What are carding and chargebacks?
Carding is a form of payment card fraud in which criminals use stolen credit or debit card information (card number, CVV, expiration date) to make unauthorized purchases. This is especially common in online retail, where transactions occur card-not-present (CNP), meaning the card is not physically present. When the legitimate cardholder discovers such a transaction, they contact the issuing bank to dispute the charge. The bank initiates a chargeback — a refund process in which the money is returned to the customer and the retailer bears the loss.Chargeback is intended to protect consumers from errors, defective goods, or fraud, but in the case of carding, it becomes a tool that shifts financial liability to the merchant. According to data, approximately 80% of chargebacks in e-commerce are related to fraud, including carding and "friendly fraud," when a customer disputes a legitimate purchase. This results in significant financial losses for retailers, who not only lose revenue but also face additional expenses. For educational purposes, it's important to understand that these losses aren't limited to a direct monetary value — they have a multiplier effect, impacting the entire business ecosystem.
Direct financial losses
Direct losses are the immediate costs a retailer incurs immediately after a chargeback. They include:- Transaction refund: The retailer is obligated to refund the full purchase price (including tax and shipping). The average chargeback amount in 2025 is estimated at $76–$169, depending on the industry. If the item has already been shipped (which often happens with carding), the retailer loses both the item and the money.
- Payment system and bank fees: Each chargeback is subject to a fixed fee from the processor (e.g., Stripe, PayPal) ranging from $15 to $100. Additionally, if the chargeback rate exceeds a threshold (0.9% for Visa or 1% for Mastercard), the retailer is subject to monitoring programs. Fines can reach $50 per chargeback (Visa) or $1,000–$100,000 per month (Mastercard). For high-risk merchants, such as those in e-commerce, fines are doubled.
- Fraud Losses: Global losses from CNP fraud (the primary carding channel) are projected to reach $28.1 billion in 2025, growing by 40% by 2026. In the US, merchants lose $4.61 for every $1 fraudulent transaction — a 37% increase from 2020.
In total, direct losses from chargebacks in global e-commerce are estimated at $33.79 billion in 2025, with a forecast to grow to $41.69 billion by 2028 (a 23% increase).
Indirect financial losses
Indirect losses are hidden costs that accumulate over time and often exceed direct costs. They include:- Operational costs: Investigating each chargeback requires 20-30 hours of staff time (managers, lawyers, customer support). Mastercard estimates operational costs at $15-$70 per dispute. General multiplier: for every $1 lost to fraud, the retailer spends $2.40-$4.61 in related expenses.
- Price increases and profit losses: 32% of retailers raise prices to compensate for losses, leading to reduced competitiveness and customer churn. Overall, chargebacks consume up to 1.8% of e-commerce revenue, while fraud prevention consumes up to 10% of revenue.
- Reputational and regulatory risks: High levels of chargebacks can lead to account suspension with the processor, loss of partnerships, or even lawsuits. Furthermore, retailers lose customer loyalty: 61% of chargebacks in 2025 are attributed to friendly fraud, which undermines trust.
- Additional effects: False declines (rejection of legitimate transactions due to suspected fraud) cost merchants $442 billion annually — 17 times more than direct losses from fraud.
Key Statistics and Trends (2025)
For clarity, here's a table with key data on chargeback losses associated with carding and fraud. The data is based on 2025 reports and forecasts.| Indicator | Meaning in 2025 | Forecast/Trend |
|---|---|---|
| Global losses from chargebacks in e-commerce | $33.79 billion | Growth to $41.69 billion by 2028 (+23%) |
| Losses from CNP fraud (carding) globally | $28.1 billion (by 2026) | +40% by 2023 |
| Loss multiplier per $1 fraud (US) | $4.61 | +37% with 2020 |
| The volume of chargebacks globally | ~260–300 million transactions | Growth to 324 million by 2028 (+24%) |
| Fraudulent chargebacks | 80% (of which 61–75% is friendly fraud) | First-party fraud increased by 36% |
| Average chargeback fee | $15–$100 + fines up to $100,000 | Depends on the network (Visa/Mastercard) |
| Merchant losses from chargebacks (USA) | $11–$15.3 billion | +46% with 2019 |
| Chargeback rate в e-commerce | 0.6–1% (vs. 0.5% offline) | +8% by 2024 |
| Total losses from fraud in e-commerce | $48–$100 billion | 42% in North America |
Trends: Chargebacks will grow in 2025 due to digitalization, AI-based fraud, and BNPL (buy now, pay later), where disputes increased by 17%. Friendly fraud now leads the way (36% of all fraud), overtaking traditional carding. The retail sector (physical goods) accounts for 55% of chargebacks, with a 222% increase in Q1 2024 compared to 2023.
How Retailers Can Minimize Losses: An Educational Aspect
For educational purposes, it's important not only to understand losses but also prevention strategies. Retailers can reduce the risks of carding and chargebacks by:- Implement anti-fraud systems: Use AI to monitor transactions (e.g., IP analysis, device fingerprinting). 3D Secure 2.0 reduces chargebacks by 70–80% through additional verification.
- Improving the customer experience: Clear product descriptions, fast shipping, and a simple return policy reduce friendly fraud. 75% of chargebacks can be prevented if the customer contacts the seller first.
- Processor collaboration: Partnerships with Visa/Mastercard for real-time alerts and dispute automation. Merchants win 45% of disputes on average, but with AI, this figure rises to 80%.
- Staff training: Regular training on fraud detection. Avoid false declines, which are more costly than fraud.
- Legal measures: In case of systematic friendly fraud – blacklisting of clients or legal action.
Ultimately, investments in prevention pay off: for every $1 spent on anti-fraud, retailers save $3–5. Understanding these mechanisms helps businesses not only survive but also thrive in the digital commerce era.