Chargebacks & Disputes FAQ

What is a chargeback ratio?

A chargeback ratio (sometimes known as a chargeback-to-transaction ratio or CTR) can be calculated by taking the number of chargebacks the acquirer received for a merchant in a calendar month (say, June), and dividing that by the number of sales transactions processed by the merchant in the month prior (May). Most card brands require that the chargeback ratio be less than 1 percent; after 1 percent, merchants may be placed in a “high-risk” or “excessive chargeback” monitoring program where they incur additional fines and fees until they are able to get the chargeback ratio decreased to an acceptable percentage. If a merchant is unable to reduce their chargeback ratio, it may lose processing privileges altogether.*

 

*http://www.mastercard.com/us/wce/PDF/SP_Excessive_Chargeback_Program.pdf

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