Most shop owners can quote their conversion rate to one decimal place. Yet they have no idea what their chargeback rate is. The second number decides whether the first one matters. A shop that loses its ability to accept cards has nothing left to convert.
The good news is that it is simple to measure and mostly within your control. The
bad news is that nobody tells you it is rising until it has been rising for
months.
How the number is calculated
The ratio is disputes divided by transactions, usually over a calendar month. The detail that trips people up is which month each side comes from. A dispute raised in March may belong to a January transaction. Depending on the method used, it counts against January’s volume or March’s. Different providers report it differently,
so the first thing to establish is which version you are looking at.
For a normal online shop, a rate below a few tenths of a percent is unremarkable.
Rising past half a percent gets attention, and approaching one percent starts
conversations you would rather not have. These are not legal limits but practical
thresholds at which acquirers begin asking questions.
What we report, and how often, is part of the
merchant account setup rather than an optional
extra.
What pushes it up in ordinary shops
Delivery problems. The single biggest driver. A parcel may arrive late, damaged or not at all. It turns into a dispute when support is slow to answer. Shops with a seasonal delivery crunch see their ratio move with it.
An unrecognisable statement line. If the descriptor shows a legal
entity nobody has heard of, buyers dispute charges they genuinely made.
Slow or hidden refunds. A customer who cannot find how to return something goes to the bank instead. The bank’s version costs you a fee on top of the refund.
Subscription surprises. If you sell anything recurring, the
renewal nobody expected is a predictable source of disputes.
Measuring it properly
Track it monthly, split by reason code, and look at it alongside delivery times
rather than in isolation. The correlation is usually obvious once both lines are on the same chart. It also tells you whether the problem is payments at all.
Watch the trend rather than the level. A shop sitting at a steady low number is in better shape than one that doubled last quarter. Acquirers react to direction as much as to position.
Who should be watching it
The ratio sits between departments, which is why it drifts. Finance sees the fees, support sees the angry messages, operations sees the delivery delays. Nobody owns the number itself.
Give it to one person and put it in the monthly review next to revenue. The check
takes ten minutes: look at the level, look at the trend, look at the top reason code.
If the same code leads three months running, that is a process defect rather than bad luck. Fixing it is cheaper than defending the disputes it produces.
Which payment methods you offer feeds into this as well. Dispute rights differ by method, so the mix changes your exposure.
Questions
merchants ask most often are collected in our FAQ.
Bringing it down
The fixes are unglamorous and they work. Make the descriptor match your brand, so
customers recognise the charge. Answer support within hours rather than days, since
most disputes start as an unanswered message. Publish the refund path where people
look for it and make it one click. Ship when you said you would, or say so before the
customer wonders.
For disputes that still arrive, respond with evidence. What was ordered, when it shipped, what the tracking says, what the customer agreed to. Our processing reports tie each dispute back to its transaction. That makes a reply possible within the short window schemes allow.
What happens if it stays high
The sequence is predictable: a warning, then closer monitoring, then a reserve or
a rate increase, then termination. None of it arrives without notice, and each step leaves room to act. That is precisely why watching the number monthly is worth twenty minutes.
Shops that keep the ratio low also pay less. Risk is priced. A clean history is the strongest argument in a rate review, far better than a negotiation. Rates for
middle-risk retail start from 1.8%, with the structure on the
pricing page.
Connection takes from 5 days as described on
how it works.
If the number is new to you, start by finding out which version your provider reports. Comparing your figure to someone else’s is meaningless when the two are calculated differently. Once you know that, a single line in a monthly report keeps you
ahead of every problem described here.
One more point is worth noting. The ratio is reported with a delay, so this month’s figure reflects decisions made two or three months ago. If something changed in delivery or in the product, the effect appears later than the cause. Teams that forget this tend to credit the wrong fix.
Connection from 5 days. Fees from 1.8% — transparent terms, no hidden charges.
Leave a request or book a consultation. We will put together the right setup for your niche and risk profile.