A dispute rate is the share of your successful card payments that cardholders dispute with their bank. Disputes are also called chargebacks. Processors and card networks watch the rate because a high or rising number can point to fraud, unclear billing or customers who did not get what they expected.
Stripe's documentation describes two related measures, and the card networks use their own formulas in their monitoring programs, so it helps to know which number you are looking at.
Two ways Stripe measures disputes
- Dispute activity is the percentage of disputes on successful payments, counted by the date the dispute arrived.
- Dispute rate is the percentage of disputes on successful payments, counted by the date of the original charge.
Stripe gives an example. If you process 1,000 payments in a week and receive 10 disputes that week, but only 3 relate to that week's payments, dispute activity is 1% and dispute rate is 0.3%. Disputes often arrive weeks after the payment, so the two numbers differ.
Stripe says the card networks' monitoring programs use the dispute activity calculation, while the dispute rate is the better way to see which payments were actually disputed. Because cardholders can dispute a charge up to 120 days after payment, and sometimes later, the dispute rate for recent dates can still change.
What counts as a dispute
Stripe's page on monitoring programs explains how the networks count:
- Disputes count whether you win or lose them. Outcomes are not considered.
- Monitoring programs do not consider refunds when identifying disputes.
- Some disputes that Stripe handles on your behalf do not appear in your Dashboard but are still counted by the networks.
Stripe also notes that Visa and Mastercard calculate monthly ratios differently. Visa compares disputes or fraud to payments in the same calendar month, while Mastercard compares them to payments in the previous month.
Why processors watch it
Stripe says the credit card processing industry standard treats dispute activity above 0.75% as excessive, and that a sudden spike or steep upward trend can lead to a monitoring program before that level is reached. Excessive dispute activity can affect your ability to process with Stripe and with other processors, and can lead to fines from the card networks.
Each network sets its own thresholds. Stripe's documentation, for example, describes Visa's program as using a non-compliant threshold of a 0.5% ratio and Mastercard's Excessive Chargeback Merchant level as starting at 100 chargebacks and a 1.5% rate. Check the networks' own documentation for current figures. Our page on card network rules merchants should know covers these programs in more depth.
Keeping the rate low
Stripe says the best strategy is prevention, because every dispute counts. For a research supply business, that usually means accurate product listings, a clear statement descriptor, visible policies, prompt support and good delivery tracking. Our checklist for reducing disputes and disputes and chargebacks basics go further.
Claddr can hold matching orders as authorized but not captured until a reviewer on your team approves them, so questionable orders can be checked before money moves. It does not guarantee any dispute outcome or rate.