Did you know that the average chargeback rate is 0.60%?  This means that six out of every 1,000 transactions result in a chargeback. 

For merchants, dealing with tons of chargeback disputes can be frustrating, especially during peak seasons. Not only is the process complex and time-consuming, but it can also be financially crippling. 

So, how can you prevent chargebacks during seasonal peaks in 2025? As a merchant, read on to learn how.

Potential Chargebacks During Seasonal Peaks: What To Expect in 2025

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It's crucial to understand the psychology of chargebacks and how it impacts both consumers and merchants.

In today's business landscape, customers have become highly critical and selective about purchasing products or services. As a merchant, you're responsible for improving the customer experience and ensuring customer satisfaction, such as preventing chargeback disputes.

But first things first, what is a chargeback? It's exactly what it sounds like—a charge put back into the customer's account. It's a payment amount returned to your customer's debit or credit card after they dispute the transaction made. 

This happens due to a handful of reasons, such as the following:

• Non-delivery dispute—Getting charged for something a customer didn't receive

• Duplicate charge error—Customers are accidentally being billed twice for the same purchase 

• Tech glitch charge—Unexpected charges due to a technical issue

• Card fraud—Fraudulent transactions from stolen card details

Chargeback reasons can either be intentional or unintentional. They could be due to a lack of employee foresight or deliberate attempts to commit fraud. 

According to Fit Small Business, fraudulent activity makes up almost 35% of all chargebacks, followed by non-delivered items (26%) and incorrect products (15%), as shown below:

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As a merchant, you can start the chargeback process after the customer successfully disputes the charge. However, the cardholder's issuing bank can also initiate this process. 

As per federal law, you usually incur a fee from the card issuer that provides the chargeback within 60 days of the billing date. So, it's best to avoid chargeback cases at all costs!

Read below to know what to expect about potential chargeback cases next year to prepare.

What to Expect in 2025—and Beyond

Chargebacks usually happen during peak seasons, which vary from one business to another. When you get a high volume of customer order requests, your team might be unable to handle each purchase accurately and efficiently. This can result in incorrect charges—hence the disputes.

Often, fraudulent activities skyrocket during peak seasons, such as Black Friday, Cyber Monday, and the holidays. That's when scammers strike when the iron is hot, making bogus purchases online using other people's cards. That's when cardholders ask for chargeback disputes from merchants.

But what can you expect about the potential chargebacks in 2025? The statistics below paint a picture of what could happen this year—and beyond:

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• The chargeback volume could hit $337 million by 2026—a 42% increase from the volume in 2023. 

• Global card-not-present (CNP) fraud losses might be worth $28.1 —a 40% increase from $20 billion in 2023.

• CNP fraud was projected to comprise nearly a third-quarter (74%) of payment card fraud last year.

• Chargebacks cost merchants from $15 to $100.

• Three-quarters of chargebacks (75%) are most likely friendly fraud (often non-delivery or damaged merchandise as reasons).

The facts and figures above show that chargeback cases will continue to be prevalent in the next few years. This begs the question: 

‍As a merchant, how can you prevent chargebacks during peak seasons in 2025? 

Keep reading to learn how to prevent these in the next section.

Key Steps for Preventing Chargebacks During Seasonal Peaks

As cited, the average chargeback rate is 0.60%, meaning six out of every 1,000 transactions result in a chargeback. However, this rate is estimated across different industries, from education and training to health and wellness to financial services and retail. 

Take a sneak peek of the chargeback rate by business type:

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Handling chargeback disputes is one thing; preventing them from happening is another. 

Prevention is a critical part of your chargeback management process as a merchant. However, it requires proper planning and critical execution, especially during seasonal peaks. Often, merchants are only prepared to handle disputes when the damage has already been done.

That said, here's how to reduce your chargeback rate and prevent possible cases this year:

1. Plan for the rush

Proper planning and enough preparation are critical to business success, which essentially applies to chargeback management. As a merchant, start by predicting the volume of your orders during a seasonal peek and plan how to manage all these. On a specific note, here's how:

• Volume forecasting: Record and review order requests every month. Based on patterns, predict the volume for the upcoming months. This is all the more necessary if you anticipate high demand during a peak season.

• Peak planning: Plan how to meet the demands during a seasonal peak. Allocate enough human and material resources to handle all these. That way, you can manage orders accurately, efficiently, and seamlessly, avoiding chargebacks altogether.

Gary Hemming, Owner & Finance Director at ABC Finance, recommends accurate forecasting and robust planning for chargeback management beforehand. "Managing chargebacks starts with smart forecasting and solid prep—plan for the rush!"

Hemming suggests, "Look at your past sales data to predict order volumes and ensure you're fully staffed and stocked to handle the rush. When you're prepared, you can keep things running smoothly and avoid unnecessary disputes."

2. Step up fraud protection

As cited, fraudulent activity is the leading cause of all chargebacks. As a merchant, you're responsible for securing your business and protecting your customers from fraud. That said, here are viable preventative measures for fraud protection:

• Secured payment gateways: While you focus on offering various payment options to enhance customer experience, secure your systems at all costs. Ensure third parties cannot infiltrate your payment portals. 

• Multi-factor authentication (MFA): It's better to enable MFA when customers make purchase transactions using their cards. For instance, OTPs should be required in addition to card information like CVV.

• AI-powered fraud detection: Leverage artificial intelligence to detect potential fraud so you can take action early on. Fret not, as AI tools are readily available in the market!

