How it works
Chargebacks, ratio, and staying under threshold.
A chargeback is a cardholder asking their issuer to reverse a transaction. The money leaves your merchant account immediately, you pay a fee whether or not you win, and the dispute counts toward a ratio the card brands monitor.
For a standard-risk merchant that is an operating cost. For a restricted-vertical merchant it is existential: cross a monitoring threshold and you are in a programme with fines and a clock on it.
The three levers
In the order they are worth pulling.
Cheapest
Prevent
Most disputes in restricted verticals are not fraud. They are a customer who did not recognise a descriptor, could not find a cancel button, or did not know a trial was converting. Every one of those is a product decision you already control.
- Descriptor that matches the brand the customer bought from
- Renewal notice before every rebill, not after
- Cancellation as easy as signup, self-service
- Order confirmation and delivery notification that actually arrive
Cheap
Intercept
Alert networks notify you when a cardholder disputes, before it becomes a chargeback. Refund inside the window and the dispute never posts — you lose the sale and protect the ratio, which is the trade that matters when your account depends on the ratio.
- Alert coverage across the major networks
- Automatic refund below a threshold you set
- Fulfilment paused on alert so you are not shipping into a dispute
- Escalation above the threshold rather than blind auto-refunding
Most work
Fight
Representment wins on evidence, and the evidence has to exist before the dispute. Assembling it afterwards is why most merchants lose cases they should win. Win rates vary sharply by reason code, so which cases to fight is itself a decision.
- Evidence captured at the point of sale, not reconstructed later
- Response built per reason code rather than from one template
- Cases triaged — fight what is winnable, refund what is not
- Outcomes tracked by reason so the process improves
Ratio
The number your account depends on.
- How it is measured
- Chargeback count divided by transaction count, in a monthly window — and the numerator and denominator do not always come from the same month, which is why subscription merchants get surprised. Both count and ratio are tracked; either can put you in a programme.
- Card brand monitoring
- The brands publish thresholds and run monitoring programmes for merchants who cross them. Entry means monthly fines, a written remediation plan and a window to get back under. The thresholds are public — ask us for the current figures for your brand mix rather than trusting a number on a marketing page.
- Why headroom matters
- Sitting just under a threshold is not safe. One bad month, one product recall, one shipping failure and you are over. The operational target is far enough under that a bad month does not breach it.
- What happens if you breach
- Fines, a remediation timetable, and possible termination if you do not recover. Terminated merchants land on the MATCH list, which affects the next application. This is the real reason ratio management is not optional in a restricted vertical.
Specific brand thresholds are not printed here on purpose — they are revised, and a stale figure on a marketing page is worse than none. Ask us for the current numbers for your brand mix and we will send them with the source.
Questions
What merchants ask.
What we put in place is described under chargeback management.
Send us your last three months.
Ratio by month, by reason code, and by product tells us more in ten minutes than a call does in an hour. We will tell you which lever to pull first.