6 Chargeback Rules Every Online Seller Should Know Before The Holiday Rush
The card networks tightened their limits in 2026. Here is what a dispute really costs, and how to keep your numbers safe.
Picture this. It’s January, and you’re running a small beauty store online. You’ve had a successful couple of months (November and December). Suddenly the disputes start rolling in. One, then six, then nineteen in a single week.
Most of them come from customers who actually received their orders. One person even posted a picture of the product on their Instagram. Your bank then takes the money back, adds a fee, and asks you to prove you’re not lying.
This is known as a chargeback. If you sell anything online, you’ll run into one at some point. As this is the start of the holiday season, I wanted to share some of what I’ve picked up on the subject. The rules quietly changed in 2026 and many sellers may not have noticed.
Do you know your chargeback ratio from last month? If you don’t, then read on.
1. Chargebacks Are Growing Faster Than Most Sellers Expect
A chargeback happens when a cardholder asks their bank to reverse a payment. The bank then takes the money from the merchant, and the merchant must provide evidence to try to fight it.
These numbers are rising rapidly. A 2025 industry study published by Mastercard, based on Datos Insights research, put global chargebacks at 261 million for 2025. It expects 324 million by 2028, a jump of 24%. In money terms, that is $33.79 billion rising to $41.69 billion.
It isn’t just a forecast. In the same study, 59% of merchants said their chargeback volume had grown by more than 10% in a single year.
Why the rise? More card-not-present transactions, more subscriptions, and simply more people realising it’s easier to dispute a charge than to contact the store.
2. Almost Half of Disputes Are Labelled as Fraud
The most surprising thing is that merchants in that study said about 45% of their chargebacks were fraudulent. Banks say it’s even higher, at 72% of disputes.
Two kinds of fraud
Third-party fraud is when someone else has stolen a person’s card details. First-party fraud is when the person using the card actually made the purchase and then disputes it. This can be down to buyer’s remorse, a family member using the card, or simply abuse of the system.
Someone buys headphones from you, uses them for three weeks, then tells the bank they didn’t make the purchase. From the bank’s perspective this looks like card theft. From your perspective you’ve lost the product, the money and the fee.
Why easy disputes mean more disputes
The study also found that in the US, when banks allow customers to dispute through an app rather than a phone call, dispute volumes went up by 30% to 40%. Whilst this is great for genuine victims, it also opens the door for everyone else.
3. Visa’s New Line in the Sand: 1.5%
This is the change I most want sellers to know about.
In June 2025 Visa decided to combine its separate fraud and dispute monitoring programs into one, called the Visa Acquirer Monitoring Program, or VAMP.
The formula is simple. Take the number of fraud reports plus the number of disputes on your online card payments in a month. Divide that by the number of settled online card transactions.
When the program was first rolled out, a merchant was flagged as “Excessive” at a ratio of 2.2%. On 1 April 2026 that line was reduced to 1.5% in the US, Canada, Europe and Asia Pacific. However, the count rule still applies, so you are only flagged at that level if you also have at least 1,500 fraud reports and disputes in the month.
Let me make that real. Say your store processes 120,000 online Visa orders a month. At 1.5%, that is 1,800 combined fraud reports and disputes, so you would be above both thresholds. The fine is $8 for every one of them.
“But I’m a small seller”
Small merchants may never hit 1,500 events, but you’re not completely safe. If your payment provider exceeds its thresholds across its entire portfolio, fines of $4 or $8 per count can trickle down to merchants whose ratio is 0.5% or higher. So your ratio matters even when you are small.
One more thing to note: disputes settled through pre-dispute tools, and fraud claims that qualify under Visa’s newer evidence rules, are left out of the ratio. We’ll get onto that shortly.
4. Mastercard Counts Differently, and the Fines Pile Up
Mastercard also has its own program, and the maths is not the same.
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A merchant enters the Excessive Chargeback Merchant level at 100 or more chargebacks in a month and a ratio of at least 1.5%. The higher tier starts at 300 chargebacks and 3%. To calculate your ratio, you divide this month’s chargebacks by last month’s sales.
That last point can cause issues. Say you had a busy December and a slow January. When you get to February you’ll still be getting chargebacks from December orders, but they are measured against January’s much smaller sales, so your ratio can spike even though nothing new went wrong.
The fines start small, at 1,000 dollars or euros in month two. If you don’t sort the problem out quickly, they climb to 100,000 a month at the first tier and 200,000 at the higher tier after 19 months. To get out, you need to be below the limits for three months in a row.
Can you see the pattern? Both networks reward the sellers who spot problems early, and punish the ones who wait.
5. You Can Fight Back, If You Kept the Right Data
In the past it has felt impossible to fight friendly fraud claims. Then, in April 2023, Visa introduced Compelling Evidence 3.0 for card-absent fraud disputes.
This makes sense. If a customer has bought from you before with no issues, using the same device or connection, it’s unlikely they’re a stranger.
To qualify, you need two earlier undisputed purchases from the same customer at your store, made between 120 and 365 days before the dispute. At least two details must match across all three orders: login ID, shipping address, IP address, or device ID. One of the two has to be the IP address or the device ID.
When Visa launched it in the UK, it estimated the rule could save retailers there about £31 million a year.
The catch
You can only use this if you stored the data. Many small stores don’t have device IDs or IP addresses saved with their orders, so when the dispute arrives the evidence simply isn’t there. This means the real work happens months before the chargeback, not after.
6. The Clock Matters More Than You Think
Most Visa disputes can be raised up to 120 days after the transaction is processed. For goods that never arrived, the window can start from the expected delivery date, up to 540 days.
This means a Black Friday sale on 27 November can come back to bite you in late March. Try to plan your cash, your stock of evidence and your team’s time accordingly.
And remember the hidden cost. Banks in the study spent between $9.08 and $10.32 just to process each dispute, and merchants wrote off 16% of their chargebacks as low-value cases not worth fighting. That money isn’t coming back.
What to Check Before the Holiday Rush
Here are the quick tips I would give any online seller this month:
- Find your Visa and Mastercard ratios for the last three months, and ask your payment provider how they calculate them.
- Check that your billing name on card statements matches your store name. People will dispute what they don’t recognise.
- Save IP address, device ID, login ID and shipping address with every order.
- Send clear order and shipping emails with tracking.
- Make refunds and cancellations easy. Refunds cost less than chargebacks.
- Remind subscription customers before each renewal.
- Ask about pre-dispute alerts. This means you can refund before a case becomes a chargeback.
- Set aside time each week to review new disputes, not once a month.
The Takeaway: Treat Disputes Like a Number You Manage
A chargeback is not just a lost sale. It is a signal, and in 2026 the card networks are watching that signal more closely than ever, with lower limits and real fines.
Going back to our skincare store, this time the owner checks her dispute numbers every Monday morning, right after her sales report. She stores device data for every order, has an easy refund button, and her billing name finally matches her brand. Her next January looks very different.
The good news is that most of this is in your control. Communicate clearly, keep good records and refund quickly.
So, before your biggest selling week of the year, would you have the evidence to hand if a flurry of disputes came through this January?
