Cardholders trust banks over merchants on disputes

By Vriti Gothi

Cardholders’ shifting payment behaviours are raising red flags for merchants, as more consumers favour bank-led channels for resolving disputes, often bypassing merchants altogether.

A recent consumer study covering over 1,200 cardholders across the U.S. and U.K. highlights a striking shift in dispute trends, with convenience, digital-first habits, and trust in banks driving record levels of chargeback misuse. Some industry estimates suggest that up to three-quarters of all chargebacks may be avoidable, costing U.S. merchants alone more than $170 billion every year.

Monica Eaton, CEO of Chargebacks911, described the changing landscape: “Today’s customers expect dispute resolution to be instant, easy, and fully controlled by their bank. For merchants, this means rethinking how they engage with customers after a transaction to prevent unnecessary disputes and safeguard revenues.”

The study uncovered several critical behaviours reshaping the post-transaction experience:

• Preference for banks: Over 75% of surveyed consumers prefer to resolve transaction issues through their bank instead of contacting the merchant, with nearly half skipping any outreach to the seller altogether.

• Banks win on trust: 89% trust their bank to resolve disputes fairly, while 88% say a positive resolution makes them more likely to file disputes again in the future.

• Digital habits intensify risk: Consumers under 30 are twice as likely to use mobile wallets as those over 60, and lead usage of buy now, pay later (BNPL) and free trial offers—categories prone to billing misunderstandings and disputes.

• Billing confusion persists: 40% of cardholders admit they don’t recognise purchases on their statements due to unclear or incomplete billing descriptors, a frequent trigger for “friendly fraud.”

• An opening for merchants: While the majority prefer banks, many still attempt to resolve issues directly with merchants. Clearer policies, faster refunds and better communication can bridge this gap and help businesses retain control.

The findings suggest that as consumers grow accustomed to fast, bank-mediated refunds, merchants risk losing influence over the post-transaction relationship if they fail to provide equally frictionless solutions.

For businesses, the message is clear: match the speed and clarity of banks’ dispute processes or risk rising costs and eroding loyalty. Proactive measures such as clearer billing descriptors, simple refund pathways and open communication can help curb misuse, prevent disputes and strengthen customer trust.

As digital payment behaviours continue to evolve, industry experts warn that merchants who adapt quickly will be best placed to protect their margins and stay relevant in an increasingly bank-centric dispute landscape.