Chargebacks: The Case for Coordination

In 2025, $34 billion in debit and credit card transactions was disputed by cardholders and charged back to merchants. This problem affected merchants and issuers in ways that extend beyond merely managing disputed transactions. Merchants must navigate complex dispute rules that differ by card brand, merchant type, and transaction type. This variability requires them to invest substantial time and resources in safeguarding their interests during disputes. Additionally, tight deadlines often restrict merchants’ ability to gather the necessary documentation and decide which disputes are worth contesting. 

Issuers, on the other hand, face pressure to take all cardholder disputes seriously or risk violating regulatory requirements. Both parties must be careful not to alienate customers with complicated processes or burdening them with costs associated with disputed transactions, which could harm future business prospects. Merchants and issuers work hard to strike a balance between satisfying their customers and minimizing the risk of so-called friendly fraud, which occurs when a buyer disputes a legitimate transaction. This balance is currently lacking, and this creates pain points for all parties to a transaction. Soothing these pain points will require an achievable level of cooperation between merchants and issuers working together to share transaction data. 

Addressing the challenge of chargebacks requires coordinated effort among the three primary parties in the dispute: the merchant, the issuer, and the customer. Greater collaboration between issuers and merchants can help preempt chargebacks and eliminate the burden of a formal dispute process. Success is measured not only by avoiding financial liability for the transaction but also by securing the relationship with customers who dispute the transactions. 

This report examines the experiences and perspectives of the various parties, offering insights into ways to reduce costs and bolster customer satisfaction during disputes and any subsequent chargeback attempts.

Foreword

This report, sponsored by Mastercard, examines the near- and long-term effects that chargebacks have on each party to a card purchase transaction, as well as the existing opportunities to streamline the chargeback process or reduce the number of chargebacks altogether. 

This report was independently produced by Javelin Strategy & Research, which maintains complete independence in its data collection, findings, and analysis.