Your chargeback ratio determines how your business operates. Merchants only need to surpass a 1.5% chargeback ratio to be labeled as high risk and excessive.
Chargebacks can hit for a number of reasons. They can be the fault of fraud, website set-up, customer service, or industry type.
Why Chargeback Ratio is Important
The chargeback ratio (chargeback-to-transaction ratio) is the metric that reflects your business’s chargeback frequency. A high chargeback ratio can lead to losing payment processing and accounts.
Many businesses and industries are inherently high risk. This means that even if merchants did their best at lowering chargebacks, their business type can make it difficult to keep a low chargeback ratio.
Exceeding chargeback thresholds can eventually lead to businesses closing down.
How is My Chargeback Ratio Calculated
Your chargeback ratio is the number of total chargebacks incurred one month against the number of transactions the previous month.
You can divide the number of chargebacks by the number of transactions. If you incurred 100 chargebacks in February and had 10,000 total sales in January, then you divide 100 by 10,000. This results in 0.01 which is translated to 1%.
Keep in mind that each card network you work with has its own chargeback ratio for you. Instead of one chargeback ratio, you have multiple – one with each card brand.
How to Manage My Chargeback Ratio
Managing your chargeback ratio is an ongoing responsibility. Consultation, tools, and other changes can make maintaining a good chargeback ratio easy and stress-free. Some of RevitPay’s favorite tools and tips are lauded for their effectiveness in lowering ratios for high risk merchants.
Chargeback Alerts
Unresolved disputes become chargebacks because merchants are unaware of them. Many customers go to their banks instead of merchants if they have an issue. Businesses may not know about these problems until a dispute appears. Even worse, they may not notice these issues until they get their next chargeback report.
Chargeback alerts notify merchants of incoming disputes. This gives businesses a few days to resolve the dispute with the customer and issuing bank.
Fraud Prevention
Fraudsters continue to evolve their tactics and target many eCommerce businesses. The loss of revenue and the stress of fraud-proofing your website may only go so far until the next hacker comes.
Payment gateways and processors can connect merchants with technology that identifies fraud. This includes authentication processes such as 3D secure.
High Risk Payment Processing
While other payment processors are wary of high risk merchants, Revitpay offers processing and a hand in lowering chargeback ratios. Our tools and experience allow you to focus on making your business thrive. Contact us today to see how Revitpay can help with your chargeback ratio.