Takeaways from Ethoca’s 2025 State of Chargebacks Report

The 2025 State of Chargebacks report by Ethoca (you can access it here – it does require you to register) is a must-read for anyone dealing with chargebacks. With global chargeback volume projected to reach 324 million transactions by 2028, at a 7% CAGR, the report underscores how essential it is for merchants to adapt their strategies to meet both the operational and customer experience demands of this environment. With great consumer freedom to buy online and with a growing share of CNP transactions, come higher chargebacks volumes. This means more complexity for merchants, and the need to completely re-think how they address chargebacks. 

Below are my key takeaways from the report, along with what merchants should be adding to their internal operations, roadmaps and toolsets. 

1. Chargebacks are increasing—and it isn’t always about fraud

The chargeback problem isn’t going away—it’s becoming bigger. Fraud isn’t driving it either. Instead, it’s tied to post-transaction issues, higher customer expectations, and manual processes that fail.

Chargebacks have historically been viewed through the lens of fraud prevention, but the report highlights how post-transaction issues are contributing significantly to dispute volume. These include confusion over billing descriptors, unmet delivery expectations, and friction in refund processes. Additionally, customer loyalty is influenced by how easy it is to deal with chargebacks – requiring financial institutions to change attitudes too.

What to consider:

• Review the customer journey post-purchase, particularly in how support and refund requests are handled.
  
• Evaluate whether your operational systems can scale as dispute volumes grow. Dealing with less than 100% of potential disputes can no longer be an option.
  
• Understand that managing chargebacks is now a multi-functional responsibility involving customer service, operations, compliance, and finance.

2. Invest in both customer experience and process improvement

According to the report, digital purchases account for 63% of all merchant transactions, and the digitalization of dispute channels (especially via banking apps) is making it easier for customers to initiate chargebacks.

What to consider:

• Improve transparency around transactions (e.g., through detailed digital receipts and recognizable billing descriptors). This is especially important in certain industries where there are several players in the value chain – e.g. travel.
  
• Evaluate how purchase data can be made available through consumer-facing tools to prevent unnecessary disputes.
  
• Understand that adding merchant data to representments and preparing them is a laborious process – and use the tools to automate this.

3. Manual chargeback management is resource-intensive and incomplete

Many merchants are not disputing all chargebacks, particularly low-value ones, due to the cost of labor and complexity involved. The report shows that 16% of chargebacks are written off as low-dollar disputes, and some merchants only dispute a fraction of their total volume.

What to consider:

• Assess whether internal teams have the capacity to manage the full scope of chargebacks effectively.
  
• Consider automation as a way to improve consistency, reduce operational cost, and increase dispute coverage.
  
• Review dispute performance by transaction value to identify areas of potential revenue recovery that may currently be neglected.
• Consider solutions that are success based, thereby reducing the fixed cost of disputes, instead opting for a variable cost, which would allow you to dispute more.
  

4. Fraud is no longer about stolen cards. First-party fraud is significant and growing 

The report estimates that 45% of chargebacks are fraud-related, with roughly equal parts first-party (23%) and third-party (22%). First-party fraud—also called “friendly fraud”—is especially prevalent in sectors such as digital goods, travel, and subscription services. This means that customers are the ones trying to game the system and merchants need to adjust.

What to consider:

• If you’re not dealing with post-transaction chargebacks, you need to begin.
• Invest in tools that support enhanced evidence collection for first-party fraud (e.g., device data, usage logs, IP match, delivery confirmation). When using a chargeback automation tool, go for a tool that can automate as much of the process as possible. At Justt we see a direct correlation between data enrichment and win rates – it’s worth leaning in to.
  
• Collaborate with issuers on initiatives that reduce transaction confusion, such as enriched transaction details in banking apps.

5. Are you in travel, digital goods, subscription or retail? Pay more attention if you are

The report states what I’ve been seeing at Justt – some industries are more exposed than others, and need to change how they deal with chargebacks.

According to the report, the industries most affected by chargebacks—particularly those impacted by first-party fraud—include:

• Digital Goods
  
• Travel & Hospitality
  
• Retail and eCommerce
  
• Subscription Services
  

Each of these sectors has characteristics that contribute to higher dispute rates, such as indirect bookings (in travel), or recurring billing models (in subscriptions).

What to consider:

• Benchmark your chargeback rates and resolution success against others in your vertical.
  
• Analyze whether the nature of your products or services leads to misunderstanding, policy disputes, or delivery issues that result in chargebacks.
  
• Implement vertical-specific strategies to address the most common dispute reasons in your industry. We’ve seen specific strategies go a long way, such as data enrichment and even specific ways to handle disputes by industry 

6. Lower value disputes matter but many avoid dealing with them

Ethoca’s report lists the following average chargeback values:

• Travel & Hospitality: $120
  
• Retail/eCommerce: $88
  
• Digital Goods: $65
  

It also notes that lower dollar disputes are often left uncontested, because of costs or lack of labor (the report doesn’t say why). In terms of disputes lower dollar write offs range between 11-19%, depending on industry. This represents a substantial cumulative loss, and you should evaluate your strategy there and its underlying reasons.

What to consider:

• Include dispute value as part of your chargeback response prioritization, but explore other ways to process disputes and cost – like using success-based automation.
  
• Avoid defaulting to write-offs without a data-driven rationale.
  
• Where possible, automate dispute responses to ensure smaller-value transactions aren’t excluded.
  

7. Chargeback challenges—and strategies—vary by business size

While chargebacks are a universal challenge, how merchants experience and respond to them often depends on business size. The Ethoca report presents distinct patterns between midmarket firms, enterprises, and large enterprises in terms of volume, operational approach, and effectiveness.

Key differences from the report:

• Large enterprises are more likely to manage chargebacks in-house and tend to dispute a greater percentage of them.
  
  • 11% of large enterprises represent more than 50% of chargebacks.
    
  • 52% win more than half of their representment cases.
• Midmarket companies tend to outsource more frequently and are less likely to pursue a high share of disputes.
  
  • 14% represent 25–29% of chargebacks.
    
  • Only 36% win more than 50% of their representments.

Both midmarket and enterprises are set to benefit from automation and success-based solutions that allow for broader coverage without expanding headcount. In both cases, win rates should and can be optimized through the use of automation, avoiding mindless repetitive work.

Regardless of size, there is evidence that representing a higher share of chargebacks is associated with higher win rates.

What to consider:

• Review your current chargeback representation rate and outcomes.
  
• Assess whether your team size and tools are aligned with your dispute volume.
  
• Consider tiered strategies: automate low-value or high-frequency cases, and reserve manual effort for complex, high-value disputes.
  

8. Issuers and merchants often interpret disputes differently

There is a notable divergence in how issuers and merchants view the causes of chargebacks. Issuers classify 72% of chargebacks as fraud-related, while merchants report a significantly lower number at 45%. This gap suggests a mismatch in how disputes are framed and defended.

What to consider:

• Incorporate issuer behavior into your chargeback strategy. Different banks may respond better to different evidence formats or levels of context.
  
• Move beyond standardized dispute templates by tailoring responses based on issuer-specific patterns and reason codes.
  
• Monitor chargeback outcomes to identify opportunities for refining representments and increasing win rates.