MasterCard’s Excessive Chargeback Program
MasterCard carefully scrutinizes each merchant’s chargeback activity
as part of the Excessive Chargeback Program. Through the use of
predetermined chargeback thresholds, acquirers are able to evaluate and
predict chargeback risk.
The network expects each acquirer to
monitor these MasterCard chargeback rates and take action when a
merchant has exceeded (or is expected to exceed) the acceptable
threshold.
The Excessive Chargeback Program
MasterCard chargeback thresholds are determined by the chargeback-to-transaction ratio.
To
calculate the chargeback-to-transaction ratio, MasterCard tallies the
current month’s first chargebacks and divides the amount by the number
of MasterCard transactions in the previous month.
For
example, 100 first chargebacks issued in June would be divided by
10,000 transactions in May to produce a chargeback-to-transaction ratio
of 1% or 100 basis points.
It is important to note chargeback
thresholds are only impacted by first chargebacks. Second chargebacks
(also known as pre-arbitration chargebacks) do not affect the
chargeback-to-transaction ratio.
Carefully monitor your chargeback ratio to avoid MasterCard’s Excessive Chargeback Program.
Chargeback Monitored Merchant
The Excessive Chargeback Program has two categories: Chargeback Monitored Merchant and Excessive Chargeback Merchant.
