Chargebacks911 has released the findings of its 2024 Cardholder Dispute Index. The study compiles insights from more than 4,000 consumers engaged in chargeback processes with issuing banks in the past year.
Released in partnership with TSG (The Strawhecker Group), a leading analytics and consulting firm in the payments industry. The 2024 Cardholder Dispute Index sheds light on crucial trends, behaviours, and statistics that redefine the landscape of cardholder disputes and payment preferences among buyers. The Index is designed to offer retailers, financial institutions, and other stakeholders a look at the current state of chargebacks from the consumer’s perspective. Based on surveys commissioned by Chargebacks911 in partnership with TSG this study provides a snapshot of how cardholders view the entire chargeback process, from initial dispute through arbitration.
According to survey respondents, US consumers on average own 5.5 payment cards. This includes bank credit cards, retail (store) cards, and debit cards. Responses also indicate that individuals with an annual income above $75,000 tend to possess more credit/debit cards than the average consumer.
Digital eWallets growth
Breaking the numbers down by gender shows that, on average, male respondents have 1.4 cards more than females. While credit cards are still far and away the preferred payment method for online shopping, alternatives are quickly gaining popularity. Digital eWallets are showing the most growth potential, especially considering they are being used both online and in-store.
But, while new payment methods are making inroads, nearly 80% of respondents report that they still favour payment cards for eCommerce transactions. “For years, we’ve been witnessing a significant rise in chargeback fraud and misuse within the world of payments. This was up to 75% of all chargebacks being filed for illegitimate reasons,” said Chargebacks911 Director of PR Justin Clements. “In this report, we get a glimpse into the mind of the consumer to see what is prompting invalid disputes. As an industry, we are developing solutions that address the root causes of friendly fraud and not just the symptoms.”
According to Chargebacks911, key revelations from the report include:
Millennials & Gen-Z embrace digital banking
A notable shift in banking preferences is apparent among individuals under 35, who overwhelmingly favour managing finances via mobile apps. Millennials and Gen-Z exhibit a threefold preference for mobile payments over traditional credit card transactions. This trend signifies an impending industry shift towards mobile-centric financial services as younger demographics mature and exert significant market influence.
Insights into cardholder disputes
For the first time, the 2024 Cardholder Dispute Index delves into the primary reasons behind cardholder disputes. Factors such as transaction recognition difficulties and convoluted return processes emerge as the top reasons compelling consumers to initiate chargebacks. The report offers invaluable insights for merchants seeking to mitigate disputes.
Disputes vs. refunds
While 72% of cardholders view chargebacks as a legitimate alternative to merchant refunds, a substantial portion initiates chargebacks without prior merchant contact. The report explores the underlying motivations driving this behaviour, illuminating aspects influencing cardholders’ preference for chargebacks over direct refund requests.
Gradual growth in mobile wallet adoption
Despite credit and debit cards remaining prevalent, the report indicates a growing preference for alternative payment methods. Approximately one in five consumers opt for alternate payment modes. This includes mobile wallet apps such as Apple Pay and Samsung Pay gaining traction, especially among younger demographics.
Americans disputed $83bn in credit card charges in 2023
The study highlights a staggering $83.569 billion worth of disputed charges in 2023. This revealed an average of 5.7 chargebacks per cardholder, each valued at $76. This stark figure prompts contemplation about the prevalence of fraud, merchant abuse, and evolving consumer behaviour impacting the chargeback process.
Enterprise Times: What this means for businesses
This is quite an extensive report that documents the popularity of subscription services. It also notes the increasing use of free trial offers by merchants and consumers alike. As a result, the industry is seeing an increase in first-party fraud disputes, which has fuelled the need for change within the dispute process. In many cases, it seems increasingly difficult to cancel a subscription by following the merchant process. So cardholders commonly initiate disputes with their issuing bank.
As a result, retailers and brands need to instantly detect and block risky transactions. They need the ability to shut off fraudulent currency movement. Furthermore, proactively prevent alternative payment abuse to protect their business down to every transaction. Chargebacks remain a challenge to manage since they can impact a brand’s reputation. Enterprises need to incorporate application that helps identify this issue, so that they can take the appropriate actions.
