The chargeback rate is the percentage of a merchant's card transactions that end in a chargeback over a given period. It is the single number card networks and payment processors watch to decide whether a broker is a safe merchant or a high-risk liability.
You calculate it by dividing the number of chargebacks by the number of transactions and multiplying by 100. If a broker processes 4,000 deposits in a month and 40 are disputed, its chargeback rate is 1.0%. Some processors measure by count, others by dollar value, so the exact denominator matters.
Visa flags around 0.9%; Mastercard escalates above ~1.5%.
Brokers compute the rate per IB and cut toxic segments.
A 5% cohort rate against a ~1% norm signals termination risk.
Lead quality, not sales aggression, is what keeps the rate low.
The thresholds are strict and public. Visa's monitoring program flags merchants at a 0.9% dispute rate (and Visa has moved toward tighter dollar-and-count triggers), while Mastercard's excess-chargeback programs escalate above roughly 1.5%. Cross those lines and a broker faces fines, mandatory remediation, higher reserves, or losing card processing entirely.
That pressure flows straight to partners. Brokers attribute chargebacks to the source that delivered the client, so an IB whose cohort runs a 5% dispute rate against an acceptable ~1% is treated as toxic. Expect commission downgrades, holds, or termination long before the broker risks its own processor relationship for you.
How it works
The processor tallies every chargeback against the transaction base and reports the ratio monthly against the card networks' thresholds. Visa and Mastercard run formal programs — such as Visa's Dispute Monitoring Program and Mastercard's Excessive Chargeback Program — that escalate fines and oversight as the rate climbs.
Brokers protect that ratio by pushing accountability down to traffic sources. Affiliate platforms tag which IB introduced each client, so a broker can compute a per-partner chargeback rate and compare it to the portfolio average. A partner whose segment drags the overall rate toward a monitoring threshold is throttled or cut before the broker's own merchant account is endangered.
1
Count chargebacks
Tally the number (or dollar value) of disputed transactions in the measurement window.
2
Count transactions
Tally total card transactions (or total deposit value) in the same window.
3
Compute the ratio
Divide chargebacks by transactions and multiply by 100 to get the percentage.
4
Compare to thresholds
Check against network limits — roughly 0.9% (Visa) and 1.5% (Mastercard) trigger monitoring programs.
5
Attribute to partners
Break the rate down by IB source and act on segments that exceed the portfolio norm.
Why it matters for partnership: Brokers track chargeback rates per IB. A partner running well above the ~1% norm is a liability, triggering commission downgrades, payout holds, or termination. Quality lead sources keep your rate low and your deal intact.
Formula
Chargeback Rate = (Total Chargebacks / Total Transactions) × 100
Real World Example
An affiliate manager at a broker reviews a partner introduced through a paid-search campaign and finds a 5% chargeback rate across 600 deposits — 30 disputes against an acceptable ~1% norm. Because that segment alone could push the broker toward Visa's monitoring threshold, the manager downgrades the partner from a $60 CPA to RevShare-only and places the next payout on hold pending improvement.
Card-network chargeback thresholds
Program
Trigger (approx.)
Consequence
Visa Dispute Monitoring
~0.9% dispute rate
Monitoring, remediation, fines
Mastercard Excessive Chargeback
~1.5% and above
Escalating fees and oversight
Healthy merchant
Under ~1%
Normal processing terms
Pro Tip
Track your own per-source chargeback rate before the broker does; kill any traffic source drifting above 1% so a bad campaign never contaminates your whole partner account.
Common Pitfalls
Assuming the broker absorbs payment issues and that chargebacks won't touch you; in reality the rate is attributed to your source and decides your commission tier.
FAQ
What is considered a good chargeback rate?
Below roughly 1% is generally safe. Card networks begin monitoring merchants near 0.9% (Visa) and escalate above about 1.5% (Mastercard), so lower is always better.
How is chargeback rate calculated?
Divide the number of chargebacks by the number of transactions in a period and multiply by 100. Some processors measure by dollar value instead of count.
Do brokers track chargeback rate per affiliate?
Yes. Affiliate platforms tag which IB introduced each client, letting brokers compute a per-partner rate and act on segments that exceed the portfolio norm.
What happens if my referred clients push the rate too high?
Expect commission downgrades, payout holds, or termination, because the broker will protect its own merchant account long before it risks it for one partner.
Is chargeback rate measured by count or by value?
It depends on the network and processor. Visa has moved toward both count and dollar-value triggers, so a few large disputes can matter as much as many small ones.
How do I lower my chargeback rate?
Improve lead quality, set honest expectations, avoid aggressive or guaranteed-return sales tactics, and cut any traffic source whose cohort disputes at an elevated rate.
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