Summary
- • Chargeback fraud losses are estimated to reach $31 billion by 2023.
- • Chargeback fraud is set to increase by 21% in 2021.
- • The average chargeback dispute costs merchants $75.
- • Chargebacks have increased by 41% during the COVID-19 pandemic.
- • 88% of all chargebacks are fraudulent.
- • It takes about 41 days on average to resolve a chargeback.
- • E-commerce chargeback rates are 2-4 times higher than traditional retail.
- • Between 60-80% of chargebacks are friendly fraud.
- • Chargebacks cost merchants nearly $70 billion a year.
- • The chargeback rate for high-risk merchants is typically 1% or higher.
- • Friendly fraud chargebacks make up 86% of all chargebacks.
- • Chargeback fraud accounts for 28% of total e-commerce fraud losses.
- • 65% of consumers check the return policy before making a purchase, leading to fewer chargebacks.
- • 55% of chargebacks are due to merchant error, such as processing mistakes.
- • Visa chargeback rates for merchants should be below 0.9%.
Chargebacks: the silent profit killers of the digital age. With fraud losses projected to skyrocket to $31 billion by 2023, a 21% increase in chargeback fraud in 2021, and an average cost of $75 per dispute for merchants, it seems that navigating the treacherous waters of e-commerce comes with a hefty price tag. Throw in the COVID-19 pandemic, where chargebacks have surged by 41%, and youve got a perfect storm brewing. From friendly fraud to processing mistakes, the chargeback saga is as intricate as it is costly, with high-risk merchants bearing the brunt of a 1% or higher chargeback rate. As the clock ticks an average of 41 days to resolve a chargeback, and with Mastercard and Visa setting stringent thresholds, its clear that chargebacks are more than just a thorn in the side of retailers; theyre a financial tsunami waiting to happen.
Average chargeback dispute costs
- The average chargeback dispute costs merchants $75.
- It takes about 41 days on average to resolve a chargeback.
- The average chargeback win rate for merchants is around 20%.
- Chargebacks typically take 75 days to process and resolve.
- 70% of chargebacks are issuers' errors that can be disputed and won by the merchant.
- Chargeback rates for recurring billing merchants are typically around 2%.
- Merchants win 55% of chargeback disputes resolved in their favor.
Interpretation
In the chaotic dance of chargeback statistics, merchants navigate a treacherous landscape where dollars are lost, days drag on, and victory hangs by a thread. The average cost of $75 per dispute may seem like a mere drop in the ocean, but when it takes a grueling 41 days to resolve, that drop turns into a tidal wave of frustration. Yet hope flickers on the horizon with a 20% win rate, as merchants bravely battle against the clock that ticks away 75 agonizing days. Armed with the knowledge that 70% of chargebacks are the issuers' mistakes waiting to be challenged, merchants play the waiting game, knowing that their odds of success are decent but not guaranteed. Despite the low rate of 2% for recurring billing merchants, those brave souls who dare to venture into this unforgiving territory often emerge triumphant, winning 55% of their hard-fought disputes. In this dizzying dance of numbers and percentages, merchants must stay sharp, nimble, and ready to pounce on any opportunity to turn the tide in their favor.
Chargeback cost to merchants
- Chargebacks cost merchants nearly $70 billion a year.
- The chargeback rate for high-risk merchants is typically 1% or higher.
- 65% of consumers check the return policy before making a purchase, leading to fewer chargebacks.
- 55% of chargebacks are due to merchant error, such as processing mistakes.
- Visa chargeback rates for merchants should be below 0.9%.
- Mastercard chargeback rates should ideally be below 0.5% for merchants.
- Chargeback rates for digital goods can be as high as 25%.
- Apparel and accessories have a chargeback rate of 0.61%.
- Chargebacks cost US merchants $25 billion annually.
- The chargeback rate for subscription-based businesses is typically around 5%.
- Friendly fraud chargebacks can cost businesses up to $41 billion annually.
- CBD products have a chargeback rate of 1.25%.
- The chargeback rate for online auctions is around 0.42%.
- Chargeback fraud costs businesses an average of $3.36 for every $1 fraudulently obtained.
- The chargeback rate for U.S. merchants is approximately 0.08%.
- Small businesses face an average of 4 chargebacks per month.
- Industries with the highest chargeback rates include travel (0.8%) and digital goods (2%).
- The chargeback rate for retail purchases is around 0.31%.
- The chargeback rate for clothing retailers is typically 0.4%.
- Chargeback fraud is responsible for 35% of total direct costs for merchants.
- The chargeback rate for subscription boxes is around 0.75%.
- High-risk merchants can see chargeback rates as high as 2.5%.
- The chargeback rate for electronics retailers is typically 0.5%.
- The chargeback rate for luxury goods is around 0.2%.
Interpretation
The world of chargebacks seems to have more twists and turns than a riveting soap opera. From the high-stakes drama of high-risk merchants facing a 1% chargeback rate or higher to the meticulous consumers who scrutinize return policies before hitting the purchase button, there's no shortage of plotlines in this multi-billion dollar saga. With Visa and Mastercard setting the chargeback rate bar at seemingly impossible levels, it's no wonder that merchants are left feeling like they're navigating a treacherous obstacle course. As the curtain rises on the chargeback extravaganza, one thing is certain: in this world of processing mistakes, subscription-based shakedowns, and friendly fraud fiascos, the cost of admission for businesses is nothing short of a wild and costly ride.
Chargeback fraud losses projections
- Chargeback fraud losses are estimated to reach $31 billion by 2023.
