Chargeback surge in UK mirrors US trend

 Justt has released findings from a new study pinpointing a worrying trend in consumer chargeback behaviours impacting merchants in the United Kingdom and the United States.

The research shows that over 75% of respondents in both countries lodged at least one card payment dispute in the period from May 2022 to May 2023.

This marked a double-digit rise, compared to the previous year, and underscores a compelling call to action for merchants, as they grapple with the intricate and increasingly challenging task of transaction dispute management.

The survey also sheds light on serial chargeback behaviours on both sides of the Atlantic, defined as individuals filing 6 or more chargebacks per year.

Despite a decline in the US, the proportion of individuals frequently resorting to chargebacks remains significant, decreasing from 18% to 12% within a year.

In stark contrast, the UK has witnessed an astonishing 8-fold surge in such activities, with the frequency of consumers engaging in serial chargebacks soaring from a mere 3% to a staggering 28%.

The data suggests a distinct shift in UK consumer behaviour, becoming noticeably ‘trigger-happy’ in using chargebacks, whether justified or not, a trend previously observed predominantly in the US.

The proportion of UK consumers who have filed a travel chargeback, for instance, more than doubled to 36% over the last 12 months, while the share of British consumers who filed a gaming chargeback also more than doubled to 49%, now surpassing that of consumers in the US.

Systemic issues with order fulfilment have played a role in escalating this reliance on chargebacks among British consumers, who have reported heightened dissatisfaction stemming from widely acknowledged problems with supply chains and limitations in labour capacity.

Additionally, the 2023 survey identifies a surprising 10 percentage point growth in UK customers engaging in chargebacks for political reasons.

Aside from emphasising the importance of a robust refund policy and a customer-centric sales journey to address the friendly fraud challenge, the 2023 survey underscores the pressing need for continued consumer education.

Despite the increasing popularity of chargebacks, a substantial portion of consumers still lack awareness of the way the payment dispute process is supposed to function.

This knowledge gap presents an opportunity for merchants and payments industry stakeholders to bridge the education deficit and empower consumers to make informed decisions.

Another significant finding in the report revolves around evolving consumer attitudes toward cryptocurrency and Buy Now, Pay Later (BNPL) services.

While the growth rates of these novel payment methods have slowed due to the current economic pullback, they continue to experience stable adoption rates.

However, this success also warrants caution, as returning growth signals a potential surge in chargeback volumes.

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