Articles

Chargeback Stats for 2017

Chargeback Stats

The Latest Chargeback Stats & Insights Revealed

Chargebacks were first introduced more than four decades ago as a consumer protection mechanism intended to build public confidence in credit cards. Since the rise of eCommerce, though, chargebacks have had unintended consequences—a fact reinforced by the few currently available chargeback stats.

What Do Most Merchants Already Know?

Learn how to reduce chargebacks and protect your business from fraud.REQUEST A DEMO

Not much, unfortunately.

There is minimal published information regarding chargebacks and friendly fraud, resulting in a lack of understanding and consensus. It’s hard to compile reliable information on the subject without considerable input from banks, card networks, and merchants.

Issuing banks and card networks refuse to publish essential data or specific numbers on chargebacks such as: dispute win rates. They typically don’t keep the kind of comprehensive records on the subject that would enable a broader view of the matter.

Similarly, merchants tend to keep issues involving chargebacks quiet, fearing that any association with chargebacks could harm their reputations.

Despite the confusion, it’s clear that the problem is getting worse. The longer this situation carries on, the longer merchants will experience lost revenue and threats to their sustainability. That's why we’ve compiled this list of the most significant—and in some cases, shocking—chargeback stats currently available.

Chargebacks Stats Revealed

First, we now know most chargebacks are likely cases of friendly fraud. But at the same time, friendly fraud is not always a deliberate act. The customer often genuinely believes that a chargeback is in order when filing-- making friendly fraud difficult to identify and prevent.


35 Simple Steps to Preventing More Chargebacks with Chargebacks911

35 Simple Steps to Preventing More Chargebacks

Download our FREE guide that outlines 35 step-by-step effective chargeback prevention techniques. Learn insider secrets that will reduce your risk of chargebacks, increase your profits and ensure your business's longevity.

FREE DOWNLOAD

A recent study by ClearSale shows the most common reasons given for customers to file a chargeback:

Chargeback Stats

Identifying friendly fraud is no simple task. Up-to-date insight into the problem is the key to protecting businesses against developing threat sources.

But while the problems of chargebacks and fraud are complex and difficult to solve, looking at the raw figures can offer some clues as to what’s really going on in the industry. The following chargeback stats paint a stark picture of the current situation with regards to chargebacks, fraud, and the demands of modern, digital-enabled customers:

1

2

3

41%

86%

81% of customers freely admit to filing a chargeback out of simple convenience.

86% of all chargebacks are probable cases of friendly fraud.

Friendly fraud increases at a rate of 41% every two years.

4

5

6

?

!

Roughly 40% of consumers who commit friendly fraud will do it again within 60 days.

At the current rate, friendly fraud will cost merchants upwards of $25 billion a year by 2020.

49% of friendly fraud chargebacks resulted from a simple misunderstanding — the cardholders didn’t even know they were filing chargebacks.

7

8

9

Attempts

28%

47%

Attacks

All totaled, fraud costs the average merchant 1.47% of their total revenue.

Fraud attempts rose 33% in 2016, while successful fraud attacks increased 32%.

When merchants self-reported fraud, they suggested that roughly 28% of all attacks were friendly fraud.

10

11

12

55%

Online sales caused 55% of the fraud sustained by multi-channel merchants.

Merchants ultimately lose out on $118 billion in sales due to false positives each year.

93% of online shoppers say free shipping can be the key factor when deciding whether to complete a purchase. Even then, the average customer is only willing to wait seven days for delivery.

13

14

15

A typical business will only hear from 4% of dissatisfied customers—the remaining 96% are at risk of filing a chargeback.

Merchants lose $2.40 for every dollar of fraud taken by a fraudster.

Roughly 79% of businesses believe that increased emphasis on a frictionless environment will lead to more tension between the user experience and fraud prevention.

1

81% of customers freely admit to filing a chargeback out of simple convenience.

2

86% of all chargebacks are probable cases of friendly fraud.

86%

3

Friendly fraud increases at a rate of 41% every two years.

41%

4

49% of friendly fraud chargebacks resulted from a simple misunderstanding — the cardholders didn’t even know they were filing chargebacks.

?

!

