Why January-March is the Danger Zone
Each year, merchants in the US, EU, and APAC experience the same pattern… Once the Christmas rush is over, the chargebacks begin. January through March becomes a stressful period because millions of customers begin returning things, requesting refunds, or disputing transactions. High return volumes cause delays, shipping networks remain crowded and many buyers have buyer’s remorse after overspending during the holidays.
Expectation-driven disputes are also increasing, particularly among mobile-first buyers who anticipate speedy delivery, real-time information and instant refunds. When those expectations are not satisfied, many customers contact their bank rather than the business.
A considerable majority of these chargebacks could have been avoided with more stringent pre-transaction checks that identified high-risk orders before acceptance. Others require post-transaction defense technologies that intercept disputes early, allowing businesses to settle problems before they become chargebacks.
What Will Really Drive Q1 Disputes in 2026
The first quarter consistently produces the most complex disputes since so many aspects collide at the same time. The most typical trigger is “Item Not Received”, as shipping networks strive to remove holiday backlogs. Even when the parcel is simply delayed, many customers choose to submit a dispute rather than wait.
Next come “Not as Described” situations, which are frequently caused by friendly fraud or missed expectations. When refunds do not arrive promptly enough due to slow or overloaded returns processing, customers may challenge transactions.
Sometimes family accounts contribute to accidental duplicate purchases, which then appear as unidentified charges. BNPL repayments will also result in a spike in regret-driven disputes from buyers who spend more than expected.
Another significant contributor is subscription renewals, particularly those related to January 1 or post-holiday trial periods. Customers typically forget about their subscription and instantly dispute the payments.
As customers seek speedy remedies, friendly fraud, whether intentional or inadvertent, grows. Some of these difficulties can be avoided before the transaction by employing fraud filters, velocity checks, or BIN/CAID checking. The rest necessitate post-transaction safeguards such as chargeback notifications, RDR, or prompt merchant-initiated refunds.
Why PSPs, PayFacs & Platforms Feel the Biggest Impact
For PSPs, PayFacs, and large payment platforms, the post-holiday surge represents a portfolio-wide risk event. A small number of high-volume merchants can push total chargeback ratios near to scheme criteria, resulting in stricter monitoring and increasing reserve pressure.
Platform support teams also encounter significant operational challenges. Q1 sees an influx of refund requests, subscription disputes, delivery concerns, and friendly fraud cases. Fragmented regulatory frameworks complicate platforms that serve merchants in numerous areas, as dispute laws and cardholder rights differ dramatically between markets.
Younger, mobile-first customers continue to shift patterns across portfolios. Many people file disputes immediately and avoid merchant help entirely, increasing early-year risk.
To stabilize portfolios, platforms require proactive pre-transaction controls, fraud filters, identity verification, behavioral analytics, and scalable post-transaction solutions such as RDR, Chargeback Alerts, and automated dispute procedures.
How the Post-Holiday Spike Differs Across Regions
The post-holiday dispute increase is a global pattern, but the underlying causes differ between the US, EU, and APAC, posing unique operational issues for PSPs, PayFacs, and platforms. Each region requires a unique combination of pre-transaction fraud controls and post-transaction dispute resolution.
United States
The United States sees the greatest increase in friendly fraud, with many customers disputing charges rather than contacting merchants. BNPL repayments have also sparked a wave of buyer’s remorse disputes. Visa’s Rapid Dispute Resolution (RDR) continues to grow, making automated post-transaction dispute prevention more critical.
Best approach
Strong device/customer recognition and pre-transaction risk scoring, combined with RDR and Chargeback Alerts.
European Union
The EU reports fewer fraud accusations but larger disputes over tight consumer rights and long-distance cross-border shipping delays. Customers frequently dispute things that arrive late or depart from expectations across markets.
Best approach
Pre-transaction clarity and SCA enforcement, along with post-transaction tools for quick issue resolution.
APAC
Note: The APAC region has different seasonal trends compared to what is usually seen in the US and EU.
The spike in APAC is driven by mobile payment usage and Christmas/New Year delivery constraints, both of which have a significant impact on “Item Not Received” claims. Further, the general up-rise in friendly fraud, for customers looking for a free product or service.
Best approach
Pre-transaction velocity checks and wallet risk controls, with real-time Alert automation.
Across all regions, controlling the Q1 post-holiday dispute wave requires a combination of pre-transaction prevention and post-transaction interception.
