Every merchant should understand what is chargeback ratio and how it can affect their business.
Chargeback ratio is a chargeback-to-transaction calculation.
Both Visa and Mastercard calculate the ratio the same way but using different numbers.
For Visa number of chargebacks from the current month is divided by the number of transactions from the current month.
For Mastercard it’s the number of chargebacks from the current month divided by the number of transactions from the previous month.
It's important for merchant to control the ratio below 1% in order to avoid fines and bad reputation. If merchants violate previous warnings they may be blacklisted to the MATCH list.
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