5

Roughly 40% of consumers who commit friendly fraud will do it again within 60 days.

6

At the current rate, friendly fraud will cost merchants upwards of $25 billion a year by 2020.

7

All totaled, fraud costs the average merchant 1.47% of their total revenue.

47%

8

Fraud attempts rose 33% in 2016, while successful fraud attacks increased 32%.

Attempts

Attacks

9

When merchants self-reported fraud, they suggested that roughly 28% of all attacks were friendly fraud.

28%

10

Online sales caused 55% of the fraud sustained by multi-channel merchants.

55%

11

Merchants ultimately lose out on $118 billion in sales due to false positives each year.

12

93% of online shoppers say free shipping can be the key factor when deciding whether to complete a purchase. Even then, the average customer is only willing to wait seven days for delivery.

13

A typical business will only hear from 4% of dissatisfied customers—the remaining 96% are at risk of filing a chargeback.

14

Merchants lose $2.40 for every dollar of fraud taken by a fraudster.

15

Roughly 79% of businesses believe that increased emphasis on a frictionless environment will lead to more tension between the user experience and fraud prevention.

1

81% of customers freely admit to filing a chargeback out of simple convenience.

2

86% of all chargebacks are probable cases of friendly fraud.

86%

3

Friendly fraud increases at a rate of 41% every two years.

41%

4

49% of friendly fraud chargebacks resulted from a simple misunderstanding — the cardholders didn’t even know they were filing chargebacks.

?

!

5

Roughly 40% of consumers who commit friendly fraud will do it again within 60 days.

6

At the current rate, friendly fraud will cost merchants upwards of $25 billion a year by 2020.

7

All totaled, fraud costs the average merchant 1.47% of their total revenue.

47%

8

Fraud attempts rose 33% in 2016, while successful fraud attacks increased 32%.

Attempts

Attacks

9

When merchants self-reported fraud, they suggested that roughly 28% of all attacks were friendly fraud.

28%

10

Online sales caused 55% of the fraud sustained by multi-channel merchants.

55%

11

Merchants ultimately lose out on $118 billion in sales due to false positives each year.

93% of online shoppers say free shipping can be the key factor when deciding whether to complete a purchase. Even then, the average customer is only willing to wait seven days for delivery.

12

13

A typical business will only hear from 4% of dissatisfied customers—the remaining 96% are at risk of filing a chargeback.

14

Merchants lose $2.40 for every dollar of fraud taken by a fraudster.

15

Roughly 79% of businesses believe that increased emphasis on a frictionless environment will lead to more tension between the user experience and fraud prevention.

Copy the code below to embed this infographic on your website.

Chargeback Ratios: The Full Break Down

According to data published by Juniper Research, the global average cost of chargebacks each year is approximately 0.47% of total merchant revenue. That risk, however, is not evenly divided across the board.

The chargeback risk associated with a transaction varies widely based on several factors. For example, ClearSale identifies the following as the six products most at-risk for chargebacks:

Chargeback Stats

The reason is a confluence of multiple risk factors including price, traceability, country of origin, and product category. The data from ClearSale breaks down average chargeback ratios based on the industry in which the merchant operates, as well as the seller’s country of origin:

Chargeback Stats

These figures don’t seem particularly high at first glance. However, most acquirers will restrict or even cancel a merchant’s account if they approach the critical 1% chargeback-to-transaction ratio. If that happens, the merchant will be placed on the MATCH list and deemed ineligible for a standard merchant account.

In context, this gives merchants very little wiggle room between the “average” number of chargebacks and a number that might destroy their business.

Facts: The Key to Fighting Friendly Fraud

Though the available data is limited, it clearly shows how eCommerce has radically impacted the role chargebacks play in the payments industry.

Taking a genuine stand against friendly fraud requires education. In turn, education requires more comprehensive facts and data to create a better model of the payments industry and truly understand the needs of merchants.

Do you have insights, chargeback stats, or additional data not published here? Interested in sharing your information to help win the battle against friendly fraud? Email marketing[at]chargebacks911.com.


Prevent Chargebacks.

Fight Fraud.

Recover Revenue.

Pin It on Pinterest