• Cybersecurity measures: Protect your networks and systems from cyberattacks, such as password, phishing, and man-in-the-middle (MITM) attacks. Customers should be protected, then you're sorry!

• Consumer education: What better way to combat fraud than to educate your customers? You can do this by providing secure instructions during checkout or sending them regular consumer protection updates.

Kathryn MacDonell, CEO at Trilby Misso Lawyers, stresses the importance of fraud protection for chargeback prevention. "Fraud is the root cause of most chargebacks, so staying ahead with strong protections is a must." 

MacDonell advises, "Use secure payment gateways, enable multi-factor authentication, and invest in AI tools to spot suspicious activity early. When prioritizing security, you protect your customers and keep disputes off your plate."

3. Communicate everything clearly

Effective communication is almost always the key to business success. For one, promote honest and transparent conversations between your employees and customers. Likewise, provide clear instructions even when customers process their orders online. 

With solid communication, you'll be surprised how you won't lose chargeback disputes and even avoid them altogether. Here's what to discuss:

• Product purchase: Be detailed and specific about the goods or items—their types, sizes, colors, and other key features. Are customers clear about all these?

• Order process: Educate the customers about the order process. How long does it take to fulfill their orders? What payment details do they need to provide? How do you keep them secure?

• Delivery TAT: Set proper expectations by informing your customers about the turnaround time (TAT). How long does it take for the goods or items to arrive at their doorsteps?

• Return policies: Create comprehensive policies, but keep them simple, clear, and concise for the customers' comprehension. If possible, consult legal experts to avoid loopholes.

• Potential delays: As a CSR, contact your customers to inform them about possible delays due to unforeseen circumstances like natural calamities. That way, they won't just dispute the orders and ask for chargebacks.

Learn from Max Tang, CMO at GEEKOM. He believes clear communication between sellers and buyers helps avoid chargeback disputes. "Clear communication is your best defense against chargebacks.” 

Tang says, "Make sure customers understand what they're buying, how the order process works, and when to expect delivery. Set clear expectations, especially about returns or delays—it goes a long way in building trust and avoiding disputes."

4. Double-check orders

Your front office team (CSRs) must be well-trained to process orders and ensure 100% accuracy. Also, establish a back-office team dedicated to examining orders for any inconsistencies. Ultimately, reviewing orders can go a long way toward winning chargeback disputes and even preventing them altogether. 

Below are processing areas where you must promote 100% accuracy of all orders:

• Order fulfillment: Ensure all order details are accurate, complete, and up-to-date, whether this function is handled by a front- or back-office team.

• Inventory: Have a dedicated back-office team responsible for regulating the stock levels. They must track all goods or items from order fulfillment to picking and packing to product delivery.

• Packing: Your warehouse team should be keen on details when selecting items and packaging orders. They should have a checklist to avoid mishandling.

• Delivery: Work with reliable couriers, whether shipping or trucking service providers. They must ensure the products are delivered on time and inform customers of possible delays.

Take it from Jeffrey Zhou, CEO and Founder of Fig Loans. Their company ensures 100% accuracy and transparency of loan offers to potential clients to avoid incorrect chargebacks for hired services. On the flip side, he also has his fair share of getting incorrect products or experiencing delivery delays. 

Zhou explains, "Accuracy is everything when it comes to preventing chargebacks. Double-check every step—from order details and inventory to packing and delivery. A little extra attention ensures customers get exactly what they ordered, on time, and keeps disputes off the table."

5. Stay on top of customer service

It’s no secret that customer service is the heart and soul of a business. CSRs are at the frontline dealing with customers, whether processing orders or handling chargeback disputes. 

It's best to provide white-label support for customer satisfaction (CSAT) and business support. In fact, CSAT is the most important KPI in business.

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When it comes to chargeback prevention, here's what you can do for your customer service:

• Train your employees. Orient them on how to process orders seamlessly and accept payments accurately. In particular, let them understand ACH payments, disputes, and chargebacks. Staying informed can prevent chargebacks.

• Provide utmost support. It's also crucial to support your front- and back-office teams responsible for processing, tracking, packing, and delivering orders. Equip them with tools and technologies and streamline their processes to make their lives easier.

• Empower them with technology. There's no denying the power of technology in business. Leverage modern tools for your chargeback prevention, such as AI for fraud detection, automation for order processing, and data analytics for sales forecasting.

• Promote customer-centric service: The customer is and will always be your most important stakeholder in business. Focus on delivering excellent customer experience and ensuring customer satisfaction. That way, you won't fall prey to chargeback disputes.

• Streamline dispute process: As a merchant leader, smoothen your processes for the customer's convenience, whether for order processing, inventory management, or product delivery. This can make a difference in your business—including preventing chargeback disputes!

Final Thoughts on Chargeback Prevention

Chargeback occurrence continues to be prevalent across different industries. It can be due to fraudulent transactions (cyberattacks) or friendly fraud (non-delivery or damaged products). These cases call for businesses to focus on chargeback management in 2025—Prevention will always be better than cure! 

As a merchant, follow the crucial chargeback prevention steps above. What better way to avoid these cases than to plan beforehand, secure payment, and review orders? Likewise, communicate with customers clearly and optimize your customer support. With all these, you can eliminate—or at least reduce–chargeback cases during peak seasons this year!

Do you need robust chargeback preventative measures? Chargeflow offers an automated app for chargeback management to help you avoid and handle disputes. Sign up now to get started with us for free!