories do you receive chargebacks?

Physical Goods
Physical Goods
Software & Digital
Software & Digital
Ticket Sales
Ticket Sales

Of the respondents within our sample group reporting under $1 million in revenue (roughly 30 percent), less than 10 percent dealt in physical goods, and even a smaller number sold physical goods exclusively.

It’s also interesting to note that of the respondents who reported NOT disputing chargebacks, 75 percent dealt only with software, services, or other digital goods. This is likely because the losses are not as steep when no physical good is lost.

Of the respondents who knew their chargeback rates—and nearly 13 percent did not know—one in six report a chargeback rate of 1 percent or higher.

What is your current chargeback rate?

Less than .1%
chargeback rate
.1% - 1%
chargeback rate
More than 1%
chargeback rate
Don't know
chargeback rate

Certain elements are commonly known to increase chargeback risk, and over half of respondents report one or more of these liabilities. Approximately one-third were actually in a high-risk industry, while the rest simply employed high-risk factors such as subscription billing or free trial offers.

Which of the following chargeback risk elements affect your organization?

High-risk industry
Subscription billing
Affiliate marketing
Free trial offers

There was a clear relationship between some risk factors and the reported chargeback rates of the participants. Those using free-trials to attract customers and then billing later through negative option, reported chargeback rates significantly higher than those transacting exclusively through straight sales.

Chargebacks and Disputes:
An Overview

Credit card chargebacks were originally invented as a consumer protection against criminal fraud and unresolvable merchant issues, ensuring that customers won’t be held accountable for transactions they didn’t authorize or items they didn’t receive.

More recently, however, chargebacks have become a growing concern for merchants. Cardholders have discovered how to abuse the system by filing fraudulent chargebacks—a process known as “friendly fraud.” Friendly fraud disputes can happen for multiple reasons, from convenience on the part of the cardholder to deliberate “cyber-shoplifting,” where the cardholder is attempting to get something for free. Either way, many merchants—both in our survey and in general—are now finding that friendly fraud accounts for as much as 80percent of their chargeback volume.

Each time a cardholder files a chargeback, the merchant has two options: accept the chargeback or fight it. Merchants who choose to fight the chargebacks enter into the process of representment (sometimes called a chargeback reversal). Chargeback representment is the organization’s chance to plead its case, prove the chargeback wasn’t warranted, and retrieve funds.

Chargeback Management Challenges

In our survey, we asked respondents to identify their three biggest challenges with respect to chargeback management. The two most cited challenges were identifying friendly fraud and disputing chargebacks; combined, those two factors made up nearly half of the top responses.

The third most cited challenge was reducing overall chargeback rates, followed closely by the need to balance chargeback risk against false positives. Cost and lack of resources/experience were also mentioned in our sample, both items specifically reflecting challenges in the area of representment.

What is your biggest challenge with respect to chargeback management?

Identifying friendly fraud
Disputing changebacks
Reducing overall chageback rates
Balancing chargeback risk against false positives

Fraud Types

We asked participants to estimate the percentage of their chargebacks were caused by criminal fraud and what percentage came from friendly fraud. Of those who responded to the question, over half (61 percent) identified criminal fraud as the biggest source of chargebacks, while 38 percent of organizations say most of their chargebacks come from friendly fraud.

Estimated percentage of your chargebacks coming from criminal/friendly fraud?

Criminal Fraud
Friendly Fraud

Depending on the source, these stats could be misleading, as friendly fraud chargebacks often—but mistakenly—labeled as “criminal fraud” through chargeback and dispute reason codes.

This perception varied by business size but stayed generally consistent across business categories.

We also asked merchants specific questions to determine the general awareness and prevalence of friendly fraud. Of those who responded, over 50 percent felt that it had increased, despite an influx of new regulations concerning the chargeback system (for more details, see page 18).

Has friendly fraud increased or decreased over the last 3 years?


Of those reporting an increase, only about 16 percent said the increase was less than 10 percent. Over 45 percent, however, felt friendly fraud had increased by 30 percent or more.

How much of an increase have you seen?

Less than 10%
10% - 29%
30% - 40%

Chargebacks: Fighting Back

An overwhelming majority (71 percent) of merchants we surveyed are currently disputing chargebacks. As we mentioned earlier, however, the demographic of the respondents is by default skewed toward merchants who are aware of and concerned about chargebacks already; the statistics likely do not represent the market in general.

Even among those companies that actively engage in representment, only a portion of chargebacks are actually disputed. Nearly half are disputing the minority of their chargebacks with just over a third disputing a significant majority.

Approximately what percentage of chargebacks do you dispute?

1% - 24%
25% - 54%
55% - 84%
85% - 100%

Perhaps more telling, nearly half of those who do dispute chargebacks are losing up to 60 percent of their cases. Less than a quarter claim to win 85 percent or more of the chargebacks they dispute...not of total chargebacks they receive.

Approximately what percent of disputed chargebacks do you win?

Don't know/don't track
Less than 10%
10% - 39%
40% - 69%
70% - 84%
85% - 100%

The percentage of chargebacks disputed was impacted by the size of the merchant. This is likely due to the increased perception of friendly fraud as a major source among larger businesses.

