The formula to calculate the Chargeback Threshold is:
\[ \text{CT} = \left( \frac{\text{TC}}{\text{TST}} \right) \times 100 \]
Where:
A chargeback threshold ratio is the maximum amount of chargebacks a merchant is allowed. The chargeback ratio is the number of chargebacks per sales transactions. It is an important metric for merchants to monitor, as exceeding the threshold can lead to penalties or other consequences from payment processors.
Let's consider an example:
Using the formula to calculate the Chargeback Threshold:
\[ \text{CT} = \left( \frac{50}{2000} \right) \times 100 = 2.5 \% \]
This means that the chargeback threshold ratio for this scenario is 2.5%.
