As e-commerce transactions continue to grow, merchants are facing a corresponding rise in chargebacks and the costly problem of friendly fraud. Research from Mercator Advisory Group highlights how consumer dispute activity is becoming increasingly automated, while advances in dispute management technology are helping merchants identify and respond to fraudulent claims more efficiently. With friendly fraud projected to reach $50 billion, businesses are under growing pressure to improve dispute management processes, evaluate outsourcing options, and adopt solutions that can help protect revenue while maintaining positive customer relationships.
The growth of online shopping has created new challenges for merchants as consumer disputes become more frequent and increasingly complex to manage. Friendly fraud, in particular, remains difficult to detect because the transaction often appears legitimate at the time of purchase. As a result, businesses are investing in automated dispute management tools, fraud detection technologies, and specialized service providers to reduce losses and improve resolution outcomes. With e-commerce volumes continuing to expand, merchants that proactively monitor dispute activity and strengthen their prevention strategies will be better positioned to protect revenue and maintain customer trust.
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Data for today’s episode is provided by Mercator Advisory Group’s report – Merchant Chargebacks Are on the Rise Due to Friendly Fraud.”
Six trends in chargebacks and friendly fraud:
- The chargeback resolution process has become highly automated
- Demand for chargeback services continues to grow in lock step with eCommerce growth
- Friendly fraud detection is particularly hard to spot, but detection companies are closing in
- Chargeback services overlap to cover process management, merchant representment, and intermediation
- M&A activity will increase for chargeback solutions with customer bases and proprietary tech
- Merchants will increasingly assess their chargeback rates to determine if they need to outsource chargebacks
- Mercator Advisory Group estimates friendly fraud will reach $50 billion in 2020
About this report
Merchants find themselves wrestling with the chargeback process, which is triggered when consumers dispute a purchase transaction, mostly on e-commerce sales. Increasingly, friendly fraud has also become a direct cause of merchant chargebacks. This report delves into chargeback reasons and implications as well as vendors of chargeback services that have emerged to provide solutions for merchants.
A new research report from Mercator Advisory Group, Merchant Chargebacks Are on the Rise Due to Friendly Fraud assesses the challenges and preventive solutions for this increasing problem that affects merchants of all sizes across vertical markets.
“Merchants are incurring a major pain point dealing with consumer-disputed sales transactions that can lead to chargebacks. This can mean merchants lose not only the sales revenue but also the merchandise and related overhead costs as well,” commented Raymond Pucci, Director, Merchant Services at Mercator Advisory Group, the author of this report.
This report is 14 pages long and has 2 exhibits.
Companies mentioned in this report: ACI Worldwide, American Express, Authorize.Net, BlueSnap, Braintree, CardinalCommerce, Chargeback, Chargebacks911, Chargeback Gurus, Chargehound, CyberSource, Discover, Ethoca, Federal Reserve Board, Lexis-Nexis, Mastercard, Midigator, PayPal, Stripe, Verifi, and Visa.
