Jodi Lifschitz
Head of Content
Table of contents

Forget the checkbook or your stack of cash—just use your smartphone instead. With a quick tap of your device, you’ve made a purchase. It’s fast, simple, and secure (and you don’t need to carry loose coins in your pocket).

As consumers, we all enjoy that type of payment convenience. But mobile money methods do cause some problems. As always, fraudsters are ready to exploit any new technology. Or consider how new systems create extra complexity (get ready for things like “near field communication”). Plus, everyone makes mistakes or errors as we learn how to use new tools and services.

Of course, for merchants, these issues can result in chargebacks. Let's explore mobile payment chargebacks and how you can prepare for the new era of mobile paying.

The Rise of Mobile Payments

Within the past decade, mobile payments benefited from the rise in digital-first commerce. Services like Venmo and PayPal showed consumers the convenience of digital transfers. Contactless payment technology with credit cards paved the way for mobile wallets. And the creation of digital wallets by tech giants Apple and Google showed everyone that mobile payments can transact safely through a device.

In turn, the popularity of mobile payments skyrocketed. The share of the U.S. Smartphone owners who use proximity mobile payment jumped from 29% in 2019 to 43.2%. Digital wallets now hold third place (12%) in market share as of 2023, behind credit and debit cards. And the number of mobile payment users is expected to surpass 2 billion by 2028.

Those numbers speak to real-world advantages. Mobile payments are fast. They offer consumer convenience. They are accessible (to anyone with a smartphone). They are hygienic (i.e.contactless). And they are secured with advanced security features (biometrics, tokenization). Consumers are happy to use smartphones for contactless interactions.

Chargebacks: A Growing Concern for Online Businesses

Just as digital transformation drove the rise in mobile payments, it also contributed to another growing issue: chargebacks.

Chargebacks are transaction reversals. They occur when a consumer refutes a charge on their credit card bill. Everyone who uses a card deserves the right to dispute a charge, as it lets you protect yourself from fraud and other errors.

But a chargeback incurs penalties for merchants. And not all consumers dispute charges in good faith. Plus, customers make mistakes that lead to cases of friendly fraud.

These problems only expand with the shift to digital services. Customers can now refute a credit card charge with a button push. Criminals can leverage digital systems to commit fraud. And the wide range of in-app purchases, online shopping, and electronic transfers causes confusion. Each of these instances leads to more disputes.

Linking Mobile Payments to Chargeback Trends

The particular nature of mobile payments also contributes to more chargebacks, for several reasons:

  • New types of fraud: Mobile payments present novel areas of attack. Why steal a credit card when you can hack into a payment app or digital wallet? This is known as Account Takeover Fraud and according to a FTC report, scams have risen 49% from 2021, and claiming consumers loses of almost $8.8 billion.

Or, think of how much easier it is to commit fraud without a physical card (and all its security features). As of 2023, some experts say card-not-present fraud accounts for around 70% of all card-related fraud.

Or consider how easy it is to trick someone into sending you money. A fake email can request fast cash via Venmo or CashApp. This is known as Authorized Push Payment (APP) fraud, and experts expect APP fraud to double in the next three years.

Of course, the more fraud, the more chargebacks.

  • New types of payment methods: Mobile payments cover several kinds of transactions. You must manage things like in-app payments, e-transfers (peer-to-peer), e-commerce shopping, digital wallets, mobile point of sale (mPOS), etc. This wide range of options makes things complex.

And that complexity leads to technical errors. Devices can fail. Systems can have bugs. The network can go down. A customer may be charged twice. Or you may post the wrong numbers.

Consumers will dispute merchant errors, leading to more chargebacks.  

  • New Types of Consumer Behavior: Mobile payments can affect how your customers shop. Paying with a device already in your hand is far easier than fishing in a purse to find a card. Impulse buying can increase or lead to less careful spending. Simply tap and go.

That hastiness leads to problems. We have all forgotten the pack of gum we tapped while buying gas. Or maybe someone lets a friend buy something with their phone. A consumer might not realize they paid for an app, a subscription, or tokens on a cellphone game.

Friendly fraud can flourish under such conditions, and that drives more chargebacks.

Strategies for Managing Chargebacks in the Mobile Payment Era

So what can you do to protect yourself? Here are some best practices for limiting mobile payment chargebacks:

  • Invest in robust customer service: Good customer service is your first line of defense. Service reps can do many things like resolve system errors, issue refunds, offer in-store credit, change subscription billing, etc. These actions fix mobile payment issues—before they turn into a chargeback.
  • Secure all payment systems: Use a payment provider with high-quality security tools to limit mobile payment fraud. Find tools that include security features such as encryption, tokenization, and multi-factor authentication. In addition, use good verification practices, like biometrics and requiring CVV codes.
  • Provide payment clarity: Mobile payments speed up the payment process, so address the possible confusion with clear and direct communication. That means writing simple product descriptions, terms of sale, and refund policies. Make sure all billing descriptors are obvious. And offer detailed records (receipts, delivery confirmation, shipment tracking, order lists). An informed customer feels supported, helping reduce instances that lead to disputes.  
  • Invest in chargeback mitigation tools: Use services and solutions that create a complete chargeback defense strategy. That can include monitoring solutions, data analysis, and fraud prevention. For example, Chargeflow offers automated dispute management, real-time analytics, and representment services. Receive pre and post-sale support that manages all aspects of the dispute cycle. Such tools are well-equipped to limit mobile payment chargebacks.


Mobile payments are here to stay. Simply put, they offer helpful benefits, from convenience, to speed, to accessibility. It is a preferred payment method for many consumers and businesses.

But, mobile payments also create new purchase conditions. Digital wallets and e-transfers present new forms of risk. And that can lead to fraud and chargebacks. Businesses must be proactive and prepare strategies that mitigate chargeback risks as mobile payment usage grows.

Want to know how you can protect your business? Contact Chargeflow to see how our solution can help you.


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Average Dispute Amount
# Disputes Per Month
# Disputes Per Month
Time Spent Per Dispute
Time Spent Per Dispute
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