26Every merchant that accepts credit or debit cards also accepts the risk of chargebacks.
The chargeback system was created to protect consumers from legitimate fraud, and it's still effective in that role. For merchants, however, chargeback abuse has become a serious threat to revenue and business stability.
The degree of risk can vary by business, vertical, and other factors; the threat itself can take several different forms. Unfortunately, publicly available data on the overall impact of chargebacks is remarkably limited, making it hard for merchants to benchmark performance or make meaningful comparisons.
The 2026 Chargeback Field Report helps close that gap. Built on proprietary survey data from more than 250 merchants, the report offers a clearer picture of how chargebacks and chargeback abuse are affecting merchants today.
We looked at how chargebacks affect different industries, business models, and transaction sizes, with a strong focus on eCommerce. The data reveals the key drivers behind rising chargeback numbers and what merchants can expect going forward. It also gives merchants practical benchmarks to measure performance, identify triggers, and compare their strategies with peers.
The top chargeback findings merchants need to know
Merchants continue to underestimate the impact of friendly fraud. They report, on average, that illegitimate dispute losses account for approximately 50% of the chargebacks that they receive. Even so, the threat level is growing: 74.4% of merchants claim a "moderate" or "significant" level of concern over the threat, and 83.4% of enterprise merchants observed a rise in friendly fraud over the last three years.
The chargeback system was originally designed to protect consumers against fraud and merchant error. Today, however, it is often used for “friendly fraud”: illegitimate disputes initiated (either accidentally or intentionally) by consumers or their banks. This represents a growing threat for merchants, yet most have limited visibility beyond their own chargeback activity.
Chargeback rights are meant to protect consumers and strengthen trust in the payments system, especially online. Unfortunately, protecting buyers often leaves merchants to absorb the cost of fraud and misuse, even when they aren't responsible.
– Monica Eaton, CEO of Chargebacks911
In 2026, nearly three-quarters of surveyed merchants say that friendly fraud is either a "moderate" or "significant" concern, compared to 70% in our previous report.
Breaking responses out by company size shows clear differences in concern about identifying and combating friendly fraud. Just under 40% of enterprise merchants call it a significant problem, roughly in line with the overall average. Among mid-market sellers, that share rises to nearly half. That suggests mid-market businesses feel more exposed than their enterprise peers.
One possible reason is that mid-market merchants have enough transaction volume for friendly fraud to become a real risk, but not the same staffing, resources, or tools as larger merchants use. That leaves them in a challenging position as they try to grow.
By contrast, fewer than one in three small businesses say they are highly concerned about friendly fraud. That may reflect lower exposure, but it may also point to a lack of education and awareness.
Merchants' friendly fraud fears are well-founded. On average, merchants estimate friendly fraud makes up 43.8% of the chargeback losses they suffer.
That's probably optimistic. Data from Visa, for example, suggests that 75% of all chargebacks are a result of friendly fraud; our internal data pins it at 86%.
It's important to note that friendly fraud is seldom a single, clearly defined behavior. Most chargebacks don't fall neatly into either criminal fraud or legitimate disputes. They more often exist along a "spectrum" of intent and legitimacy.
At one end are clearly unauthorized transactions. At the other are clear cases of merchant error and valid customer disputes. In between sits a range of cases where attribution depends on the specific circumstances of the transaction. As a result, the "blame" often falls somewhere along a continuum rather than on one party (this includes banks, typically ones using AI.) This overlap makes it difficult to definitively classify every claim.
Other factors are at work here, as well. Customers may claim "unauthorized activity" to mask invalid intent or simply feel it's easier to call the bank.". Similar disputes may be interpreted differently depending on available evidence. Any of these scenarios can lead merchants to undercount friendly fraud and overcount criminal fraud, distorting their true exposure.
Business scale appears to be a key factor in perceiving friendly fraud as a threat. Enterprise merchants were more likely than the average respondent to say that friendly fraud accounts for a majority of their chargebacks. While it's possible that cardholders are actually filing more invalid chargebacks against large businesses, the more likely explanation is that enterprise merchants have the tools, budget, and expertise to better identify the source of their disputes.
Many illegitimate disputes get filed with no malicious intent. That said, even chargebacks stemming from cardholder confusion or other benign intentions are a misuse of the system, and contribute to merchant loss.
– Jarrod Wright, SVP of Marketing and Revenue Operations at Chargebacks911
Merchants also say the friendly fraud issue is getting worse. Among respondents who reported a change, 73.7% observed an increase in friendly fraud over the last three years, 1.7 percentage points above the proportion from 2024. Several factors are driving the growth of friendly fraud. "Chargeback culture" is becoming more normalized among consumers, supported by online forums and social media content that explains the process. At the same time, filing a chargeback has become significantly easier and continues to favor cardholders over merchants.
