In terms of what to aim for, a chargeback rate of 1% is a healthy goal. That means aiming for just one chargeback for every 100 transactions. Maintaining a rate of 1% or lower should be sufficient to keep most card issuers happy and avoid retailers having to pay penalty fees or excessive fees for each transaction.
The industry standard chargeback ratio threshold is under 1% (i.e. less than 1 chargeback per 100 payments). Generally, receiving a chargeback demand during your first month selling in Wix Payments is not a good indication. Neither is maintaining a high chargeback ratio after three months of business.
Tier One: Excessive Chargeback Merchant (ECM)
Threshold: minimum 100 chargebacks in a calendar month and a monthly CTR equal to or in excess of 1.50% (150 basis points) ▪ Fines assessed beginning in second consecutive month based on MasterCard's Fine Assessment Structure table, referenced below.
Merchants win chargeback disputes approximately 20-30% of the time, though this success rate can vary widely based on factors such as the industry, the quality of the evidence presented, and the specific reason for the chargeback.
That is: the number of chargebacks in a given month divided by the number of transactions in the same period or current month.
Retail E-commerce: Rates typically hover around 0.6%-0.9%. Subscription Services: Chargebacks in this category often exceed 1% due to recurring billing disputes. Digital Goods: High rates of fraud and unauthorized transactions push chargeback rates higher, often nearing 1.5%.
A 1% chargeback rate is the industry-standard maximum, which equates to one chargeback per 100 successful orders. And that 1% is usually the absolute maximum allowed for direct merchant accounts.
Chargebacks negatively impact a merchant's reputation.
Even if you win a dispute, a chargeback reflects poorly on your company. If multiple claims are filed against you, you will be enrolled in a monitoring program, which becomes even more costly.
Net Chargeback ratio - Total chargeback initiated on acquirer banks against their total transactions Volume for the month.
Generally, lenders like to see a back-end ratio that does not exceed 36%. However, some lenders make exceptions for ratios of up to 50% for borrowers with good credit. Some lenders consider only use this ratio when approving mortgages, while others use it in conjunction with the front-end ratio.
Win rate is a calculation that compares the number of successful chargeback responses against the number of chargebacks fought. Win rate is a commonly referenced key performance indicator (KPI) for chargeback management. In-house teams with manual processes usually achieve a 20-40% win rate.
What Is a Good Return on Sales? A good return on sales is 5 to 20 percent, depending on industry statistics. That means your company is producing favorable operating profitability of at least 5 to 20% on its net revenues. Some industries have a higher cost structure than other industries.
Although benchmarks vary from company to company, most ecommerce businesses have 25-30% percent returning customers. This is backed up by Alex Schultz, VP of Growth at Facebook who says, “If you can get 20-30% of customers coming back every month and making a purchase from your store, you should do pretty well”.
The Visa Dispute Monitoring Program has two levels: Standard: Merchant has at least 100 chargebacks and a chargeback ratio of at least 0.9%. High risk/excessive: Merchant has at least 1,000 chargebacks and a chargeback ratio of at least 1.8%.
Stripe doesn't set a specific limit on the number of chargebacks you can have. However, most card networks set a chargeback threshold of 1% of transactions (or less), which makes maintaining a low chargeback rate very important.
On average, merchants win approximately 32 out of every 100 chargebacks they decide to contest. This means that if you're a merchant dealing with 100 chargebacks, you can typically expect to successfully recover funds from around 32 of those disputes.
High-risk industries, particularly those where purchases are made without physical cards—like online retail, digital goods, and travel services—often experience elevated chargeback rates.
An excessive chargeback merchant receives 100 or more chargebacks each month and has a chargeback-to-transaction ratio of 1.5% or above for two consecutive months. Mastercard assesses fees to ECMs, and the merchant must create an action plan to reduce their risk exposure.
For their “Excessive Chargeback Merchant” designation, the standard is at least 100 chargebacks per month and a ratio of at least 1.5% for two consecutive months. Learn more about chargeback rate limits. Acquirers are ultimately liable for every merchant with whom they do business.
Having a ratio that exceeds 1.5% will likely put you on the Excessive Chargeback Program. With Visa, meanwhile, a ratio of 0.9% or higher will be placed on the standard program, and a ratio of 1.8% or more will put you in the excessive program.
Chargeback fees are charged by the business's “acquirer,” which is the financial institution working on behalf of the merchant. The merchant will have an account with this acquirer, which will accept payments for products and services.
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).
Paying the chargeback fee to the card processor. Even if the merchant files a chargeback dispute and the issuer decides not to grant the customer a chargeback, the merchant is still obligated to pay this fee.
Their decisions are based on your service, product, past history, and industry. As a loose idea, chargeback fees are normally between $20-$50 per case, but it's not out of the ordinary for them to be higher than that range.