Chargeback Ratio

The chargeback ratio is the percentage of total chargebacks to total credit card transactions expressed as a percentage.

For Example:
A business would have a chargeback ratio of 1%, if they had one hundred total credit card authorizations and one chargeback.

A merchant service provider's tolerance for chargebacks is directly related to the overall risk factor associate with the account as judged by the underwriters and the security department for the provider.

Overall, most providers become wary if a merchant's chargeback ratio is 1% or higher. Of course, a high risk merchant account will have a higher tolerance for chargebacks.