In order to accurately diagnose chargeback sources and deploy solutions, you need data about the disputes being filed against you. A lot of this data hinges on the specific metrics you use to gauge performance.
Key performance indicators, or KPIs, can (and should) influence your strategy. Stats like order abandonment rate, refund rate, and decline rate are all important stats.
If you want to know whether your chargeback management strategy is working, though, there’s one KPI that stands out in terms of direct relevance: your chargeback win rate. This figure is crucial to overall loss prevention and revenue retention.
A chargeback win rate is the rate at which a merchant disputes and successfully recovers transactions following an initial chargeback. This figure is expressed as a percentage of overall chargebacks.
Your chargeback win rate is a crucial KPI, and is not to be confused with related (but different) stats like your chargeback rate or net recovery rate.
Read MoreYour chargeback win rate can help you make key decisions like whether a dispute is worth fighting, what tactics work, and what tactics don’t work. It also signals to issuers that your brand is legitimate and should not be written off as a scam operation.
There’s another counterpoint to consider as well: the cost of not fighting back.
Read MoreIf you want a simple answer, your chargeback win rate can be calculated using a simple equation. Divide the total number of chargebacks you re-presented to the issuer by the total number of chargebacks you won. Of course, there’s some additional nuance here that you should take into account as well.
Read MoreIn this chapter, we identify the most frequent errors merchants make when fighting chargebacks, from evidence gaps to strategic miscalculations, and provide guidance on how to avoid each pitfall.
Read MoreIn some cases, the benefits of fighting back simply may not justify the expense. Here’s a decision framework for helping merchants determine which disputes are worth fighting based on win probability, transaction value, resource costs, and strategic considerations.
Read MoreSo, how do you achieve the highest chargeback win rate possible? In this chapter, we provide actionable, step-by-step strategies for improving win rates through better evidence collection, response processes, prevention efforts, and strategic approach optimization.
Read More
The average merchant wins roughly 45% of the chargebacks they challenge through representment. However, when we look at net recovery rate, we see that the average merchant only wins 1 in every 8 chargebacks issued against them.
All things considered, cardholders tend to win about 7 out of 8 chargebacks issued. Merchants have less than a 50/50 shot of winning their representment cases. Although, their situations could be improved with better data leveraged through KPIs like chargeback win rates.
For consumers, it tends to be fairly easy. If the consumer’s claim is valid, they can often be issued a provisional credit by the bank and receive the funds almost immediately. It’s very hard for merchants, though.
The chargeback process is often a costly and time-consuming process for merchants. Merchants also have a very tight timeframe in which to submit a response (usually less than a week).
The length of time is takes to win a chargeback depends on how far it progresses. If the consumer’s claim is valid, they can often be issued a provisional credit by the bank and receive the funds almost immediately. If the merchant re-presentments the charge, though, it could take several weeks — or even months — to resolve a dispute.
There’s not really a solid universal indicator for what constitutes a “good” win rate. Instead, win rates are intended to measure the efficacy of your chargeback management and prevention methods. Rather than aiming for a “good” win rate, you want your win rate to be as high as possible.
Merchants have roughly a 20-30% chance of winning a chargeback, on average. However, buyers who have documented evidence that they were victims of fraud or unauthorized activity are nearly guaranteed to win the disputes they file.