It’s also worth noting that enterprise merchants were far more likely to say that identifying friendly fraud is becoming easier. This might be because of its continued growth, or partially because of better detection. It may also reflect the tradeoffs that come with frictionless checkout and enhanced authentication processes.
Whatever the cause, the direction is clear. Merchants that are not investing in friendly fraud identification and prevention may find their room for error shrinking fast.
“Merchants say friendly fraud is getting worse.”
Merchants are aware of how serious of a problem chargeback abuse has become. Overall, we're seeing increased awareness and interest, especially when it comes to preventing chargeback abuse.
– Jarrod Wright, SVP of Marketing and Revenue Operations at Chargebacks911
If there's a silver lining here, it's that merchants are not oblivious to the problem. As friendly fraud becomes more prevalent, awareness of the issue is rising in tandem. According to Google Trends, relative search interest for the term "friendly fraud" reached a new all-time high in 2026, surpassing levels set in 2024.
Another encouraging observation is that nearly eight in ten surveyed merchants are actively turning awareness into action by practicing one or more preventive measures. Only 13.9% of respondents say they don’t know how (or whether) their business is addressing friendly fraud.
Respondents who answered "Other" were asked to elaborate on how they tackle friendly fraud. Select answers include:
To be clear, friendly fraud isn't a single, straightforward problem. It can take many different forms; in fact, even the terminology used to describe it isn't consistent.
"Friendly fraud" is the most widely used term and is often treated as a catch-all for illegitimate disputes. Denotatively, it refers to cardholder-initiated disputes that lack a valid basis. The word "fraud," however, suggests deliberate or malicious intent. In practice, many disputes stem from confusion, miscommunication, or convenience rather than outright deception.
A related term, first-party misuse, is often used in the same context, but it carries a different connotation. While the terms may overlap in definition, friendly fraud is broader and more neutral, capturing the full range of cardholder-driven disputes from unintentional errors to deliberate abuse. The latter, sometimes known as first-party misuse (or abuse), describes cases where a cardholder knowingly plays the chargeback process for personal gain.
As far as common usage goes, results show that the terms "friendly fraud" and "chargeback fraud" are clear winners: a combined 78.4% of surveyed merchants favored one of the two terms.
Pinning down how merchants refer to chargebacks (as a whole) is a bit more complicated. Historically, the term "dispute" referred to the process of challenging an invalid chargeback through representment. That changed in 2018, when Visa introduced Visa Claims Resolution (VCR) and began using "dispute" as the official label for first-cycle chargebacks. Visa still uses that terminology, but adoption across the industry has been inconsistent.
Survey results indicate that many merchants continue to use "chargeback," while others either say "dispute" or treat the terms interchangeably. In this report, we generally distinguish between the two: a dispute refers to the cardholder's claim against a transaction, while a chargeback refers to the bank's action of filing and processing that claim. In some cases, however, the terms are used interchangeably to reflect common industry usage.
Whether referred to as friendly fraud, first-party misuse, first-party fraud, or chargeback fraud, the core concept is the same: invalid bank or cardholder-initiated chargebacks that are due to customer confusion, ill will, buyer's remorse, or for any other motive outside the narrow set of legitimate dispute reasons, including technical errors and even the common mistakes AI is prone to make.
Chargeback issues can vary, but surveyed merchants report that abuse tends to cluster around several clear patterns. Intentional fraud, buyer's remorse, learned behavior, and chargebacks filed while refunds are pending stand out as the top areas of concern.
Chargebacks filed while refunds are still being processed can cause problems. If both go through, customers may end up effectively receiving two credits: one from the merchant and one from the chargeback.
Our survey findings align with our broader experience: the majority of friendly fraud stems from a limited set of cardholder-driven behaviors, including intentional misuse, buyer's remorse, learned behavior, and impatience. These behaviors also manifest when cardholders exploit perceived loopholes ("cyber shoplifting"), seek to reverse unwanted purchases, or follow patterns they have observed elsewhere.
These patterns are also reflected in prior research. Findings from the 2025 Cardholder Dispute Index indicate that cardholders are often unwilling to wait several days for a refund, driven in part by the mistaken belief that chargebacks are equivalent to refunds. From the merchant's perspective, however, these two types of payment reversals are substantially different.
Less common (but still worth noting) are friendly fraud cases involving employees. In some cases, this is intentional and malicious, such as a staff member telling a customer to bypass the refund process and file a chargeback instead. In exchange, the cardholder and the employee would split the refund amount.
On the other hand, friendly fraud can also come from simple mistakes or poor communication. For example, a customer service rep talks to a buyer over the phone. The rep agrees to refund the purchase, but fails to initiate the process correctly. When the refund doesn't happen, the cardholder disputes the transaction with their bank.
Not all fraud comes from outside. Employees, contractors, and even fraud filter vendors can pose risks, too, which is why you need strong internal controls. Separate responsibilities, limit access to sensitive data, do regular audits… it's about being proactive.
