Chargeback rate is the percentage of your total transactions that result in chargebacks. Card networks like Visa and Mastercard monitor this metric and penalise merchants who exceed their thresholds.
Chargeback rate is the percentage of your total transactions that result in chargebacks. Card networks like Visa and Mastercard monitor this metric and penalise merchants who exceed their thresholds.
Chargeback Rate = (Number of Chargebacks ÷ Total Transactions) × 100 Your chargeback rate is calculated monthly by dividing the number of chargebacks by the total number of transactions. Visa's threshold is 0.9% and Mastercard's is 1.5%. Exceeding these puts you into a monitoring programme with escalating fines, higher processing fees, and potential termination. Most healthy ecommerce stores maintain rates below 0.5%. The rate is based on when the chargeback is filed, not when the original transaction occurred, which can cause spikes from old orders.
Chargeback Rate = (Number of Chargebacks ÷ Total Transactions) × 100 In January you process 2,000 transactions and receive 12 chargebacks. Your chargeback rate is (12 ÷ 2,000) × 100 = 0.6%. This is below Visa's 0.9% threshold but worth monitoring closely.
Your chargeback rate determines whether you can continue accepting card payments at normal rates. Cross the threshold and you face monthly fines of £5,000–£25,000, mandatory remediation plans, and possible account termination. Prevention is far cheaper than dealing with a monitoring programme.
Only tracking chargeback rate monthly instead of on a rolling basis
Not realising that card networks use their own calculation method which may differ from yours
Assuming a low rate means chargebacks aren't a problem — even a few per month erode margins
StoreLyst monitors your chargeback rate in real-time and sends alerts when you're approaching card network thresholds, giving you time to take preventive action.
Learn more about Chargebacks →Keep it below 0.5% to stay well within safe territory. Visa's monitoring programme starts at 0.9%, and Mastercard's at 1.5%. Once you enter monitoring, it takes months of low rates to exit.
Visa divides the number of chargebacks received in a month by the number of transactions processed in the same month. Note: the chargebacks may relate to transactions from previous months, which can make your rate appear higher than expected.
You'll enter a monitoring programme with monthly fines, mandatory remediation plans, and increased scrutiny. Continued high rates lead to escalating fines and potential termination of your merchant account.
Stop calculating in spreadsheets. Get real-time chargeback rate tracking for your Shopify store.