How European merchants can reduce chargebacks and protect revenue in 2026

Chargebacks remain one of the most persistent risks in European ecommerce. Every dispute costs more than the transaction itself, eating into margins through lost revenue, fees, and operational strain. For merchants, the real risk is not only the financial loss but also the reputational impact and the potential for penalties if chargeback ratios rise too high.

In 2026, European chargeback dynamics are being reshaped by regulation, consumer protection, and new payment methods. Merchants need to understand the rules, identify the risks, and apply practical strategies to minimize disputes. This article explores the key drivers of chargebacks in Europe, the rules that govern them, and how merchants can protect their revenue.

Understanding chargebacks in Europe

A chargeback occurs when a cardholder disputes a transaction with their bank or card issuer. The bank reverses the payment, and the merchant must either provide compelling evidence to contest it or absorb the loss.

Chargebacks differ from refunds in two ways:

• Refunds are initiated by the merchant as part of customer service.
• Chargebacks are initiated by the issuing bank after a dispute.

Card scheme rules

Visa, Mastercard, and American Express each define their own chargeback codes and timelines. These rules apply across Europe, but implementation may differ depending on local acquiring banks. Merchants that operate across borders must stay aware of multiple sets of requirements.

PSD2’s role

The revised Payment Services Directive introduced Strong Customer Authentication (SCA), designed to reduce fraud-related disputes. While SCA helps prevent unauthorized transactions, it has not eliminated chargebacks. Merchants must still prove compliance with SCA exemptions during disputes.

Chargeback rates in Europe

On average, ecommerce chargeback rates in Europe remain below 1%, but certain verticals (such as travel, digital goods, and marketplaces) regularly exceed this threshold. Card networks monitor ratios closely, and merchants that cross tolerance levels face fines or higher processing fees.

Data from 50 payment and merchant statistics shaping Europe in 2025 shows that fraud-related disputes now account for a growing share of chargebacks, underscoring the need for better prevention tools.

Key risks driving chargebacks

Fraudulent transactions

Fraud remains the most common driver. Two categories dominate:

• Friendly fraud: When a customer makes a legitimate purchase but later disputes it, often claiming they did not authorize the transaction.
• Account takeover: When stolen credentials are used to complete transactions without the customer’s consent.

Customer dissatisfaction

Disputes also arise when customers claim goods were not delivered, arrived damaged, or did not match descriptions. Poor communication or unclear refund policies often push customers toward banks instead of merchants.

Processing errors

Duplicate charges, incorrect transaction amounts, and settlement mistakes also lead to disputes. Even small operational errors create costly chargebacks.

Regional differences

Chargeback risks vary by payment method and country:

• SEPA Direct Debit: Customers can request a refund within eight weeks of a debit. This makes disputes easier for consumers and riskier for merchants.
• Wallets and APMs: Dispute rules differ widely, often offering buyers more protection than traditional card rails.
  

For a closer look at these payment preferences, see our guide on top payment methods in Europe.

European chargeback rules and compliance requirements

Merchants face overlapping rules when it comes to chargebacks.

PSD2 and SCA compliance

Merchants must prove they followed SCA requirements or that an exemption applied. If they cannot, issuers often side with the cardholder.

SEPA Direct Debit refund rights

In the eurozone, SEPA gives customers the right to request a no-questions-asked refund within eight weeks. Beyond that, unauthorized debits can be disputed for up to 13 months.

GDPR considerations

Dispute resolution requires handling sensitive personal and financial data. Merchants must ensure compliance with GDPR when collecting, processing, and submitting evidence.

Country-level enforcement

While card scheme rules are global, European regulators and local courts play a role in disputes. For example, Germany’s consumer protection agencies may pressure merchants with high complaint volumes, while the UK’s Financial Ombudsman can intervene in disputes.

For a deeper dive into how European compliance overlaps with payments, see our guide on embedded payments compliance in Europe.

Strategies to reduce chargebacks

Merchants can lower dispute rates and protect revenue with practical measures tailored to Europe’s regulatory and consumer environment:

1. Strengthen authentication: Apply SCA correctly on initial transactions and use exemptions responsibly for recurring or low-value payments. This ensures compliance and reduces fraud-driven disputes.
   
2. Set clear refund and cancellation policies: Transparent policies reduce the chance that customers go directly to their bank. Easy-to-access refund options also improve trust.
   
3. Use proactive communication: Send real-time notifications on billing dates, shipping updates, and renewals. Customers who feel informed are less likely to file chargebacks.
   
4. Adopt tokenization and secure storage: Tokenization protects card data and minimizes risk of misuse. It also supports account updater services that reduce disputes linked to expired cards.
   
5. Automate alerts and monitoring: Early alerts from card networks allow merchants to resolve issues before they escalate into formal chargebacks.
   

For more insights into how regional habits shape dispute trends, see our report on digital wallets in Europe.

How orchestration helps manage chargebacks

Chargebacks become harder to manage when merchants rely on multiple acquirers or PSPs. Payment orchestration provides the tools to bring dispute management under one roof:

• Centralized reporting: Collect dispute and chargeback data from all providers in one dashboard.
• Routing flexibility: Direct high-risk transactions through acquirers with stronger fraud defenses or better win rates in disputes.
• Unified evidence management: Orchestration platforms consolidate transaction records, making it easier to submit compelling evidence.
• Third-party fraud tools: Easy integration of external fraud detection services strengthens prevention.

This orchestration advantage mirrors the broader benefits outlined in our guide on payment orchestration vs PSP in Europe.

Roadmap for merchants

To prepare for 2026, European merchants should:

1. Map chargeback exposure: Understand which markets, methods, and products drive the most disputes.
2. Train staff: Ensure customer service and risk teams understand local chargeback rules and evidence requirements.
3. Integrate orchestration: Adopt orchestration to centralize fraud prevention, evidence gathering, and dispute resolution.
4. Balance risk and conversion: Stronger controls reduce fraud but can impact approval rates. Use orchestration to fine-tune the balance.
5. Review compliance regularly: Regulations like PSD3 will continue to evolve. Merchants must adapt quickly to stay compliant.
   

More context on regulatory shifts and consumer expectations is available in our report on European retail payment trends in 2025.

FAQ

What causes most chargebacks in Europe?

Fraudulent transactions, friendly fraud, and customer dissatisfaction remain the top causes.

Are chargeback rules the same across all EU countries?

No. While card scheme rules are consistent, local enforcement and refund rights, especially with SEPA Direct Debit, vary by country.

How does PSD2 affect chargebacks?

PSD2 introduced Strong Customer Authentication, which reduces unauthorized fraud. But merchants must apply exemptions correctly or risk declines and disputes.

Can merchants fight chargebacks successfully?

Yes, but success depends on having clear evidence, centralized reporting, and strong internal processes.

Does orchestration help reduce chargeback costs?

Yes. Orchestration centralizes data, simplifies dispute handling, and improves routing strategies that reduce dispute frequency.

Chargebacks are costly, but European merchants can reduce their impact by strengthening compliance, improving communication, and using technology to manage disputes more effectively.

Orchestration provides the structure to prevent, manage, and resolve chargebacks across multiple markets and providers. It reduces operational complexity while protecting revenue.

Contact Gr4vy to simplify chargeback management and protect your business in 2026.