– Donald Kossmann, CTO at Chargebacks911
Data suggests that in-house collusion plagues roughly one-quarter of surveyed merchants, with bigger numbers for enterprise merchants; the real proportion is likely higher. The risk of undetected collusion is especially high among the 53.5% of respondents who either don't know if this problem is being monitored, or who said it is definitely not being monitored.
Chargebacks are increasing in frequency and magnitude…and everyone's paying the price. 61.8% of merchants surveyed say chargeback costs are getting worse, and 64.4% express “moderate” or “significant” concern over fraud in general. A similar proportion, 62%, express the same concerns over refund abuse, a related issue. As a result 38% say they pass rising costs directly onto their customers
Whether in the form of lost revenue, increased FTEs, lost inventory, fees, or the financial burden of fraud prevention, merchants still bear them majority of chargeback costs, with financial institutions not far behind. Regardless of the source, the stakeholders are united with against a common enemy. The trickle down effects mean higher costs for virtually everyone involved, including non-malicious customers.
Fraud of any kind is going to eventually hit consumers in the form of higher prices for goods and services. That includes honest shoppers who play no part in causing the problem.
– Monica Eaton, Founder and CEO, Chargebacks911
While all fraud costs merchants, survey data shows that consumers are increasingly affected as well. Instead of absorbing fraud-related costs through margin compression, many merchants are passing them on to customers. Roughly 38% report doing so, up from 32.5% in 2024.
Merchants also face another challenge: chargebacks are becoming more frequent but smaller. Historically, chargebacks averaged 20%-30% more than typical transactions. Now, the average chargeback is smaller than the median transaction value.
Put another way, disputes are increasingly stemming from routine, low-value purchases rather than high-ticket items or buyer’s remorse. At the same time, issuers appear less likely to absorb small disputes as write-offs, passing more of them on to merchants.
As a result, strategies focused only on high-value transactions are becoming less effective, driving merchants toward continuous monitoring across all purchases – often at a higher cost.
For midsize- and enterprise-level merchants processing millions in annual revenue, a single dispute may not seem like it has a significant impact. But on average, merchants will lose more than four dollars for each dollar disputed. It'll take several successful transactions to offset the bottom-line loss resulting from a single chargeback.
– Monica Eaton, Founder and CEO, Chargebacks911
Momentum is also increasing. Nearly 62% of surveyed merchants report that chargebacks are becoming more frequent. This trend is driven in part by the ease of filing disputes: cardholders can now initiate chargebacks with a single click or tap, often with less friction than the original checkout.
Interestingly, merchants say friendly fraud is growing at an even faster rate than chargebacks overall. This points to two possibilities. First, because friendly fraud already makes up a large share of chargebacks, much of the overall increase may be driven by its growth. Second, if the trend continues, friendly fraud could account for an even larger share of chargebacks in the future.
To reduce chargeback losses, some merchants adopt simplified, customer-friendly return policies. Making it easier for buyers to resolve issues directly can help lower dispute numbers. But, overly lenient policies may simply shift the problem from friendly fraud to refund abuse.
Refund abuse (or refund fraud) is another growing threat. Unlike friendly fraud, criminal fraud, or in-house collusion, it doesn't involve the chargeback process. Instead, customers try to get refunds by submitting refund requests that would not normally be allowed according to the merchant's policies.
It's a meaningful issue: on average, merchants say refund abuse accounts for 27.1% of all returns, and nearly one-third report that most of their returns involve some form of abuse.
The hidden costs of containing, resolving, and preventing fraud, especially chargebacks, results in what's known as the "true cost" of fraud. According to LexisNexis Risk Solutions, every $1 lost to fraud ultimately costs North American eCommerce merchants as much as $4.61.
The fact that much of the increase in chargeback volume is driven by consumer behavior and process friction doesn't negate external threats. A portion of chargebacks can also stem from true fraud, also known as criminal or third-party fraud.
With friendly fraud, a valid purchase is followed by an invalid cardholder dispute. Third-party (criminal) fraud involves an unauthorized transaction that leads to a chargeback. Even if the cardholder's claim is legitimate, however, the merchant's losses are usually non-recoverable.
Merchants appear to view criminal fraud as a more manageable threat. Fewer than two-thirds of respondents rate true fraud as a "moderate" or "significant" concern, compared with nearly three-quarters who say the same about friendly fraud.
The differentiating factor here may be as simple as the way criminal fraud manifests, as it typically involves clearly abnormal behavior that is more obvious and easy to detect.
Criminals may, for example, attempt dozens of logins per second or place unusually large orders with no prior purchase history. These anomalies help distinguish third-party fraud from normal activity and can readily be detected by standard fraud prevention tools. It's at least partly for this reason that merchants may feel more confident in their ability to manage true fraud.
