Your chargeback ratio: how it’s measured and how to keep it low

What the ratio is

Networks watch the share of a merchant’s transactions that become disputes. The exact definition, which month’s disputes count against which month’s transactions and whether counts or dollars are used, varies by network and program, and the programs change over time.

Treat the numbers on this page as a guide. Programs, thresholds and fees are set by the networks and your processor, and change. Check your processor’s current terms.

A simple working version for your own tracking: disputes opened this month divided by transactions this month. It is a good early-warning number even if the network’s own calculation differs slightly.

Why subscription brands feel it

Subscriptions create many small recurring transactions and a steady trickle of “I forgot” disputes. A few lost 13.2 cases a month can push a brand with modest volume toward the threshold, and every dispute counts whether you win it or not.

Calculate yours

• Count the disputes opened in the month.
• Count the transactions in the same month.
• Divide. A store with 4,000 transactions and 40 disputes is at 1.0%.
• Track it every month and by reason, so you see which kind is moving it.

Drop your disputes export into the free chargeback audit and it calculates the ratio and shows where the disputes come from.

Bring it down

• Refund quickly when a customer writes in unhappy. A refund before a dispute is filed keeps it off the ratio. See refund or fight.
• Use a recognizable descriptor.
• Send renewal reminders with one-click cancel.
• Use dispute-alert services where your processor offers them, which let you refund before a dispute becomes a chargeback.
• Win the disputes you can. Winning one doesn’t remove it from the count at every network, so prevention matters more than recovery.

Questions

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