Overview

Chargebacks and fraud are an unfortunate reality of doing business and you can expect to receive both in some regard, especially if you are an ecommerce business. It is your responsibility to minimize the amount of chargebacks and fraud you receive as much as possible.

Card brands regulate the payments space to keep it safe and secure for all parties. To help these efforts, they have established acceptable thresholds for chargebacks and reported fraud. If your account meets or exceeds these set thresholds in a given calendar month, you can be placed into one or more of their monitoring programs until your account meets the card brand's qualifications to exit the program.

Here are some important terms, as defined by Visa and Mastercard, regarding monitoring programs:

• Chargeback: Referred to as a dispute by Visa, this is a claim against a transaction initiated by a cardholder with their issuing bank or by the bank themselves
• Dispute: The act of challenging any claim over the legitimacy of a transaction; often used interchangeably with chargeback
• Fraud: A claim of unauthorized activity against a transaction or attempted transaction initiated by a cardholder with their issuing bank or by the bank themselves
• Count: Number of transactions regardless of dollar amount (example: 1 transaction for $500 = 1 count)
• Amount: Dollar (or other currency) amount of the transaction (example: 1 transaction for $500 = $500 amount)
• Descriptor: A descriptor is what your customers will see on their bank statement when they make a purchase through your mobile app or website
• Merchant Account ID: Your merchant account ID is a unique identifier for a specific merchant account in your gateway
• Threshold: The established amount of chargebacks or reported fraud that must be met or exceeded in a given time period for the account to enter a chargeback or fraud monitoring program
• Fraud Ratio: The amount of fraud reported in a given month divided by the amount of settled sales in a given month
• Chargeback (Dispute) Ratio*: The count of chargebacks opened in a given month divided by the count of settled sales in a given month

* The card brands only count first chargebacks when calculating your chargeback ratio. Pre-arbitrations (or second chargebacks) and retrievals are not included in these figures.

Thresholds for monitoring programs

While Visa and Mastercard have similar thresholds regarding chargebacks, there are slight differences. To understand each program, you'll want to check out our Visa and Mastercard program articles.

How to know if you’re in a monitoring program

If your merchant account is provided through Braintree, our Disputes team will notify you if you’re ever identified in any card brand monitoring program. In fact, we do proactive monitoring to help in chargeback reduction and remediation. The Disputes team is a great resource for navigating and understanding these programs as well as their potential implications.

If you have any questions regarding these programs, check out our FAQ or Contact us.