Cardholders should dispute invalid purchases. That's why the system exists. But, we should also remember that merchants who are forced to absorb those losses will be forced to pass the costs on to consumers in the form of higher prices.
– Monica Eaton, Founder and CEO, Chargebacks911
Survey data shows that most merchants track just one chargeback recovery KPI: their win rate. That number can seem high, but it’s also deceptive: the number of first-cycle claims won isn’t nearly as relevant as how much revenue they’re actually recovering. Factoring in the percentage of wins that are escalated to a second-cycle chargeback, the average respondent’s net recovery rate averages an alarming 10.7% of cases. Most merchants lack the resources to take a more comprehensive approach.
As we’ve discussed, cardholders have the right to dispute charges. Invalid claims, however, can be contested through representment. Furnishing compelling evidence that validates the original transaction could potentially reverse a chargeback.
Representment outcomes, however, are increasingly driven by factors largely beyond merchants’ control: issuer/acquirer connectivity, response speed, and access to current data, and so on.
The truth is, it’s far easier for cardholders to file chargebacks than for merchants to contest them. Sellers must submit compelling evidence while working within tighter timeframes, higher evidence standards, and more complex rules. Respondents identify evidence collection as the biggest challenge in chargeback management.
However, solving lower-ranked issues like root-cause analysis and rule management could actually simplify evidence collection. Sadly, most merchants lack the operational efficiency, integrated systems, benchmark data, and connections needed for that broader approach.
Respondents who answered "Other" remark that their principal challenges surround knowing when a chargeback occurs, or the fact that chargeback rules are slanted in favor of banks and cardholders.
The vast majority of merchants surveyed, nearly eight in 10, say they contest at least some friendly fraud chargebacks. This figure may overstate the broader merchant population, however, survey respondents were likely to be more engaged with chargeback management.
Over 90% of enterprise respondents say they dispute at least some illegitimate chargebacks, a rate well above the overall average. For enterprise sellers, this is not surprising. Most typically face more invalid chargebacks to begin with. At the same time, larger clients are more apt to have higher consequences if they don't challenge those claims. It's a piece of the puzzle that affects their authorization rates, as well.
Conversely, merchants who said they don't re-present chargebacks offered a variety of reasons:
Merchants still struggle with chargeback management. A hodgepodge of tools, a lack of third-party support, and complex evidence gathering workflows complicates the process. Only about 34% of merchants report having a dedicated chargeback team, while fewer than 30% say they leverage any form of outside help. At the same time, 23.5% of merchants say they juggle five or more chargeback tools at once, a tall order even for chargeback professionals.
Merchants contesting chargebacks must overcome steep odds, tight deadlines, and heavy workloads. A key recurring complaint from respondents was their lack of tools, staff, or expertise to fight back effectively.
Merchants are doing their best. But, the scale of the threat, unclear ownership, and competing priorities leave them overwhelmed and under-resourced. Put simply, most are outgunned.
– David Pirtle, VP Enterprise Engagement
Too many merchants feel better relying on in-house resources than seeking outside professional help. In doing so, however, they're complicating their own situation. Leaning on outside help for some chargeback management duties is one way to support merchants who feel overwhelmed by the representment process.
Merchants contesting chargebacks already face steep odds, tight deadlines, and heavy workloads. Many respondents felt they lacked the tools, staff, or expertise to handle disputes effectively. That may not be the real issue, though.
Seven in ten merchants who know their processes say they at least partially manage representments in-house. Increasingly, though, the real value of those teams may lie elsewhere.
As outcomes become more tied to connectivity, data access, and speed, the process will likely get even more confusing. For many, shifting internal resources toward oversight could be more effective.
Instead of owning representment workflows end-to-end, internal chargeback teams are often better used supporting broader fraud strategy: loss prevention, risk management, and operational oversight. Helping identify root causes improves decision-making and helps pre-empt future disputes.
For most small and mid-market merchants, in-house chargeback management means disputes are handled by generalists. Most lack deep expertise in card network rules, evidence requirements, and representment best practices. That gap doesn’t just increase the chance of losing winnable disputes. It also overlooks a broader opportunity.
Many organizations still treat dispute management as a secondary function of finance or customer service. In practice, chargeback teams are evolving to take on more intelligence, risk, and loss prevention functions, with a growing role in operational quality control. When properly resourced, they can play a major role in not just limiting risk, but in generating revenue as well.
Unfortunately, that’s still not the norm. Despite the clear upside, only a small minority of respondents say they combine in-house teams with external software support or fully outsource chargeback management to a third party.
Tools that give you insights into chargeback issuances, and benchmarks, allow your chargeback management team to act as ‘physicians’ for your business. You gain the visibility necessary to diagnose issues and identify opportunities for additional revenue streams.
