The concept

It's the division between disputed transactions and processed transactions, usually within the month. Each card network publishes its own limit and its own monitoring program for those who go past it.

Two details change the math and are almost always overlooked. The first is the lag: the dispute arrives weeks after the sale, so a month of rapid escalation drags down the following month's index. The second is that a voluntary refund doesn't enter the numerator, and neither does a pre-chargeback resolved in time.

How it shows up in practice

Every month you monitor how many of your transactions got disputed. The card network publishes a limit and you know that exceeding it results in a fine or account termination. A quick escalation of chargebacks in one month leaves the account at risk the next month, even if you fixed the problem.

We see our customers as invited guests to a party, and we are the hosts. It is our job every day to make every important aspect of the customer experience a little bit better.

Jeff Bezos Source: Jeff Bezos's letters to Amazon shareholders.

Act fast on pre-chargeback, offering voluntary refund when the complaint arrives. That does not count toward the card network's chargeback rate and stops the indicator from blowing up. The lag between the sale and the dispute makes that detail worth months of smooth operation.