Global Businesses Face $15 Billion Hit from Fraudulent Chargebacks in 2025, Mastercard Warns: What You Need to Know

Chargeback fraud is becoming increasingly common, turning into a growing crisis that costs merchants billions of dollars.
First-party fraud is increasing rapidly as banking applications simplify the process of fabricating information to secure refund benefits.
Mastercard warns of up to 324 million chargebacks for businesses by 2028 without swift action.

New research has cautioned that fraudulent chargebacks are swiftly turning into a significant financial and operational challenge for companies around the world.

A Mastercard-sponsored study by Datos Insights estimates sellers will lose $15 billion to fraudulent chargebacks in 2025.

The total volume of chargebacks is projected to reach $33.79 billion this year and rise to $41.69 billion by 2028. These fraudulent disputes have far-reaching implications that affect everyone from merchants to consumers.

Digital growth comes with new risks

The increase in digital and card-not-present transactions has made online shopping faster and easier, but it has also made it more vulnerable. More purchases made via ecommerce platforms mean more chargeback claims.

Interestingly, 45% of chargebacks originate from "first-party" disputes initiated by legitimate customers who falsely dispute their transactions. Malicious individuals find it particularly easy to challenge these charges through banking applications without providing substantial evidence.

Mastercard warns that without prompt action, the number of chargebacks could reach 324 million by 2028, an increase from 261 million in 2025. Regrettably, what was designed to safeguard customers is currently being exploited.

Chargebacks are more than just a financial hassle for online companies, particularly those that use even the best ecommerce platform . On average, the chargeback value per dispute for some industries exceeds $120.

Small and medium-sized enterprises often struggle with such costs, leading them to expedite processes by disregarding minor claims. However, these small losses can accumulate rapidly. As a result, businesses must choose between absorbing these expenses or allocating significant resources towards enhancing their cyber defenses and improving dispute management systems. In either scenario, additional funds will be required, potentially resulting in increased product pricing or other negative consequences.

According to Mastercard’s findings, 46% of small and medium-sized enterprises (SMEs) have faced a cyberattack, leading to significant consequences: 18% went bankrupt, and another 17% were forced to close permanently. There has been an increased recognition of cybersecurity’s importance, with 62% of these businesses prioritizing it at the top of their spending plans and approximately 80% viewing it as vital for day-to-day functioning.

What’s the answer? Cutting-edge AI technologies. These include automated notifications, explicit transaction descriptions, and comprehensive digital receipts, which facilitate more efficient dispute management. According to Mastercard, companies employing these tools succeed in over fifty percent of their representment cases—instances when they challenge chargebacks backed by proof.

Companies must work together with them. best merchant service and payment gateway Providers must address this issue as, unless steps are taken, the expenses will ultimately be passed down to typical consumers through increased pricing and reduced service speed.