Chargeback Ratio

Chargeback Ratio represents the proportion of chargebacks a merchant receives relative to the total number of transactions conducted. Typically calculated on a monthly basis, this ratio is a critical metric for evaluating a merchant’s transaction quality and fraud management practices.

Card networks and acquirers closely monitor this ratio, imposing penalties or additional scrutiny on merchants whose chargeback ratios exceed acceptable thresholds. A high chargeback ratio can indicate problematic business practices or inadequate fraud prevention measures, potentially leading to increased processing fees, stricter transaction scrutiny, or, in severe cases, the termination of merchant accounts.