Card-Not-Present Transactions and Fraud Expected to Fuel Growth in Chargebacks Through 2028

Merchants and credit card issuers would rather spend their time pursuing the next sale than dealing with refunds and investigating fraud. But the very fact that chargebacks exist can actually motivate cardholders to use their cards more.

Chargebacks give consumers confidence to transact with their cards. Educated cardholders know that they have a process to fall back on should they have to dispute a purchase they made with their credit card.

A new report from Datos Insights and Mastercard reveals that chargebacks are expected to grow 24% from 2025 to 2028. The study cites a plethora of factors that will boost the number of chargebacks in coming years, including the growth of card-not-present transactions and increasing fraud rates.

Dispute resolution processes may instill confidence in consumers to transact with their credit cards, but that confidence comes at a cost. Issuers and merchants must plan for the expenses associated with chargebacks. Costs due to lost sales and the operational costs of managing chargebacks can quickly add up.

Half of consumers would consider switching banks for dispute management services offered in online banking tools.

And issuers must consider the costs of services customers expect to use in dispute resolution. The study said that 50% of consumers would consider switching to another financial institution if it offered them the ability to use online banking programs to manage disputes.

“Issuers and merchants that re-examine their approach and implement advanced automated technologies and prioritize the customer experience will reap the rewards of reducing chargebacks while improving customer satisfaction and loyalty,” the report’s authors wrote.

The report includes information on issuers and merchants from around the world.

The Mastercard and Datos Insights report reveals that — although chargebacks are expected to increase globally through 2028 — some countries may experience more chargeback growth than others.

The Middle East and Africa — analyzed as one region in the report — is expected to experience a 59% growth in chargebacks from 2025 to 2028, which is more than the growth in any other area.

That number dwarfs the projected growth — 35% — in the Asia Pacific region, the area expected to have the second-highest chargeback growth over the same period.

North America is expected to have a 16% growth rate in chargebacks from 2025 to 2028, the lowest percentage increase of any region included in the report. But it isn’t all good news for North American issuers and merchants.

The report estimates the value of worldwide chargebacks to grow from $33.7 billion in 2025 to $41.6 billion in 2028. Though chargeback growth is projected to be relatively small in North America in coming years, the region is projected to have a higher value of chargebacks than any region other included in the study. 

Chargebacks in North America are projected to be $20.4 billion in 2028, representing almost half of the global value of all chargebacks. 

And merchants in the U.S. face a more expensive chargeback battle than those in Australia, Brazil, or the UK. The average value of a chargeback in the U.S. is $110, which is $16 higher than the average chargeback in Brazil, and $19 and $28 more than average chargebacks in Australia and the UK, respectively.

The Mastercard and Datos Insights study paints a gloomy picture of the rising threat of chargebacks to company bottom lines. But it ends on a hopeful note, touching on strategies issuers and merchants can follow to keep chargeback costs in check:

Building a Better Customer Experience: Customers who understand what they’re buying — particularly when it comes to online shopping — are less likely to buy something they don’t need or want, per the study. Creating a buying environment that is seamless and secure helps ensure shoppers purchase only the items they intend to buy.

Offering an intuitive digital experience can also give shoppers confidence in transacting online. The report’s authors said that “issuers and merchants can improve the digital experience by giving customers more self-serve options and making purchasing — and managing those transactions — easier.”

Offering Collaborative Tools: Cardholders who have multiple outlets to monitor card activity may be able to detect and dispute unauthorized transactions faster than those who don’t. Some issuers empower cardholders to enable alerts that notify them when their cards are used for online purchases and can help them spot unusual activity.

Merchants and issuers can also use artificial intelligence to monitor for suspicious activity on card transactions. The report communicates that automated tools can provide cardholders with purchase data within banking applications and give back-office groups the information they need about a transaction to reach quick resolutions.

“Enabling this type of data sharing helps prevent chargebacks before they escalate into costly disputes — while delivering on a better customer experience, leading to greater satisfaction and loyalty,” the report’s authors conclude.