- 88% of all chargebacks are fraudulent.
- Chargeback fraud accounts for 28% of total e-commerce fraud losses.
- Cross-border transactions have a chargeback rate of 0.32%.
- Chargebacks from unauthorized transactions account for 41% of all chargebacks.
Interpretation
As these staggering chargeback statistics illustrate, navigating the treacherous waters of e-commerce can feel like trying to cross a tumultuous sea on a makeshift raft. With fraudulent chargebacks accounting for a staggering 88% of all cases and unauthorized transactions making up a hefty 41%, it's clear that the sharks are circling. The looming $31 billion in fraud losses projected for 2023 is a financial whirlpool threatening to swallow businesses whole. Despite these alarming figures, hope glimmers faintly on the horizon in the form of the relatively low 0.32% chargeback rate for cross-border transactions. Nevertheless, merchants must remain vigilant, or risk being sunk by the murky depths of chargeback fraud.
Chargeback rate for subscription services: Increase in chargeback rates over time
- The chargeback rate for subscription services is typically around 0.5%.
Interpretation
While the chargeback rate for subscription services may be a modest 0.5%, don't be fooled by the seemingly small percentage. Think of it as the savvy subscriber's way of saying, "I didn't sign up for this rollercoaster ride without a seatbelt." It's a gentle reminder to businesses that consumers are keeping a close eye on their recurring charges, ready to hit the eject button at the first sign of a disappointing service. So, while 0.5% may seem insignificant, remember that in the world of subscriptions, even a tiny blip can create a tsunamic backlash of customer dissatisfaction.
Chargeback rates for digital services are around 116% falls under the category of "Chargeback cost to merchants"
- Chargeback rates for digital services are around 1.16%.
Interpretation
In the fickle world of digital services, a chargeback rate of 1.16% is like finding a small dent on a brand new sports car – not catastrophic, but enough to make you wince. It's the gentle reminder that no matter how seamlessly your business operates, there will always be a few bumps in the road. So, buckle up, stay sharp, and keep those chargeback disputes at bay because in the arena of e-commerce, even a seemingly insignificant percentage can pack a punch.
Chargeback win rate for merchants: Friendly fraud prevalence
- The chargeback win rate for merchants is around 40% in their favor.
Interpretation
In the tumultuous battleground of chargebacks, where merchants and customers clash over disputed transactions, the statistics reveal a surprising victory for the merchants with a win rate of around 40%. It seems the scales of justice have tilted slightly in favor of those brave souls who dare to challenge erroneous chargebacks and stand their ground. Perhaps there is hope yet for the underdogs of the retail world, armed with tenacity and a touch of luck, to emerge triumphant in the eternal struggle against unjust claims.
Friendly fraud prevalence
- Between 60-80% of chargebacks are friendly fraud.
- Friendly fraud chargebacks make up 86% of all chargebacks.
- 84% of consumers have filed a chargeback due to unauthorized transactions.
- 31% of consumers have committed friendly fraud, knowingly disputing a valid charge.
- Chargeback fraud accounts for 23.3% of U.S. e-commerce fraud.
- 70% of chargebacks are never disputed by the consumer.
- 45% of consumers who file chargebacks would not make a purchase after a chargeback is processed.
- Chargebacks initiated by shoppers who "forgot doing that" constitute 10% of all chargebacks.
- 55% of consumers have filed a chargeback due to billing errors on their account.
- Fraudulent chargebacks make up 56% of all chargebacks in the US.
- Friendly fraud cases have grown by 41% in the last year.
Interpretation
Chargebacks, the ultimate finesse move in the world of digital transactions, have taken on a life of their own, with statistics painting a bewildering picture of human behavior and financial shenanigans. From the sneaky maneuvers of "friendly fraudsters" to the surprisingly common act of conveniently forgetting one's own purchases, it seems that chargebacks have become a playground for both the mischievous and the absent-minded alike. With a whopping 86% of chargebacks classified as friendly fraud and fraudulent cases on the rise by 41%, it's safe to say that in the realm of e-commerce, the line between legitimate dispute and strategic sleight of hand is getting blurrier by the day. One thing is certain though - when it comes to chargebacks, it's a wild, wild west out there.
Increase in chargeback rates over time
- Chargeback fraud is set to increase by 21% in 2021.
- Chargebacks have increased by 41% during the COVID-19 pandemic.
- E-commerce chargeback rates are 2-4 times higher than traditional retail.
- Chargeback fraud increases by 49% during the holiday shopping season.
- 32% of merchants see a rise in chargebacks due to unclear return policies.
- Chargebacks are projected to rise by 20% in 2022.
- Chargebacks have increased by 183% in recent years.
- Chargeback fraud is expected to grow by 14% annually.
- Chargebacks related to digital goods have increased by 10% in the last year.
- Chargeback fraud losses are projected to increase by 18% over the next two years.
Interpretation
Chargebacks: the sneakiest villains of the financial world, lurking in the shadows of e-commerce platforms and brick-and-mortar stores alike. With an arsenal of statistics that would make any entrepreneur sweat, it's clear that chargeback fraud is not a foe to be taken lightly. Like a crafty chameleon, it adapts to the ever-evolving landscape of consumer behavior, thriving during the chaos of a pandemic or the frenzy of holiday shopping. Merchants beware, as the numbers tell a tale of caution: from unclear return policies to the allure of digital goods, the battleground is vast and the stakes are high. As we brace ourselves for the inevitable rise in 2022, one thing is certain – in the game of chargebacks, a sharp eye and a solid defense are your best allies against the relentless tide of fraud.