While everyone knows that high chargeback rates hurt your credibility as a merchant, “high” remains vague. How many chargebacks are one too many? Merchants typically strive for a chargeback ratio of 1%, which is calculated by dividing your monthly chargeback cases and total transactions together. However, the number of disputes you get might be a bit higher.
Statistics show that merchants win around 40% fraudulent and non-fraudulent chargeback cases. Going by the universal 1% chargeback rate threshold, a business with 10,000 monthly transactions should keep their disputes under 250 and win at least 150 chargeback disputes. Otherwise, your card network or processor flags you as high-risk.
Abiding by the 1% rule may vary depending on the following institutions:
Taking fast action against disputes plays a crucial role in minimizing your chargeback rate. Always keep your sales documents organized so that you can send and access them as needed. Try storing digital and physical copies of your invoices. Also, respond to disputes within 7 to 10 days because otherwise, you might lose the case by default.
Are you having trouble qualifying for a merchant account because of your high chargeback rates? Processing Card has you covered! Read our brief introduction to applying for high-risk merchant accounts for more information.
Florence Carpenter is passionate about ensuring that the process of opening merchant accounts is as straightforward as possible. She graduated from the University of Michigan with a bachelor’s degree in Marketing.
Demystifying Level II and III Data: What It Does for Merchants
Enter you email below to receive the guide.
High-Risk Merchant Account For Credit Repair and Education
Enter you email below to receive the guide.
Understanding 3D Secure 2.0 Technology
Enter you email below to receive the guide.