Chargeback Ratio

The Chargeback Ratio is an essential metric within the payment processing industry. It quantifies the proportion of chargebacks a merchant receives relative to their total number of transactions over a specific time frame.

Typically expressed as a percentage, the chargeback ratio is calculated by dividing the total number of chargebacks by the total number of transactions and then multiplying by 100. Payment processors, acquirers, and card networks closely monitor the chargeback ratio.

If the chargeback ratio becomes excessively high, it may indicate that the merchant poses an increased risk of fraud or customer dissatisfaction. Consequently, it can lead to elevated processing fees, stricter operational requirements, or in severe cases, termination of the merchant’s account.