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What is a chargeback rate?

charge - back rate
noun

The chargeback rate is a metric that indicates the proportion between the overall number of transactions and the total number of chargebacks that a vendor has received.

How Does a Chargeback Rate Work?

The calculation of the chargeback rate follows a specific formula: it divides the number of open chargebacks by the total number of completed transactions from the preceding month. Includes only completed transactions for payment methods that offer chargeback capabilities, such as credit cards and PayPal. deally, a favorable chargeback rate should be below 1%. Most payment processors deem any increase beyond this threshold to be unacceptably high and may result in the termination of merchant accounts.