Calculate Chargeback Win RateComparing Your Chargeback Win Rate vs. Net Recovery Rate
How to Calculate Your Chargeback Win Rate
Your dispute win rate helps you determine if your current approach to chargeback and fraud management is effective, or if there are weaknesses that need to be addressed. But, how exactly do you calculate that number?
The answer is that your chargeback win rate is the ratio of chargebacks you “win” to the total number of chargeback responses you submit. If we dig a little deeper, though, there’s more nuance to the question, along with other related indicators to examine.
Chargeback Win Rate
Chargeback-to-transaction ratios can help you determine how well you prevent chargebacks, but what about the chargebacks you can’t avoid? This article will explain everything you need to know about your chargeback win rate: why it matters, how it’s calculated, and what you can do to improve your numbers.
Formulas to Calculate Your Win Rate & New Recovery Rate
There are differing levels of granularity here. You can segment your chargeback win rate based on factors like product category, for instance, to compare representment success in different verticals. In all cases, though, your chargeback win rate can be calculated using this simple equation:
And, as we discussed in an earlier chapter, your net recovery rate is the ratio of chargebacks you won as a portion of total chargebacks filed by customers.
Seems simple enough, right? Well, there’s a little bit of nuance as to what counts as a “won” chargeback, which we should also probably touch on.
What Counts as a “Won” Chargeback?
You can say you “won” a chargeback if the bank accepts your re-presented transaction, or if the cardholder withdraws their claim before a judgement is made.
Understanding what qualifies as a chargeback “win” is crucial for accurately calculating your win rate and measuring your dispute strategy's effectiveness.
You can say you “won” a chargeback if you submit compelling evidence and the issuing bank rules in your favor, overturning the chargeback entirely. It also counts if a cardholder withdraws their disputes after you provide evidence, but before a formal judgment is made. This counts as a win since you successfully defended the transaction.
Issuer-declined disputes — any claims rejected by the issuing bank before they even reach you for representment — shouldn’t be counted, as you didn't actively fight these claims. The same applies to any disputes that you accept without representment. Disputes you choose to accept as valid losses shouldn't be included in win rate calculations. Instead, they should be tracked separately as “accepted losses.”
Do Second Chargebacks Count Against Your Chargeback Win Rate?
The simple answer is “no,” second chargebacks don’t count against your win rate.
What am I talking about? Well, what if you lose the initial representment, but you choose not to proceed to arbitration? Or, the issuer escalates to the arbitration stage, and you end up losing?
These are clear losses. But, the silver lining here is that losing an arbitration case will not count as an additional loss against your chargeback win rate. The initial chargeback has already been counted against your chargeback ratio. You’re not going to get double-tapped by having that dispute counted twice.
