Mastercard and Worldpay Partner to Prevent Merchant Chargebacks

Mastercard and Worldpay are teaming to help merchants settle transaction disputes faster and reduce chargebacks.

Chargebacks — refund requests sparked by customers disputing transactions — are a growing issue, Mastercard said in a Tuesday (March 26) press release, with industry-wide chargeback volumes expected to reach 337 million by 2026, up 42% from 2023 levels.

“With ecommerce thriving, we’re working to make transactions as safe and as seamless as possible for all parties,” Johan Gerber, executive vice president for cyber and intelligence at Mastercard, said in the release.

“This partnership with Worldpay extends our powerful technology to even more merchants around the world, reducing fraud. By working together, we will advance our shared goal of building trust and powering the global digital economy.”

With the partnership, Worldpay will offer Mastercard’s Ethoca Alerts to its 1 million merchants around the world, providing “an early warning system” that helps stop a dispute from becoming a chargeback and cut back on potential financial losses due to fraud.

Ethoca Alerts works across all payment brands and offers insights that merchants can use to stop the fulfillment of goods and services. Merchants will not need to change their existing infrastructure or processes to take part in the alerts, the release said.

“Chargebacks have long been a thorny issue for merchants,” PYMNTS wrote recently. “And as transactions become increasingly digitized, chargebacks have in turn become more prevalent.”

They not only represent a loss of revenue but can also incur additional fees and damage relationships with payment processors. The rise of eCommerce has seen an uptick in chargebacks, making it crucial for merchants to possess effective tools for their prevention and management.

That’s why network-led initiatives are so important for offering merchants a standardized approach to defend against post-transaction fraud disputes and prevent chargebacks.

“Being able to handle chargebacks preventatively has a huge ROI [return on investment],” Robert Painter, director of chargeback management at Kount, an Equifax company, told PYMNTS. “It means no chargeback, no refund, and no case to go down and chase.”

Meanwhile, recent research by PYMNTS into buy now, pay later (BNPL) plans and other installment payment offerings finds that chargebacks are a pain point for merchants that offer these sort of solutions.

“Half of surveyed merchants reported that general-purpose card installment plans led to increased chargebacks, directly impacting their costs,” PYMNTS wrote last month.

“Similarly, other split-payment alternatives, including merchant or store card plans and BNPL options, also contributed to additional chargebacks, albeit less prominently, with rates of 20% and 13%, respectively.”