Chargebacks Are Surging Worldwide, and AI May Be Making the Problem Worse

The number of chargebacks around the world has been steadily rising in recent years, and those figures are expected to climb through the latter half of the decade, according to data from Datos Insights. 

A consumer can have any number of reasons for disputing a credit card charge, including when they suspect someone used their card credentials to make a purchase without permission.

Or a cardholder bought an item online that arrived at their house damaged during the shipping process. Many shoppers have had that experience at least once. 

And, while frustrating, those people were likely grateful they had the option to skip paying for the damaged item. 

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A cardholder may even have to dispute a charge when they cancel a subscription, but the charges continue. Regardless of what motivates a cardholder to dispute a credit card charge, it’s a process that occurs with greater frequency as each year goes by.

In 2022, the number of payment disputes around the world that resulted in a refund came in at more than 119 million, the Datos Insights figures reveal. But that number soared in the following years, surpassing 260 million in 2025. 

And the growth of disputes in the beginning of the decade is on track to continue in the near future as Datos Insights expects the number to reach 359 million by 2029. 

Disputing a payment can be a wise move in many instances. But when the number of disputes rises rapidly in a relatively short time, credit card issuers may have to take a closer look at each one to ensure it’s valid. Cardholders should know that an issuer may take longer to investigate a dispute during periods of high volume.

The news that payments disputes may continue to ramp up is surely something most credit card issuers don’t want to hear. After all, issuers devote time and resources to investigate a dispute. U.S. financial institutions pay anywhere between $9.08 and $10.32, on average, to process a single dispute, according to a recent American Banker report.

While that amount isn’t much to banks with huge amounts of capital in their coffers, it can add up to a substantial figure if an institution faces many thousands of disputes in a given year.

We caught up with Darren Beyer, Founder and Chief Product Officer at Qolo, to learn more about the surge in chargebacks taking place in the 2020s. Qolo offers a payments platform that allows financial institutions and fintechs to manage and move money in real time.

Beyer told us that one reason chargebacks are on the rise is because criminals are able to use artificial intelligence to search for weaknesses to exploit.

Processing a single payment dispute costs a financial institution anywhere between $9.08 and $10.32, on average.

“Fraudsters are going to go to the place where it’s easiest to get the money,” Beyer said. “And AI is helping them find those places. And the key element is that they’re able to now go in, look for vulnerabilities, find something, go attack it, and do so in a very agile manner. And this is what is fundamentally different than, say, even five or 10 years ago.”

Credit card companies that want to bolster their defenses against criminals who try to take advantage of the payment dispute process can fight fire with fire. The American Banker report indicated that AI tools can help banks improve their ability to not only detect fraud but to stop it before it has a chance to succeed.

Pattern analysis can help put the brakes on a fraudulent transaction, but American Banker revealed that only 25-30% of U.S. financial institutions use pre-dispute resolution solutions. 

Banks can also do a better job of capturing data about disputes. Ron van Wezel, Strategic Advisor in Retail Banking and Payments at Datos Insights, told American Banker that although most financial institutions in the U.S. handle dispute intake through a call center, they measure the performance of the agents in those centers on speed, not thoroughness.

“The result: incomplete data gets handed to the back-office chargeback team, which then has to recontact the cardholder — increasing costs and headcount,” van Wezel explained.

Merchants also play a key part in the payment dispute process. And while consumers may not have thought much about the role sales receipts play in chargebacks, merchants should.

Sale receipts provide customers with a record of their transaction. Customers should hang on to receipts until they are certain they are satisfied with their purchase. 

But merchants should do everything they can to make certain that the way they list items on a receipt is clear to the consumer. Businesses may have a certain code they assign to one product or another, but customers aren’t likely to be familiar with those codes. So merchants shouldn’t list them on a sales receipt in place of an item description.

If they do, they risk facing a dispute from a customer who didn’t recognize one of the records a merchant printed on their receipt.

Businesses can also ensure that the language they use to communicate subscription terms and any cancellation policies they offer is as clear as possible. This practice can help cut down on customer confusion that could lead to a dispute.

Merchants that use sales receipts to clearly communicate the items a customer bought may see fewer disputes over time from people who don’t recognize a charge.

With all the AI tools at our disposal, it can be easy to forget that a business’s customer service team can go a long way toward helping consumers resolve issues that could have otherwise led to a chargeback.

Merchants committed to seeing fewer cardholders dispute charges should offer reliable customer support that people can easily access. And should a customer’s complaint warrant a refund of a purchase, then businesses should be quick to process those before they turn into bigger problems that eat up more of a merchant’s resources.

If stakeholders in the payments arena want to see a reversal of the trend in payments disputes that Datos Insights has highlighted, then making that happen will require a team effort. 

“It’s got to be a combination of the issuers … the networks, and the merchants working together to combat this,” Beyer told us. “Without that ecosystem working to do this, this is going to continue to be a problem.”