Mastercard Rolls Out New Anti-Fraud Tools as Merchants Face $42B in Chargeback Losses

Mastercard is extending its First-Party Trust program from the United States to Canada, Latin America, Asia Pacific, and the Caribbean as it continues to lead the fight to safeguard digital payments.

Digital payments are getting smoother — and riskier. Worldwide friendly fraud, which is when legitimate purchases are declined at the cardholder level, largely without valid reasons, is on the increase.

By 2028, chargebacks will cost merchants $42 billion globally, nearly half of which will be classified as fraudulent, according to Mastercard’s State of Chargebacks report. That expense encompasses not just losses but also the cost of time and resources devoted to claims investigation and dispute resolution.

Global chargeback volume is expected to grow by 24% to 324 million transactions annually by 2028. Merchants and issuers both increasingly face a serious challenge.

Merchants and issuers require the right combination of insights and tools to enable them to quickly resolve disputes and prevent them from becoming chargebacks. In fighting first-party disputes, Mastercard offers both sides of a two-sided solution.

Merchants can share enhanced data at the time of the transaction or when a dispute is raised. Issuers are then offered clearer signals on cardholder buying habits, location, cardholder, and device details — and faster and more accurate resolution.

New rules define “compelling evidence” of a genuine transaction. This revision offers chargeback protection for merchants that comply with Mastercard’s higher standards for data sharing.

It also makes sure that issuers cannot refund legitimate purchases that will be deemed suspicious without information.

The joint prespective to the program is an extension of Mastercard’s broader approach. By collaborating with industry groups like the Merchant Advisory Group and the Merchant Risk Council, Mastercard can restructure dispute processes without an adjustment to consumer protections.

That’s significant because first-party fraud still represents the single-biggest cause of card-not-present chargebacks — 75% among digital merchants, according to Datos Insights estimates.

The cost of a chargeback exceeds the value of the transaction. U.S. financial institutions lose between $9.08 and $10.32 on each dispute, mostly from labor and fraud control. Larger institutions have more than 200 full-time staff personnel to handle disputes, which costs them back-office expenses running into the millions.

Merchants also have their share of problems, ranging from subscription control challenges to reputational harm to their brand.

Operational costs, especially technology investments, add to the cost of chargebacks. Merchants pay between $100,000 and $500,000 every year for chargeback tools, and 12% of giant corporations said those costs have increased more than 25% in the past year.

Chargebacks often result from cardholder confusion. For example, disputes may arise when a cardholder transacts through a third-party app instead of directly with a merchant and sees the ‘wrong name’ on their statement.

Real-time notifications and clearer transaction records, such as branded receipts and purchasing context transmitted via banking apps, can lower confusion-led disputes.

Mastercard’s First-Party Trust program is but one component of its ongoing reaction. The company in 2025 set up an industry work group to combat other abuse vectors such as fraudulent returns. These are all intended to reduce disputes arising from confusion, misuse, or poor-data mishaps all too common among subscription and online commerce.

“As e-commerce continues to evolve, businesses are increasingly able to create new consumer experiences, which underscores the need for a clear framework to manage complex disputes,” said Johan Gerber, executive vice president and global head of Security Solutions at Mastercard.

The sector stakeholders regard Mastercard’s initiative as extremely significant toward rebuilding trust. “Developed in close partnership with Merchant Advisory Group members, this initiative reflects our shared commitment to reducing fraud,” said John Drechny, CEO of the Merchant Advisory Group.

As digital payments grow more complex, the rules governing chargebacks must evolve as well. Mastercard’s expansion of First-Party Trust may not put an end to friendly fraud, but it gives merchants and issuers sharper tools to fight it — and potentially recover billions in the process.