By Roenen Ben-Ami, Co-Founder and Chief Risk Officer at Justt
In 2025, Congress enacted the GENIUS Act, the first federal framework for payment stablecoins and digital asset oversight. On the same day, global crypto market value briefly topped $4 trillion, solidifying the industry’s standing in global finance.
Yet mainstream adoption has surfaced a fundamental contradiction: while crypto technology promises “irreversible” transactions, most purchase pathways still rely on traditional payment rails—where chargebacks and reversals are common. The result is a paradox where blockchain permanence meets the real-world flexibility of card-based payments, exposing exchanges and merchants to significant and rising dispute volumes.
When customers buy digital assets with credit cards, their supposedly immutable trades remain subject to reversal—often weeks or months after the fact. Rather than theory, this contradiction is now driving real risks: as adoption and volatility both spike, friendly fraud, buyer’s remorse, and opportunistic disputes are all on the rise. Crypto exchanges are facing some of the highest dispute rates in digital commerce, and the threat is growing.
The Scale of Impact
According to Mastercard, direct global chargeback costs are projected to grow from $33.79 billion in 2025 to $41.69 billion by 2028. And those figures capture only direct losses—the disputed transaction value, fees, and admin outlay. When indirect costs such as labor, fraud prevention, lost merchandise, and compliance penalties are included, analysts typically estimate the total ecosystem impact at north of $100 billion annually.
The stakes for crypto platforms are especially high. With large transaction values, rapid price swings, and a lack of conventional evidence for representment, crypto merchants often win only 30–45% of friendly fraud chargeback cases—lower than many traditional retailers that can provide shipping logs or proof of delivery. Where advanced AI-driven dispute tools and automation are implemented, enterprise win rates have demonstrably risen—sometimes reaching the 60–80% range, based on internal and industry case studies. But for much of the market, chargebacks remain a chronic and costly drag.
Five Critical Defense Strategies
Tackling this crisis requires a modern, data-driven defense. Leading exchanges and merchants are converging around these best practices:
1. AI-Driven Dynamic Representment & Argument Generation:
Sophisticated chargeback platforms now build adaptive evidence packages that respond to the unique requirements of each issuing bank and card network. By continuously A/B testing argument structures, integrating transaction pattern analysis, and self-updating as rules change, these tools have helped top merchants substantially improve win rates on complex cases—especially compared to static templates or manual approaches.
2. Pre-Dispute Alert Systems:
Networks like Ethoca and Verifi let merchants resolve flagged cases within 48–72 hours, reducing dispute ratios and providing a lifeline for at-risk accounts. However, these alerts should be used selectively: proactively refunding can preclude later recovery efforts, so merchants benefit most by applying alerts to disputes they are unlikely to win, or to lower-value transactions that pose an elevated ratio risk.
3. Merchant Descriptor Optimization:
Confusion-driven chargebacks remain common—especially when customers don’t recognize a merchant name on a statement. Clear, consistent descriptors tied directly to a known brand, paired with instant post-purchase notifications, reduce “friendly fraud” and lower operational waste for all parties.
4. Customer Education at Point of Sale:
Best-in-class platforms now deliver clear risk disclosures, educational prompts, and even cooling-off periods for large purchases. By educating buyers on volatility, irreversibility, and platform policies, merchants curb preventable disputes and reinforce long-term trust at the moment of transaction.
5. Monitoring Network and Regulatory Rule Changes:
Major rule updates from Visa (such as CE3.0), Mastercard, and regulators frequently alter timelines and evidence standards. Merchants must vigilantly track these changes and recalibrate dispute strategies accordingly—since a single misstep can sink a winnable claim or put processor relationships at risk.
Industry Transformation on the Horizon
Looking ahead, the most forward-thinking exchanges are already piloting blockchain-native refund protocols, advanced arbitration models, and decentralized dispute systems. Innovations like on-chain dispute resolution hold the promise of reconciling crypto’s permanent ledger with mainstream requirements for fairness and consumer recourse. Until those mature, success will belong to platforms able to combine real-time automation, adaptive evidence, strategic alerts, and total operational visibility.
Conclusion
For the entire digital asset industry, cracking the chargeback paradox is about more than just defending revenue—it is a prerequisite for stable, lasting trust as crypto cements its place in mainstream financial systems. In this new era, resilience, adaptability, and transparency are no longer “nice to haves”—they are the baseline for any exchange or merchant expecting to thrive.