MasterCard charges an issuer reimbursement fee and violation assessment to the acquiring bank of an Excessive Chargeback Merchant. First, the issuer reimbursement fee is calculated by multiplying the total number of chargebacks above 150 basis points by $25. To determine the number of chargebacks above the threshold 150 basis points, subtract 1.5 percent of the previous month’s transactions from the number of the current-month chargebacks.*
Example (using figures from the previous FAQ above):
1.5 percent of June’s transactions (98,000) = 1,470 (98,000 X 0.015)
1,500-1,470 (total July chargebacks – 1.5% of previous month’s transactions) = 30
30 X $25 = $750
The issuer reimbursement fee is $750.
To calculate the violation assessment, multiply the issuer reimbursement fee by the chargeback threshold ratio (in basis points), then divide by 100.
$750 X 153 (CTR basis points) = 114,750
114,750 / 100 = 1,147.50
The violation assessment is $1,147.50.