How Merchants & Platforms Can Reduce Q1 2026 Chargebacks
The post-holiday time is predictably difficult, but the losses need not be. Merchants and platforms that manage Q1 successfully enhance pre-transaction controls to prevent dangerous transactions and rely on post-transaction automation to resolve disputes before they become locked-in chargebacks.
Strengthen Pre-Transaction Defenses
Stopping disputes early involves enhancing fraud screening, tightening velocity checks, and utilizing device intelligence to detect mismatched identities or dangerous profiles. Clarity at checkout is also important. Clear delivery estimates, product descriptions and return policies prevent misunderstandings.
Delivery is a big Q1 pain point, thus increasing fulfillment visibility is crucial. Real-time tracking and proactive delay Alerts can assist avoid common “Item Not Received” and “Not as Described” arguments.
Maximise Post-Transaction Protection
Once a transaction has passed through checkout, merchants must rely on post-transaction chargeback protection. Automated SMS/email touchpoints that confirm orders, renewals, and delivery updates decrease misunderstanding. Faster refunds reduce escalation, while clear billing descriptions guarantee cardholders understand charges.
Post-transaction solutions such as Chargeback Alerts, RDR, and merchant-initiated resolution procedures enable platforms to intercept Friendly fraud disputes before they impact ratios.
Together, both sides create a comprehensive defense strategy that keeps dispute ratios stable throughout the Q1 rise.
The Automation Layer: Where Ethoca, Verifi & PayShield Fit In
The holiday dispute increase highlights the limitations of manual procedures. To manage Q1 chargebacks in worldwide markets, merchants and platforms now rely on an automation layer that detects fraud at the checkout and intercepts disputes as they arise.
On the post-transaction side, automation begins with Visa Rapid Dispute Resolution (RDR), which automatically refunds valid dispute types before they are charged back. For scenarios where RDR is not eligible, Ethoca and Verifi CDRN Alerts provide real-time notifications when an issuer is ready to file a dispute, allowing merchants to attempt to resolve before itis filed.
Above these technologies, PayShield’s Dispute Intelligence automates all Chargeback Alert handling and refund logic. Instead of human triage, Dispute Intelligence applies merchant-defined rules instantly, ensuring that no Alerts are missed during high-volume periods.
Automation also reinforces the pre-transaction pillar. Before authorisation, tools such as PayShield’s Transaction Risk API, 3D Secure 2.2, and behavioral risk scoring evaluate identity consistency, device reputation, and previous dispute history, lowering the likelihood of high-risk orders entering the system.
Together, these systems form an end-to-end defense layer. Prevention at the checkout, as well as automated post-purchase interception.
Why Acting in Seconds Matters
During the busy season, even minor delays might make the difference between a reimbursed Alert and a fully lodged chargeback, affecting ratios and compliance. This risk therefore involves fast decisioning at both stages of the transaction lifecycle.
Pre-transaction fraud checks and risk assessment must work in real time to prevent transactions from becoming disputes. Merchants must reply to issuer signals promptly after the transaction using technologies such as RDR, Verifi CDRN Alerts, and Ethoca Alerts before a dispute is resolved.
Only automated dispute resolution provides the speed needed to preserve portfolios during the difficult January-March period.
A Simple Q1 Checklist for 2026
As the dispute wave strikes, merchants, PSPs and PayFacs can utilize this checklist to ensure system readiness for both sides of the chargeback lifecycle.
Pre-Transaction (Stop bad transactions today)
- Update fraud screening rules, BIN risk scoring and velocity limits
- Ensure 3D Secure or risk-based authentication applies to high-risk attributes
- Improve clarity on shipping times, refund policies and subscription terms
- Verify product descriptions across all channels
- Review controls for family accounts and shared devices
Post-Transaction
- Enable Visa RDR for eligible dispute categories
- Ensure Verifi CDRN & Ethoca Alerts are active
- Automate refund logic with Dispute Intelligence for disputes subscriptions and delayed deliveries
- Add post-purchase SMS/email notifications
- Review billing descriptors for clarity
Conclusion
The period from January to March is the most unpredictable for merchants, PSPs, PayFacs and platforms worldwide. With friendly fraud on the rise, delivery issues becoming more widespread, and issuers increasing dispute responses, organizations require a strategy that handles both ends of the transaction lifecycle.
Strong pre-transaction controls prevent high-risk orders from being processed, while post-transaction automation, RDR, Chargeback Alerts, and real-time refund routing intercept disputes before they have an influence on ratios.
To secure your portfolio in the US, EU, and APAC in Q1 2026, you’ll need a system designed for speed, size, and precision.
Speak with PayShield about safeguarding your portfolio from post-holiday chargebacks.
