What’s the true cost of a chargeback in 2025?

Global chargeback volume is expected to grow 24% from 2025 to 2028, reaching 324 million transactions annually, according to Mastercard’s 2025 state of chargebacks report, based on research from Datos Insights. 

As the volume and value of chargebacks rise, merchants and issuers will incur increased costs — both direct (e.g., chargeback fees paid by merchants) and indirect (e.g., operational costs associated with hiring more back-office staff to manage disputes). 

Though quantifying these costs can be difficult, it’s critical to merchants and issuers looking to manage the rising tide of chargebacks. Both groups require the right combination of insights and tools to enable them to quickly resolve disputes and prevent them from becoming chargebacks.

So, as chargebacks continue to grow, what is the true cost of a chargeback to businesses in 2025?

Several factors contribute to the total cost of a chargeback. Although some of them are not easy to track, statistics from the chargeback benchmark report help quantify losses for merchants and issuers at a high level. (Note: All monetary values are in U.S. dollars.) 

The cost of a chargeback for issuers 

While issuers sometimes absorb the chargeback amount, their greatest costs are operational. Handling a high volume of disputes puts a strain on the limited time and resources available for customer service and back-office fraud teams.

Each disputed transaction costs FIs $9.08 to $10.32 to process. Multiplied by an estimated 261 million chargebacks generated annually in 2025, this represents trillions of dollars of total expenditures across all FIs each year. 

The cost of a chargeback for merchants 

When a merchant receives a chargeback, they're not only faced with the cost of managing the dispute, but also may absorb the cost of the associated merchandise or service, if it was already provided. So, for merchants, the cost of a chargeback depends largely on the chargeback amount. And those amounts vary considerably by industry and region: 

• By industry: Travel and hospitality have the highest average chargeback amount ($120) — in part because customers often book through third-party travel services, making them less likely to reach out to the merchant directly to resolve issues, which could help avoid a dispute. The next highest average chargeback amounts are in retail ($84) and high-risk industry categories such as gambling, gaming and cryptocurrency exchanges ($99). 
• By country: The U.S. leads in average chargeback value among countries studied ($110), compared to Brazil ($94), Australia ($91) and the U.K. ($82). 

However, merchants also incur operational costs related to chargebacks, particularly around technology. Merchants spend $100,000 to $500,000 on chargeback technology annually, with 12% of large enterprises claiming chargeback technology costs increased by more than 25% in the past 12 months.  

Personnel costs can also be significant. Half of merchants (50%) manage chargebacks completely in-house, while another 34% outsource chargebacks to a third-party firm but manage fraud internally. Only 16% outsource both chargebacks and fraud management.  

Finally, chargeback fees to card processors add another expense for merchants. That means preventing a dispute from turning into a chargeback has an added benefit, too — it’s one of the most streamlined ways to reduce costs, including chargeback fees.

All in, the financial impact of global chargebacks is expected to grow from $33.79 billion in 2025 to $41.69 billion in 2028. This represents a 23% increase over just three years. The rise in chargeback volume and costs is driven by a few key trends, including: 

• Growing digital transaction volumes: Digital purchase volumes are growing, especially with the rise of the subscription economy — and chargeback volumes are growing with them. That’s because chargebacks are more likely to occur on card-not-present (CNP) transactions, which currently represent 63% of merchants' transaction volumes. Cardholders may fail to recognize legitimate CNP charges on their bank statements, especially if they transacted through a third-party app or service. This can lead them to mistakenly initiate chargeback requests for their own purchases. 
• Rising fraudulent chargeback volume: Third-party fraud involves an unauthorized user making purchases on a card without the cardholder’s consent, while first-party fraud occurs when an authorized user knowingly disputes a legitimate purchase. Datos Insights’ 2025 chargeback fraud data shows that both types of fraudulent chargebacks are increasing, accounting for approximately 45% of merchant chargeback volume globally.  

These trends affect all corners of the globe. Today, North America leads in total chargeback value — but other regions are catching up. Chargeback amounts are forecasted to reach $20.47 billion in North America by 2028, compared to Latin America ($8.49 billion), Asia Pacific ($5.89 billion), the Middle East and Africa ($3.59 billion) and Europe ($3.17 billion).  

For North America, that represents just a 16% growth in chargeback volume. Other regions are predicted to grow volumes much faster in the same period: 22% for Latin America, 35% for Asia Pacific, 59% for the Middle East and Africa, and 27% for Europe.  

Together, these factors underscore what’s at stake for businesses that fail to implement best practices and adopt cutting-edge technologies to support the chargeback process.

To see greater cost savings and increased customer lifetime value (CLV), issuers and merchants need to ensure a frictionless experience even after a purchase has been made. Both groups are increasingly adopting new dispute management and chargeback prevention strategies and tools to streamline the customer experience and mitigate costs:  

1. Implement real-time chargeback alerts 
   
   When a merchant is promptly notified about a chargeback, they can immediately refund or cancel a customer’s order before it’s shipped. That’s especially important if the item purchased is large or expensive, like appliances or other heavy items — in which case shipping expenses can outweigh the cost of a chargeback fee or even the cost of the merchandise itself. 
   
   Chargeback resolution tools provide real-time notifications to merchants, enabling them to take swift action and keep costs down. Similar benefits apply to issuers: Resolving fraudulent chargeback scenarios more quickly avoids wasting employee time and resources. 
   
   
2. Improve transaction transparency 
   
   Chargebacks are often the result of simple purchase confusion — and unclear records make the problem worse.  
   
   For example, if a cardholder transacts through a third-party app, instead of directly with a merchant, they may be surprised to see the “wrong” name in their statement, especially if the transaction record gives no other context about the purchase. 
   
   By providing cardholders detailed transaction information like logos or digital receipts directly within their preferred banking apps, FIs can boost transparency and reduce purchase confusion. This conserves both FIs’ and merchants’ resources by helping them avoid handling — and often paying for — chargeback disputes that would otherwise be legitimate transactions.  
   
   
3. Simplify subscription management 
   
   Subscription-based merchants frequently experience chargebacks due to cardholders having trouble managing their recurring payments.  
   
   While these chargebacks are often low-cost, they can have an outsized impact on merchants’ bottom lines. In many cases, the cost of the initial dispute fee may be more than the cost of the subscription service rendered, generating an immediate financial loss.  
   
   Chargebacks also impact customer experience — a particularly important consideration for subscription services where CLV is paramount.  
   
   Subscription companies must dedicate high spend to convince customers to commit to recurring payments in the first place. When a customer disputes a subscription fee in error, they may be blocked from re-subscribing to the service for a period of time due to an automated fraud protection process. This makes it impossible for the merchant to recoup their initial marketing costs and ultimately leads to a poor customer experience. 
   
   All of this means the ideal chargeback management strategy for a subscription-based, online merchant is to avoid the initial dispute in the first place. To help, merchants can implement digital tools that allow users to easily pause or modify their subscriptions, which can lower initial chargeback request rates and help retain customers for the long term, maximizing CLV. 

Addressing rising chargeback volumes demands close collaboration between merchants and issuers.  

Automated tools can streamline communication and boost transparency, ensuring all parties receive the information they need — from cardholders examining their transaction records in a banking app to back-office employees managing disputes for an FI.  

These solutions can ease costs and streamline operations for merchants and FIs alike, while also offering customers the types of frictionless purchase experiences that ensure customer satisfaction every time. 

Learn how Mastercard can help you better track, manage and resolve chargebacks throughout the payments lifecycle to improve the purchase experience and minimize disputes.