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Chargebacks & Risk

Chargeback Ratio

The percentage of a merchant's transactions that become chargebacks, typically measured monthly. Card networks set thresholds — commonly around 1% — above which a merchant faces monitoring programs, higher costs, or termination.

Because the ratio is a moving average of recent activity, a healthy denominator (steady sales) and disciplined prevention both help keep it under threshold as you grow.

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Related terms

Chargebacks & Risk

Chargeback

A forced reversal of a card payment initiated by the cardholder's bank, usually after a dispute over fraud, a product issue, or a billing complaint. Chargebacks return funds to the customer and often add a fee for the merchant.

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Chargebacks & Risk

Chargeback Monitoring Program

A card-network program that places merchants exceeding chargeback thresholds under heightened scrutiny, with fees and remediation requirements. Staying out of these programs — or exiting quickly — is essential to keeping an account healthy.

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Chargebacks & Risk

Fraud Ratio

The percentage of transactions flagged as fraudulent, tracked separately from the chargeback ratio. High fraud ratios trigger their own network programs, so fraud tools that block bad transactions protect both metrics at once.

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