– Monica Eaton, CEO of Chargebacks911
Merchants pull representment data from all over: payment gateways, CRMs, order systems, and more. This results in more information, but that isn’t really the issue. What’s missing isn’t more evidence; it’s a unified view of what’s happening. And without benchmarking or broader context, even solid data is hard to act on.
Ideally, representment needs to shift from collecting documents to making sense of scattered signals. The real need is for deeper data and comparison points to power strategic decisions. For smaller and mid-sized merchants, that usually means using external support.
Merchants also rely on a range of tools to gather and compile evidence for dispute representment. Among those who provided an estimate, more than 20% use at least five separate tools.
This fragmented setup creates operational friction and increases opportunity for error. Evidence is often spread across multiple systems, requiring staff to anually locate and assemble case materials. This slows down the case creation process, which can be a critical factor given the tight filing deadlines.
Some merchants admit to turning to automated, rules-based solutions. These systems can, in some cases, help reduce administrative strain, at least for smaller businesses with limited resources or relatively straightforward dispute volumes.
At higher volumes, however, the tradeoffs become more apparent. Templated workflows often lack the flexibility needed to address complex cases, shifting issuer requirements, or edge-case scenarios that can materially affect outcomes.
Larger or enterprise merchants achieve better results from tools that combine operational efficiency with human oversight.
Beyond operational strain, this fragmentation also limits what merchants can actually learn from dispute activity. When evidence is spread across different systems, it’s harder to spot patterns, do meaningful fraud analysis, or feed insights back into prevention strategies.
As a result, opportunities to improve loss prevention, tighten operations, and even enhance customer experience often get missed.
With more integrated access to fraud intelligence, merchants could not only handle disputes more efficiently, but also use them as a source of real strategic improvement across the business.
We find that merchants are better equipped to make informed, proactive decisions when they pair internal resources with external experts capable of flagging upcoming changes and advising on required actions.
– Monica Eaton, Founder and CEO, Chargebacks911
Chargeback management is difficult, and the multi-tool juggling act merchants engage in doesn’t help. Coupled with high dispute volumes, it highlights several persistent pain points.
What stands out, however, is that many merchants remain focused on downstream outcomes: winning representments, reducing chargeback rates, identifying friendly fraud, and recovering lost revenue. While important, these are largely symptoms rather than causes.
Greater gains may come from addressing upstream issues like fraud trends, operational inefficiencies, and dispute drivers before they become chargebacks.
On the other hand, merchants appear painfully aware of the tradeoffs involved, such as balancing chargeback risk against false positives. In fraud prevention, merchants routinely accept that eliminating all fraud would come at too high a cost. Yet many don’t understand that post-transaction fraud requires the same mindset: balancing dispute reduction against revenue, customer experience, and operational efficiency.
By one estimate, false declines cost 75 times more than fraud itself.
Another major consideration is the frequent changes to card network rules. These ongoing but irregular shifts increase the difficulty of keeping current with what are, in effect, moving goalposts.
Across the board, merchants report limited confidence in their understanding of card network rules. This could lead to problems: staying current is increasingly a marker of operational maturity and strategic sophistication, not just compliance. Merchants who adapt to network changes are better positioned to compete; others may be left behind as the dispute landscape evolves.
Just 17.4% of SMBs say they feel “very” informed, while nearly one in three enterprise merchants (31.4%) self-report the same level of knowledge. Naturally, large sellers are more likely to employ experienced in-house chargeback professionals. It’s not surprising that more of them feel confident in their understanding.
Beyond incremental updates, merchants must also contend with more substantial changes to card network rules.
One notable example is the implementation of the Visa Acquirer Monitoring Program (VAMP) in April 2025. This new program consolidated Visa's two existing chargeback monitoring programs, the Visa Fraud Monitoring Program (VFMP) and the Visa Dispute Monitoring Program (VDMP), into an evolved program with different risk thresholds for acquirers and merchants.
According to Visa, this unification will help the card network address up to four times more payment fraud globally.
As for how the card network's switch up is affecting merchants, 20% report being directly impacted by changes to VAMP. Another 26.8% say they now actively monitor TC40 (fraud) records to track their VAMP chargeback ratio.
But not all merchants are aware: nearly one-third say they don’t know whether they’re being impacted. That’s a dangerous position: as programs like VAMP expand, it exposes a growing reality: merchants are increasingly being expected to operate at bank-level compliance.
Those who say they were affected offered some revealing insights on the impact of VAMP.
This complete VAMP guide walks you through the complex details of the program.
About one-third of merchants use alert-based tools like Ethoca Alerts or CDRN. These refund-based solutions or automated resolution introduce concern that over-reliance for threshold compliance could. Nearly half (49%) also incorporate third-party fraud prevention tools into their stack. Adoption of AI is growing as well, with more than 25% of merchants already using it and nearly 40% planning to.
