What chargeback rate is safe for a prop firm?
Quick answer
Card networks monitor merchants with chargeback ratios in the region of 1% of transactions, and processors often set stricter internal limits. Exceeding thresholds can lead to fines, monitoring programmes or account closure. Aim to stay well below 1%, and track the ratio monthly.
Detailed answer
General information. Payment providers set and change their own policies on prop firms; confirm the current terms with any provider before relying on them.
How to manage it:
- Know your provider's threshold, which may be lower than the networks'.
- Track monthly: disputes divided by transactions in the same period.
- Find causes: unrecognised charges, breach disputes, delayed delivery, refund refusals.
- Use alerts: some processors offer dispute alert services that let you refund before a chargeback is filed.
- Act on trends before they become a problem.
The exact thresholds and programme rules belong to Visa, Mastercard and your processor and change over time; check them with your provider. This is general information.
Worked example
A firm processing 1,000 card transactions in a month with 8 chargebacks has a ratio of 0.8%. Two more disputes would push it to 1%, so a single bad week can move a small firm across a threshold. Smaller firms feel each dispute more, which is why prevention matters most early.
What to do if you approach a threshold
Contact your processor early, explain the cause and the measures you are taking. Processors respond better to firms that raise issues themselves.
PropExecutor team · Updated
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