Methods Of Visa and Mastercard To Manage Chargeback

Manage Excessive Chargeback Levels

The Visa and MasterCard take action depending on the number of chargebacks in a month for the merchant.

This is called the chargeback ratio or chargeback rate. If the merchant reaches the maximum chargeback limit, the card companies have the right to implement a penalty.

These are sensitive issues that can affect your business in terms of profit and reputation.

ChargebackRatio and Chargeback Rate – Calculate Chargeback Threshold with Visa And Master Card

The Visa and the MasterCard, both have different norms to manage Excessive Chargeback levels but before moving to the excessive chargeback, you must know about the Chargeback Rate and Chargeback Ratio.

Visa’smethod to calculate Chargeback Ratio:

• To calculate the chargeback ratio, the Visa divides the number of chargebacks in a month to the number of transactions of that month. This becomes the chargeback ratio. Furthermore, to calculate the chargeback rate, multiply this ratio with 100.

Here is the formula that Visa uses to calculate the Chargeback Rate:

• Chargeback Rate = (Number of Chargebacks in a month / Number of Transactions in a month) *100

Master Card’s Method To Calculate Chargeback Ratio:

• The Master Card uses a slightly different method to calculate the Chargeback rate. The formula is similar but the only difference is, they take the ratio of the current month’s chargeback and divide it by the previous month’s transactions.

The Mastercard chargeback rate formula is:

• Chargeback Rate = (Number of Chargebacks of current month / Number of Transactions of the previous month) *100

If you are a merchant, then you can also calculate the chargeback ratio of your enterprise using this simple formula.

What are Excessive Chargeback Levels?

As complicated as it sounds, the chargebacks can be tricky to deal with not only for the merchant but also for banks. Every year, many cases of chargeback frauds are reported. Furthermore, the banks and card networks are trying to establish the best method to avoid any frauds.

Chargeback Expertz

ChargebackExpertz does the best research for you and gives you the best maintenance for the chargebacks. Have any questions in your head call us at +1 855-465-4723 or mail us at app@chargebackexpertz.com