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Banks processing up to 200k chargebacks each month

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Banks processing up to 200k chargebacks each month

Cash, money, burning, coins

Chargebacks aren’t just a growing problem for business leaders, with banks bogged down processing up to 200,000 of such claims every month, an industry insider has claimed.

Speaking at Kount’s Payments & Fraud 360 World Tour in Sydney recently, Brett Small of payment network Ethoca said that “the big banks here [in Australia] are seeing somewhere between 50[,000] to 200,000 chargebacks per month”.

Mr Small, who noted that he previously worked in the fraud detection sector for several banks, also said that card fraud is much more prevalent than businesses realise, stating that 58 per cent of fraud that is detected by a card issuer is unknown to the merchant.


The Australian Bankers Association (ABA) did not respond to a request for confirmation of these figures, while the Financial Ombudsman Service (FOS), which overseas complaints about financial products include disputed chargebacks, told My Business that it does not keep data on chargebacks.

However, Philip Field of the FOS last year told My Business that many people, from business owners to the banks and card providers themselves, have likely become complacent in their checks and are now over-reliant on detection technologies.

“Credit cards are a no more guaranteed method of payment than any other method of payment – back in the old days, cheques could bounce; you can still get fake cash; and credit cards carry a risk too,” he said.

Ethoca’s Mr Small also noted that, particularly for digital goods merchants, friendly fraud is by far the most common cause for chargebacks – as much as 60 per cent to 90 per cent of cases.



He said these tend to fall into four basic categories: descriptor confusion, where the buyer is confused about what they are actually buying; household, such as kids using their parent’s credit card to secretly make purchases; buyer’s remorse; and gaming the system.

Yet he stressed that fraud currently only accounts for 9.4 per cent of declined transactions against consumers. By far the largest reason for declined purchases is insufficient funds, accounting for almost a quarter of all such cases.


Banks processing up to 200k chargebacks each month
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