There are multiple tools on the market that can help prevent disputes from escalating into chargebacks, and adoption has grown steadily as merchants look for ways to intercept disputes before they become chargebacks. Refund-based alert tools such as Ethoca Alerts and the Visa Cardholder Dispute Resolution Network (CDRN) are designed to catch disputes early, and around one-third of respondents report using them.
Roughly one-quarter use data-sharing and inquiry-deflection tools (Verifi Order Insight, Ethoca Consumer Clarity), and a similar share run multiple tools simultaneously. Interestingly, about one-third of merchants don't dispute any chargebacks, instead using these tools only to stay below thresholds… apparently finding it easier to pass the costs on to consumers.
Fraud prevention features such as AVS checks and 3D Secure are often built into or supported by merchants’ payment processors or eCommerce platforms. Nearly half (49%) of respondents report using dedicated third-party fraud prevention tools as part of a broader strategy.
When asked to specify the tools they use, several providers were repeatedly mentioned across multiple categories. Notably, the same names also appeared in responses related to chargeback representment tools. This overlap suggests merchants are gravitating toward providers that offer both prevention and representment capabilities within a single ecosystem.
Friendly fraud chargebacks are tough to prevent because they start with a legitimate purchase. Nothing looks “off” at checkout, so the sale goes through. The actual dispute may not show up until weeks or even months later.
– Jarrod Wright, SVP of Marketing and Revenue Operations at Chargebacks911
Third-party solutions that help prevent disputes from escalating into chargebacks generally fall into three categories: Merchant Refund-on-Demand (Alerts), Inquiry/Data-Based Deflection, and Realtime Network Refunds (RDR).
Many disputes begin when a cardholder contacts their issuing bank rather than the merchant, often due to confusion about a transaction or uncertainty about how to resolve an issue.
Chargeback alert tools such as Ethoca Alerts and Verifi CDRN are designed for this stage. Merchants are notified of a potential dispute initiated at the issuer or network level. Before it might become a formal chargeback, the merchant can issue a refund or otherwise resolve the issue, preventing escalation.
There is a shift underway in how these tools are being used that deserves a closer look, though. Increasingly, merchants are using alerts to refund disputes automatically while declining to re-present transactions. This looks efficient at first: the dispute disappears before it becomes a chargeback. But, a refund issued without any defense is not a neutral act; it trains the broader ecosystem to treat disputes as a guaranteed payout. The result is self-reinforcing: more alerts, and ultimately more chargebacks.
This is the distinction merchants should keep in view. Alerts are useful, but alerts are not a strategy. Their value lies in what they enable, not in the convenience of an automatic refund. The real return comes from dispute intelligence, data visibility, fraud analytics, issuer-behavior analysis, and root-cause discovery. In short: operations that reveal why disputes are happening and which ones are worth fighting. Used that way, these tools inform better decisions; used as a reflex to “refund and forget,” however, they erode a merchant’s standing.
Data-based deflection tools are offered directly by the major card networks. These tools help provide information in realtime, typically without requiring a refund or direct merchant involvement.
In some of these tools, when a cardholder contacts their issuer with a question about a charge, the bank can retrieve enriched transaction details from the merchant. This information can help clarify the charge during the same interaction—for example, when a customer does not recognize a billing descriptor.
In other cases, where a refund has already been issued, the same data access can help confirm resolution and prevent the inquiry from escalating further.
Order Insight and Consumer Clarity are examples of data-based chargeback prevention tools.
Chargeback deflection tools function as a second line of defense. They should kick in after standard preventive measures, including representment fail.
– David Pirtle, VP of Enterprise Engagement, Chargebacks911
Verifi Rapid Dispute Resolution (RDR) is a network-based resolution tool that automatically refunds a consumer's request for a refund through their bank. Unlike alerts such as CDRN, RDR is triggered through predefined merchant parameters, enabling issuing banks to assist their customers more efficiently.
Merchants may configure certain rules in advance, such as transaction thresholds and dispute types. When a dispute meets those criteria, RDR automatically issues a refund without further merchant involvement and the merchant is later sent the refund to record in their system. This reduces chargeback fees and operational overhead, but merchants still absorb the transaction cost. Because disputes are resolved automatically, RDR also provides less actionable data for future optimization than a traditional chargeback process and consequently merchants may inadvertently refund invalid disputes.
Since it operates within the Visa network workflow, RDR is not universally applicable across all dispute scenarios. It can also create issues if automated refunds are triggered before customer service teams have resolved the dispute. For example, imagine a customer calls a merchant to request a refund. That same customer can also call their bank, and be issued a refund automatically through RDR.
Merchants also appear increasingly enthusiastic about the use of artificial intelligence (AI) in fraud prevention. So far, most of the focus has been on catching fraud at the point of sale, but AI tools can also help reduce chargebacks after the fact. High-risk transactions can be spotted earlier in the dispute process, and decisions to approve, flag, or deny a transaction can be made more accurately.
