Chargeback Fees: What Will Chargebacks Cost in 2026?

 Chargebacks have become one of the most persistent and costly challenges for modern merchants. While most business owners understand that a chargeback reverses a sale, many underestimate the full financial impact of a dispute. Recent analysis projects that global chargeback volume will increase by 24% from 2025 to 2028, reaching an estimated 324 million disputes annually 

Chargeback Cost Summary

• Chargeback fee: $20–$100+

• Average total cost per dispute: ~$190–$191

• Goods, shipping, and labor costs: typically unrecoverable

• Long-term impact: higher processing fees, reputational damage, account risk

• Dispute volume trend: +24% increase expected by 2028 (Mastercard, 2025)

What Is a Chargeback Fee?

A chargeback fee is a penalty merchants pay when a customer disputes a transaction with their bank. Typical 2025 chargeback fees range from:

• $20–$50 for low-risk merchants
• $50–$100+ for high-risk merchants or businesses with elevated dispute ratios

Direct Costs of a Chargeback

1. The Chargeback Fee

The immediate cost charged by the processor. This fee is nonrefundable—even if the merchant ultimately wins the dispute.

2. Lost Transaction Amount

Once a chargeback is filed, the disputed revenue is pulled from the merchant’s account until the case is resolved. In most situations, merchants lose this revenue permanently.

3. Lost Goods or Services

Merchants typically cannot recover shipped products or delivered digital services, leaving them at a total loss.

4. Shipping & Fulfillment Expenses

Even when the product is lost to the dispute, these costs cannot be recovered:

• Shipping fees

• Packaging

• Labor

• Fulfillment center costs

Indirect Costs: The Hidden Losses Behind Each Chargeback

According to updated 2024–2025 research from Fit Small Business, when all costs are included, the average chargeback costs merchants approximately $190–$191 per dispute.

Here’s where these hidden costs come from:

1. Labor & Administrative Time

Merchants often spend hours gathering evidence, communicating with processors, and responding to inquiries.

2. Operational Overhead

Chargebacks reduce inventory accuracy, disrupt fulfillment operations, and require additional fraud-prevention tools.

3. Marketing & Customer Acquisition Waste

If you paid to acquire the customer—via ads, email, influencers, or affiliates—those costs are lost the moment the chargeback is filed.

Additionally, customers who dispute charges rarely convert again, reducing lifetime value (LTV).

4. Higher Processing Fees & Account Risk

Repeated chargebacks can trigger:

• Higher processing rates

• Rolling reserves

• Monthly compliance reviews

• Placement in card brand monitoring programs

In extreme cases, merchant accounts can be terminated.

How Merchants Can Reduce Chargeback Costs in 2026

The most effective way to reduce chargeback fees is to prevent disputes before they happen. Both traditional fraud and first-party (friendly) fraud continue to rise—driven by subscription-based billing, mobile commerce, and customer confusion. Studies indicate that friendly fraud increases around 40% every two years, making proactive prevention essential.

Below are the most effective, current, and comprehensive strategies merchants can use to reduce avoidable disputes, improve customer clarity, and defend against sophisticated fraud schemes.

1. Improve Billing Descriptors to Reduce Customer Confusion

A significant percentage of friendly fraud occurs because customers do not recognize a transaction on their bank statement. To reduce this:

• Use clear, consistent billing descriptors with:

  • Your full business name (no abbreviations customers won’t recognize)

  • Customer service phone number

  • Website URL

  • Short purchase description (“Subscription Renewal,” “Monthly Membership,” etc.)

• For subscription businesses:

  • Send advance renewal reminders (email/SMS)

  • Provide easy cancellation options

  • Use branded messaging that matches the billing descriptor

These actions directly reduce unnecessary disputes and improve customer trust.

2. Enhance Customer Service Accessibility and Speed

Research consistently shows that many chargebacks happen because customers find it easier to dispute a charge than to contact the merchant.

Improve your customer support experience by:

• Offering 24/7 support channels (chat, email, phone, or AI-assisted)

• Responding to inquiries quickly—fast resolution reduces escalations

• Clearly displaying support links throughout the site

• Making refunds or cancellations simple and transparent

The easier it is for customers to reach you, the less likely they are to go straight to their bank.

3. Clarify Checkout and Post-Purchase Information

Clear, consistent communication reduces misunderstandings that turn into chargebacks. Make sure your checkout process includes:

• Itemized order details

• Expected shipping timelines and delivery windows

• Return and refund policies prominently displayed (not hidden in footers)

• Subscription renewal dates, terms, and cancellation steps

• Digital delivery expectations (e.g., confirmation emails, download links)

Sending post-purchase confirmations and shipping updates also reduces confusion that triggers disputes.

4. Strengthen Fraud Prevention with Modern Tools

Criminal fraud and policy abuse schemes continue to evolve. To stay ahead, businesses should use layered fraud-prevention tools, including:

• Behavioral analytics to detect abnormal purchasing activity

• Device fingerprinting to identify risky or repeated devices

• Address Verification Service (AVS) for billing address checks

• CVC2/CVV2/CID verification for card-not-present transactions

• 3D Secure 2 authentication, especially for high-risk orders

• Real-time risk scoring to evaluate transaction trustworthiness

• Velocity checks to identify rapid purchase attempts

• Automatically lock accounts after repeated failed authentication attempts

For high-value shipments, requiring signature confirmation significantly reduces product theft and friendly fraud claims.

5. Maintain Comprehensive Transaction Records

Accurate, detailed documentation helps merchants successfully fight disputes through representment. Maintain:

• Order confirmations

• Delivery tracking and proof of delivery

• Customer communication logs

• IP logs, device data, and behavioral insights

• Refund, cancellation, or return requests

The more complete your records, the stronger your case when a chargeback occurs.

6. Monitor Chargeback Patterns and Identify Root Causes

Analyzing dispute data helps merchants reduce repeat issues. Monitor:

• Chargeback reason codes to identify recurring problems

• Repeat offenders who frequently dispute purchases

• Channel-specific fraud patterns, such as mobile or marketplace-related disputes

• SKU-level trends, such as certain products with higher dispute rates

• Fulfillment issues (delivery delays, shipment loss, unclear packaging)

Proactive pattern analysis not only reduces recurrence but also helps allocate resources where they are most impactful.

7. Partner With Fraud and Chargeback Experts

Even businesses with strong processes will encounter disputes. Because fraud evolves constantly, many merchants benefit from partnering with a provider that offers:

• Advanced fraud detection

• Chargeback alerts and early-warning programs

• Dispute representment support

• Industry-wide data intelligence

• Continuous monitoring 24/7

This ensures teams can focus on growth while experts manage fraud risk.

Chargebacks in 2025 are more expensive and more frequent than ever. With dispute volume projected to rise significantly, merchants must understand the full financial impact — including hidden costs that far exceed the initial fee. By improving billing clarity, strengthening fraud controls, and proactively monitoring dispute patterns, businesses can protect revenue and reduce unnecessary losses.

As the newest addition to Experian's fraud risk profile, ClearSale offers merchants the tools and global experience to prevent chargebacks and protect your bottom line. Contact us today to learn how easy it is to get started.