How is the required MasterCard chargeback threshold ratio calculated?
The chargeback threshold ratio (CTR) is calculated by dividing a merchant’s total number of first chargebacks for a particular month with the previous month’s total number of sales transactions. The monthly chargeback threshold ratio (CTR) is not to exceed 100 basis points (which may also be shown as 1% or 0.01).
1,500 (July chargebacks) / 98,000 (June transactions) = 0.0153 or 153 basis points.
Note: MasterCard’s chargeback ratio thresholds can vary based on geographic location of the acquiring bank. MasterCard expects the acquiring bank to monitor and report its merchants’ chargeback threshold ratios and take action if they exceed the determined level.