New Report Shows UK Consumers Are Causing a Surge in Chargebacks

July 12, 2023

There’s a new worrying trend in the behavior of consumers when it comes to chargebacks – the study by Jusst shows 75% of respondents both in the UK and the US lodged at least one card payment dispute between May 2022 and May 2023. Compared to the previous year, this signified a two digit-rise.

…this underscores a compelling call to action for merchants, as they grapple with the intricate and increasingly challenging task of transaction dispute management.

The study also covers “serial” chargeback behaviors where individuals lodged 6 or more chargebacks per year both in the US and UK.

Even though chargebacks reduced from 18% to 12% in a year in the US, individuals resorting to chargebacks are still a significant issue. However, in the UK, the frequency in which individuals engaged in these serial chargebacks increased from 3% to a whopping 28%.

This increase means consumers are getting comfortable with using chargebacks, whether the need for it is legitimate or not. This trend once happened in the US, too.

The two industries most affected by this chargeback increase in the UK has been travel, which increased to 36% over the last year, and gaming, which increased to 49% in the same amount of time. These numbers surpass 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.

…In addition, it was stated by the report that 10% of UK consumers have attributed their chargeback behavior to political reasons.

Educating Consumers

This survey shows how hugely important it is to educate consumers, as a substancial portion of them have no idea how the payment dispute process functions. Many of them think chargebacks have no victims, or that the banks “eat” the loss – which couldn’t be further from the truth.

Another finding revolves around Buy Now, Pay Later (BNPL) and cryptocurrency services. The study suggests that even though these services have slowed down due to the economic pullback, the adoption rates are stable, and caution is warranted as a result, as surely chargebacks could surge with these services as well.

The report highlights how incredibly important it is for merchants to choose a provider that can protect them from chargebacks as well.

Want to learn more? Check out Payments Cards and Mobile’s full write-up here.

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