Number of chargebacks in a month ÷ Number of transactions in the same month = Chargeback rate Let’s say a business processes 1,000 transactions and experiences 50 chargebacks in a month.
Businesses can divide their total chargebacks per month by their number of transactions in that month. And in card-not-present (CNP) transactions, the business bears the financial impacts of repaying the customer and faces fees from the issuing bank.Ī chargeback rate is a calculation of a business’s number of chargebacks against its sales volume. In most cases, the bank sides with the customer, refunds the charge, and processes a chargeback against the merchant. When a customer sees an unfamiliar charge on their credit card statement, they may call their bank to dispute the charge.
Then we’ll look at chargeback fraud consequences and fraud monitoring programs, best practices for chargeback prevention, and chargeback solutions for merchants.Ī chargeback is the reversal of a credit card charge by a customer’s bank or payment processor, and it’s usually the result of a customer dispute.
So let’s explore what a chargeback is, the types of fraud that lead to chargebacks, and the direct and hidden costs of chargebacks.
