In business, chargeback rate is a metric that shows the ratio between transactions and chargebacks made. The ratio is calculated as follows: the number of chargebacks divided by the number of transactions per month and then multiplied by 100 to convert it into a percentage. This ratio is called the chargeback-to-transaction ratio, but in some cases, it can also be called the dispute-to-sales ratio. Either way, it is quite telling on how well a business is doing.
The maximum chargeback rate is considered 1%. If the rate is larger than that, it can harm a business since most payment processors think this as unacceptable. This can lead to the termination of the business account.
