Chargeback Ratio

How it's calculated

The basic formula is the number of chargebacks in a month divided by the number of transactions in that month. For example, 8 chargebacks on 1,000 transactions is a 0.8% chargeback ratio. Card networks and processors may calculate it slightly differently, for example by counting this month's chargebacks against the previous month's sales.

Check yours in seconds with the chargeback ratio calculator.

Why card networks watch it

Visa and Mastercard run monitoring programs for merchants whose dispute levels are too high. Merchants in these programs can face fines, required action plans, and, if the problem continues, loss of their ability to accept cards. The exact thresholds and programs change from time to time, so check with your processor for the current rules.

Keeping your ratio low

• Describe products accurately and show prices, terms and cancellation steps clearly.
• Ship fast and share tracking numbers.
• Answer customer emails quickly and refund when it's fair.
• Watch for friendly fraud and respond to disputes with evidence.

Underwriters will usually ask for your recent chargeback history when you apply. See the approval checklist for what to prepare.