In the near future, we expect to see additional features, such as more dynamic, behavior-driven fraud scoring and AI-driven defenses against deepfakes and identity theft. As for now, more than a quarter of respondents say they already use AI to detect fraud, while nearly four in 10 say they plan to do so down the line.
Merchants are moving beyond credit and debit cards. Today, a sizable number of merchants support a range of alternative payment methods, including mobile wallets, bank transfers (ACH payments), and QR code payments. Notably, 19.1% of respondents say they allow buy now, pay later (BNPL) transactions, which allow customers to finance their purchases by breaking them up into four or more installment payments.
Sellers who only accept plastic in 2026 are like their cash-only counterparts in 2016: they're behind the curve. Retailers nowadays, especially eCommerce sellers, say they support a plethora of payment options.
There's good reason to do so. Obviously, buyers prefer the option of paying by their preferred method. So, accommodating a wider range of options at checkout is linked to higher conversion rates and customer satisfaction.
It’s also no surprise to learn that some payment methods are more widely supported than others. At the top of the list are card-not-present (CNP) transactions, which the vast majority of merchants surveyed say they accept. Over half also say they support mobile wallets (55.2%) and card-present transactions (54.4%).
Other popular payment methods include bank transfers or ACH payments (44.1%) and PayPal (41.9%). Beyond that, acceptance becomes far less universal.
Surveyed merchants also appear at least moderately receptive to BNPL platforms. These payment capture alternatives allow buyers to break down purchases into a series of (often four to six) installment payments, sometimes at 0% interest. For sellers, the primary benefit is the ability to offer purchase financing without having to bear credit risk internally.
Survey data reveals that Stockholm-headquartered Klarna is the most popular BNPL provider among respondents who support this checkout method.
US-based Affirm ranks a close second, while less common offerings include Afterpay, PayPal Pay Later, and various bank-hosted or regional platforms such as India's Lazypay.
The respondents who said they do support BNPL said they did so for a variety of reasons. That list includes competitive pressure, to increase checkout conversion rates, or to appeal to younger buyers.
These rationales make perfect sense. Breaking down sizable purchases into a series of smaller, more manageable payments can help widen a merchant's customer base. Interest-free financing may entice customers to make purchases they otherwise couldn't afford.
The majority of merchants who do not support BNPL supplied an even mix of reasons. By a narrow margin, the most recurrent rationale is a concern over higher fraud risk (23.4%). This is not an unfounded fear: nearly four in ten merchants across the board, including those who offer BNPL as a checkout option, agree that BNPL platforms are potential fraud drivers.
Other reasons merchants give for refusing to support BNPL include a lack of business model alignment (22.4%) and average order values (AOVs) that are too low to justify BNPL (19.6%).
For merchants concerned about fraud risks from alternative payment capture types, clear customer communication is key.
For example, over 32% of respondents identify subscription billing as a chargeback risk factor. For businesses with recurring transactions (including installment payments), simple notices of upcoming charges can significantly mitigate this risk.
Yet of respondents that offered recurring payments, more than a quarter don't remind cardholders before or after billing; another 17% only send post-charge reminders, which do little to prevent disputes.
Billing descriptors are another internal risk factor that could be easily mitigated with minimal effort. Obscure or unclear statement descriptors may keep buyers from recognizing legitimate purchases.
Clear and understandable descriptors, on the other hand, help cardholders to remember when, where, and what was purchased, even long after the purchase has settled. Despite this, only about half of respondents say they know exactly how their billing descriptor appears on customer statements.
In this area, at least, more merchants appear to be catching on: nearly 58% say they've taken steps to make their billing descriptors more recognizable to customers.
No survey can capture every challenge across every merchant segment or situation. That said, a broad and diverse sample can still offer a reliable snapshot of current trends.
To produce the 2026 Chargeback Field Report, we collected responses from over 250 completed surveys from merchants representing a wide range of industries, business models, and company sizes. Where possible and appropriate, analysis was limited to card-not-present (CNP) transactions. Unless otherwise noted, findings reflect self-reported metrics from the past year.
The data includes chargeback rates, dispute (representment) outcomes, and estimated exposure to fraud-related losses, presented as averages and distributions across respondents.
As with any survey-based report, the findings rely on self-reported data. This provides a strong overall view, but the specific numbers should be treated as directional rather than exact. For example, the person completing the survey may not have had access to all of the requested data, and participants were asked to provide approximate numbers if specifics were unavailable. The latter is highly relevant: in our experience, merchants commonly underestimate the scale of their chargeback problem… and overestimate the effectiveness of their management efforts.
Some survey questions allowed respondents to select multiple answers, so totals for those questions may exceed 100%. In addition, not all participants answered every question, and certain figures have been rounded for clarity and ease of interpretation.
The methodology used for this report is consistent with prior years, allowing for valid year-over-year comparisons. In most cases, numeric free-entry responses are presented as median values to reduce the influence of outliers.
