Enter the total number of first chargebacks in the month and the previous months number of sales transactions into the calculator to determine the Chargeback Threshold.

Chargeback Threshold Ratio Formula

The following formula is used to calculate a Chargeback Threshold.

CT = TC / TST *100

  • Where CT is the Chargeback Threshold (%)
  • TC is the total number of chargebacks for the month
  • TST is the total number of sales transactions for the previous month

To calculate the Chargeback Threshold, divide the number of chargebacks by the total number of sales transactions.

What is a Chargeback Threshold Ratio?

Definition:

A chargeback threshold ratio is the maximum amount of chargebacks a merchant is allowed. The chargeback ratio is the number of chargebacks per sales transactions.

How to calculate Chargeback Threshold Ratio?

Example Problem:

The following example outlines how to calculate a chargeback threshold ratio.

First, determine the total number of chargebacks for the period. In this example, there are a total of 100 chargebacks.

Next, determine the total number of sales transactions in the same period. For this problem, there were 10,000 sales transactions.

Finally, calculate the chargeback ratio using the formula above:

CT = TC / TST *100

CT = 100/1000 *100

CT = 1%