Turning the tide on friendly fraud as Asia’s payments surge

Ultimately, the issue at stake is not just about reducing losses - it is about sustaining the trust that fuels e-commerce.

Asia Pacific is at the epicentre of a digital payments revolution. The region’s e-commerce and mobile transactions are growing at an unprecedented pace, fuelled by rapid digitisation, the rise of new digital platforms, and a surge in mobile-first consumers. 

As banks and fintechs across the region race to deliver seamless, secure experiences, the banking app has become the new control tower for managing spending, subscriptions, and everyday transactions.

This transformation is not just about convenience. It’s about empowering consumers and businesses to transact with confidence. 

However, as we celebrate this progress, we must also confront a hidden cost that threatens to undermine trust in the digital economy: the rise of “friendly fraud.”

The unintended consequence of convenience
Friendly fraud, despite its innocuous name, is a growing challenge for merchants, issuers, and consumers alike. It occurs when legitimate transactions are disputed by cardholders - often out of confusion, forgetfulness, or misunderstanding, rather than malicious intent. 

In today’s fast-paced digital environment, it’s easy for a consumer to forget a subscription renewal, misinterpret a billing descriptor, or fail to recognise a cross-border transaction.

The impact is significant. Mastercard’s latest report projects that global chargeback volumes will rise by 24% between 2025 and 2028, reaching 324 million transactions annually. 

Nearly half of these will be flagged as fraudulent, and merchants could face $42b in costs globally by 2028 - with Asia Pacific’s share estimated at $6b. For small businesses, just a handful of disputes each month can mean the difference between profit and loss.

Beyond the financial toll, friendly fraud diverts staff from serving customers, erodes trust across the ecosystem, and risks making it harder for genuine victims of fraud to obtain redress.

A region of opportunity and complexity
Asia Pacific's size and diversity presents both opportunities and challenges to businesses operating here. Mature markets like Australia and Japan benefit from rigorous regulations and established consumer habits, whilst fast-digitising economies in Southeast Asia contend with uneven adoption rates and fragmented rules. 

Cross-border trade adds further complexity, as a startup in Manila may face disputes simply because its billing descriptor is unfamiliar to a customer in another country. Yet, it is precisely this diversity that makes Asia Pacific a laboratory for innovation. The region’s businesses and financial institutions are uniquely positioned to pioneer new approaches to dispute resolution and fraud prevention.

Innovation is making a difference
The good news is that the industry is not standing still. In fact, we are seeing massive reductions in chargebacks where issuers have adopted advanced security measures like tokenisation, biometric authentication, and passkeys. Australia, for example, is already experiencing the benefits of these technologies, with significant declines in fraudulent disputes. 

Tokenisation replaces sensitive card details with unique digital tokens, making transactions more secure and less susceptible to misuse. Biometric authentication - using fingerprints or facial recognition, adds another layer of protection, ensuring that only authorised users can complete transactions. Passkeys, which use device-based authentication, further reduce the risk of account takeover and unauthorized disputes.

These innovations are not just technical upgrades - they are fundamental shifts in how we build trust in digital commerce.

Designing for trust and transparency
Addressing friendly fraud requires more than better systems. It demands better design. 

Clearer transaction labelling, intuitive subscription management, and proactive reminders can help consumers recognise legitimate payments and reduce accidental disputes. When consumers feel informed and in control, they are less likely to dispute transactions - and more likely to remain loyal customers.

Solutions like consumer clarity and smart subscriptions are helping merchants and issuers in the US and Europe provide greater transparency and control to consumers - allowing them to view detailed transaction information and manage recurring payments directly within their banking apps. These tools are already making a measurable impact in reducing unnecessary disputes and reinforcing trust. 

Collaboration across the payments ecosystem is also essential. Standardised digital receipts, delivery confirmations, and subscription logs enable issuers and merchants to resolve disputes more efficiently and fairly. AI and machine learning, meanwhile, are automating evidence exchange, identifying patterns of abuse, and enabling faster, more accurate dispute resolution.

The path forward: Trust as the currency of growth
Ultimately, the issue at stake is not just about reducing losses - it is about sustaining the trust that fuels e-commerce. Trust is what enables a consumer in Bangkok to book a hotel in Sydney with confidence, or a manufacturer in Ho Chi Minh City to subscribe to a logistics platform in Singapore.

As commerce becomes increasingly agentic - driven by intelligent systems acting on behalf of users - the need for clear dispute management frameworks, proven authentication, identification and verification systems as well as transparent controls and tokens becomes even more critical. Indeed, these innovations are all critical components for enabling the deployment of consent driven, autonomous systems that can act on behalf of users and transform the digital commerce experience.

By embracing innovation, focusing on both security and user experience, as well as fostering collaboration across the whole system, Asia Pacific can continue to lead the world in digital commerce, ensuring that growth is inclusive, efficient, and sustainable.