Respondents were drawn from organizations of all sizes, with a focus on eCommerce merchants accepting card-not-present (CNP) transactions.
We tried to maintain a balanced mix of small, midsize and enterprise organizations (measured by both headcount and revenue).
This mix illustrates the broad cross-section of card-not-present merchants represented in our data. The range becomes even clearer when we look at the individual respondents themselves, which include everyone from mainstream businesses to niche sellers like ATV parts retailers, supplement vendors, and cryptocurrency companies.
Merchants also represented a diverse range of geographies. Most respondents (66.7%) primarily operated in North America, with additional representation across Europe, Asia-Pacific, South America, and the Middle East & Africa. As a result, the sample spans every populated continent, offering a broad view of chargeback challenges across global markets.
Survey participants included merchants selling to both businesses (B2B) and consumers (B2C), though B2C organizations were more heavily represented. That's not surprising, given that chargebacks are far more common in consumer transactions, and it means the findings are well aligned with where most dispute activity actually occurs.
Chargeback risk varies widely from one merchant to the next. This is clearly reflected when we asked respondents about their chargeback-to-transaction rate, or the percentage of transactions that result in disputes.
The industry average chargeback rate sits at 0.57% of transactions. But, roughly one-third of respondents reported that they routinely exceeded this benchmark. More than one-quarter of respondents (25.4%) said that their chargeback rate was 0.9% or higher; while Visa and Mastercard have currently set their threshold for what is considered an “excessive” chargeback rate at 1.5% of transactions for merchants, the limit at the acquirer level is much lower; Visa’s threshold for the “Acquirer — Excessive” designation is just 0.7% of transactions.
Excessive chargebacks put the merchants in question in serious jeopardy. Acquirers can face steep penalties if their chargeback rate exceeds the limit imposed by Visa; if an acquirer is at risk of exceeding the 0.7% limit, they may opt to cut off service for merchants that are seeing the most disputes, even if that merchant has not technically exceeded the 1.0% chargeback limit.
Visa reduced it's chargeback thresholds, despite acknowledging there are more chargebacks.
Higher percentages typically point to higher risk business models. That kind of risk can come from one or more in a range of risk factors inherent in a business. Breaching chargeback thresholds may result in involuntary enrollment in punitive merchant monitoring programs or, in extreme cases, the loss of card acceptance privileges entirely.
Chargebacks continue to be a defining operational challenge for merchants across industries. The findings in this report reinforce what we continue to see across the payments ecosystem: most friendly fraud stems from a relatively small group of cardholder-driven behaviors, including intentional misuse, buyer's remorse, learned abuse patterns, and simple impatience. As eCommerce continues to evolve around speed and convenience, these behaviors are becoming more normalized, creating growing pressure on merchants to absorb the fallout.
The good news is that merchants are beginning to recognize how serious chargeback abuse has become. While some of this shift is a knee-jerk reaction to rising dispute numbers and costs, there's also a noticeable increase in long-term awareness and investment in prevention strategies. Nearly eight in ten surveyed merchants report actively using at least one preventive measure. This could imply that chargeback management is becoming a core initiative rather than just a back-office task.
Still, awareness alone will not be enough to drive meaningful change. Many merchants remain constrained by fragmented workflows, disconnected tools, and unclear ownership of chargeback outcomes. Going forward, we expect even more businesses to add third-party solutions to their existing efforts. Unfortunately, this will often happen in ways that complicate operations even further rather than streamline them.
Card networks are also expected to continue introducing rule updates and monitoring initiatives like VAMP. While these programs are designed to reduce disputes and strengthen accountability, they will also require merchants to dedicate more resources toward learning and implementing new processes. For teams already stretched thin, that burden may offset some of the potential ROI gains.
That, among other factors, could increase the likelihood of merchants passing chargeback-related costs on to consumers through higher prices and stricter policies. In turn, this can create a self-perpetuating cycle: abuse losses lead to higher prices, causing customer frustration that leads to abuse. Breaking that cycle will require a stronger focus on prevention, transparency, and customer experience.
If there is one clear takeaway from this report, it is that merchants should actively evaluate the fraud-fighting and chargeback management tools available to them. As consumer behavior continues to evolve, professional chargeback management will become increasingly valuable. The right solutions can help merchants retain more revenue, reduce operational strain, free internal resources for growth, and maintain stronger relationships with both banks and customers.
At Chargebacks911, we can assist you with all aspects of chargeback management. From automated chargeback responses that mitigate the overall risk of illegitimate chargebacks, to helping recover more revenue from chargeback fraud, Cb911 offers the most comprehensive, end-to-end chargeback management platform. Plus, all our services are backed by the industry's only performance-based ROI guarantee. If you have questions concerning prevention, representment, or any other chargeback management issue, contact us today.