The percentage of survey respondents that do not dispute or represent chargebacks were asked why they did not. The most common responses included a lack of sufficient resources and belief they wouldn’t win any of their representments even if they tried.

These numbers gets worse with it comes to pre-arbitration: nearly a quarter of those respondents who regularly engage in representment do not know whether those cases move on to become second chargebacks...meaning the number of cases won is most likely significantly lower.

Of the participants who indicated they regularly disputed chargebacks, a slight majority did so using a dedicated internal fraud team. The others outsourced to a third party, although some reported using both an outside vendor and in-house resources.

Respondents who reported using a third-party solution cited an overall win rate approximately 20 percent higher than those who disputed chargebacks using an in-house resource.

20% higher win rate reported by organizations using a third-party chargeback management solution.

A surprising 72 percent reported using none of the pre-chargeback resolution solutions available on the market. This not only includes commercial products, but even network programs such as Visa Merchant Purchase Inquiry (VMPI) integration, which a mere two percent of merchants are currently taking advantage of.

Which of the following chargeback reduction solutions do you use?

None / dont know
Chargeback Alerts

Of the organizations that are using a prevention solution of some type, most were utilizing an alerts program. This is where participating issuers alert the merchant each time a transaction dispute is filed, if the basis of the claim is credit card fraud. Doing so allows the merchant to refund the cardholder rather than get hit with a chargeback.

On average, respondents who had implemented a chargeback alerts program reported a 24 percent reduction in chargebacks.

On average, respondents who had impemented a chargeback alerts program reported a 19% reduction in chargebacks

The impact of
New Regulations

Over the last two years, the card networks have made multiple significant changes to the way chargebacks are filed and disputed—some with more fanfare than others. The most dramatic change came in the form of Visa Claims Resolution (VCR), a major overhaul of the chargeback system. Mastercard followed suit with its Mastercard Dispute Resolution Initiative (MDRI), which reportedly had a similar purpose but was a less dramatic change.

As it stands, Visa’s program appears to have a somewhat wider awareness than Mastercard’s. This is likely to change going forward, since the latter’s initiative is not fully implemented yet.

Awareness of scheme changes to the dispute process


Despite the awareness of VCR, merchants seem much less aware of the Visa Merchant Purchase Inquiry (VMPI) program, which was launched within the same time period: One third of respondents admitted to needing more information on the subject.


Overall, when asked how they felt the program had affected chargebacks and chargeback management, over 82 percent of our sample group believed VCR had had little to no impact. Only 6 percent felt VCR had made a “significant” impact.

Well over ¾ of respondents believed VCR had little to no impact on chargeback management.

Still, 19 percent of these merchants did see a decline in their number of Visa chargebacks once the changes were in effect. Twenty-five percent didn’t know if there had been a decline, but more than half (55 percent) said the program had not reduced chargeback numbers.

Organizations noting a decline in Visa chargebacks post-VCR

I don't know

Among those who did experience a decline, the average reduction was around 12 percent. The majority, however—over three-quarters of the respondents—appeared to be ambivalent about whether the program actually made the chargeback process better or worse.


Awareness of MDRI among respondents trailed that of VCR, with only 42 percent participants saying they knew of it.


The Visa Merchant Purchase Inquiry (VMPI) program works in conjunction with VCR to give issuers more resources with which to respond to cardholder inquiries. The goal is to filter out simple, answerable inquiries before they escalate to a chargeback.

The number of survey respondents who had already integrated with VMPI was too small to make a reasonable statistic in terms of the program’s effectiveness. What seems more relevant is that less than 10 percent of all respondents had any plans to enroll in VMPI in the future.

As of the date of our survey, less than 2 percent of merchants in our sample had enrolled in VMPI

Despite the obvious upside, merchants in our sample do not seem to be taking advantage of the Visa program. This could indicate that the importance and long-term benefits of this revolutionary yet relatively user-friendly program are not yet fully understood by a wide audience.

The low adoption could prove challenging to VISA in the future (assuming, of course, that the results stretched beyond our survey group), but it will ultimately weigh heaviest on the merchants not taking full advantage of VMPI. Visa suggests implementing the program through an authorized Visa facilitator such as Chargebacks911 in order to achieve maximum benefits.


If the results of our survey are any indications, merchants are by and large aware of the chargeback problem; they’re less aware of any type of solution. A variety of tools exist for helping prevent chargebacks and challenge disputes, but to a large degree those tools are being ignored. This leads directly to wasted efforts and high chargeback rates, which in turn create a sense of futility about the entire subject.

But merchants don’t have to be victims. At Chargebacks911, we can assist you with automated chargeback responses to prevent unnecessary response fees, mitigate your overall risk of receiving chargebacks, and help you fight all instances of chargeback fraud. As authorized, certified Visa/VMPI facilitators, we can help you enjoy the benefits of easy, instant integration with the Visa Merchant Purchase Inquiry plugin and the Visa Resolve Online platform.

Chargebacks911 even offers comprehensive, end-to-end chargeback management ... and that means you have more time to concentrate on your business.

If you have questions concerning prevention, representment, VMPI, or any other chargeback management issues, contact us today.

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