Understanding Your Chargeback Ratio
In this article
- What is a chargeback?
- Chargeback ratio
- Chargeback ratio threshold
It's important to keep track of how many chargebacks you receive from customers. A high chargeback ratio can lead to your payouts being delayed, or a request for additional verification documents. In extreme cases, a high chargeback ratio can even lead to your Wix Payments account being closed and your funds being withheld.
What is a chargeback?
A chargeback is a demand made by a credit card or BNPL provider for a merchant to return funds to a customer when they report a transaction as fraudulent or disputed. Unlike a regular refund request, where it's just between you and your customer, a chargeback also involves banks and payment networks (e.g. Visa, Mastercard, Affirm, etc.).
Any chargeback requires an investment of time and resources from the parties involved (Wix, banks, card schemes, etc.) and, as such, if you receive a chargeback, you incur a
chargeback fee.
Tip:
You can
dispute a chargeback by providing relevant documents and proving the validity of the transaction. If you win the dispute the funds will be returned to you along with the chargeback fee.
Chargeback ratio
Wix Payments, as well as banks, credit card companies and other payment providers, take into consideration that chargebacks may happen every now and then. However, we are required to monitor your chargeback ratio in order to determine and report your risk level as a merchant.
We calculate the chargeback ratio according to the following formula:
Total number of chargebacks / total number of transactions. Your business' risk level increases in accordance to the chargeback ratio, which means you need to keep the ratio as low as possible. We recommend making sure you're following the common
best practices for merchants. This can help to reduce the likelihood of receiving chargebacks.
Chargeback ratio threshold
The industry standard chargeback ratio threshold is under 1% (i.e. less than 1 chargeback per 100 payments).
Generally, receiving a chargeback demand during your first month selling in Wix Payments is not a good indication. Neither is maintaining a high chargeback ratio after three months of business.
As a merchant, keep in mind that the more chargebacks you receive, the riskier Wix Payments considers your business to be, which may lead to closing your account, withholding your payouts and other risk preventing measures.
Important:
When a chargeback leads to a negative balance in your Wix Payments account, Wix.com may charge your bank account by direct debit to cover the missing amount.
