Win Rate

Knowing your win rate is a crucial aspect of an effective chargeback management strategy. So what is a good win rate and how do you calculate it? We’ll cover these fundamental questions in more detail.

Metrics that factor into the win rate calculation

There are three different win rate equations you can use, each using different metrics in the calculation.

Here are the various metrics that are involved.

• Fought – You challenged a chargeback and attempted to overturn it.
• Did not fight – You did not respond to the chargeback.
• Won – You fought the chargeback and won. The issuer thought your argument was compelling. Financial responsibility shifted back to the cardholder, and the revenue was returned to your merchant account.
• Lost – You fought the chargeback and lost. The issuer didn’t think your argument was sufficient. The temporary credit applied to the cardholder’s account becomes permanent and your revenue is officially lost.
• Pre-arbitration – You fought the chargeback and initially won, but the cardholder continued to dispute the purchase. So your win turned into a loss.

Ways to calculate your win rate

While there is no universal win rate calculation endorsed by the card networks, there are a few common equations you can use to estimate your win rate.

Most people will use a simple calculation to determine win rate. It looks at how many chargebacks you’ve won versus the number of cases you’ve lost.

By using this calculation, you can evaluate the effectiveness of your chargeback responses — or how well you fight chargebacks.

Here’s the equation:

Chargebacks Won / (Won + Lost)

The next equation compares the number of chargebacks that you won against the cases that were either lost or went to pre-arbitration.

This equation is used to estimate the amount of money you have recovered. Since most pre-arbs shouldn’t be fought, a case that advances to pre-arbitration is essentially a loss.

Here’s the equation:

Chargebacks Won / (Won + Lost + Pre-Arbitration)

A third equation compares cases that you won against all disputes filed. This equation is more comprehensive than the previous two calculations, showing how well you’re doing against every possible outcome. However, it doesn’t reveal how effective your chargeback responses are or what it takes to win.

Here’s the equation:

Chargebacks Won / (Won + Lost + Pre-Arbitration + Did Not Fight)

What is a good win rate?

As with many things in life, “good” can be subjective. A win rate is no different. For example, what is good to one merchant may be bad to another merchant in a different industry with lower profit margins.

To get a realistic idea of how healthy your win rate is, you would need to look at data from merchants who are in a similar industry as you, who also have a similar mix of reason codes and a similar amount of compelling evidence as you.

Most merchants strive toward a win rate of 30%, but win rates that fall below or above that average are not necessarily better or worse.

What matters most is how that win rate impacts your ROI. Some businesses have a lower win rate but it may not negatively impact their ROI. This is where “good” and “bad” win rates can be subjective. It all depends on what is financially beneficial for your business.

How to improve your win rate

Even if your win rate is okay, there are probably things you can do to make it a little bit better.

Focus on chargeback prevention.

Investing in high-quality chargeback prevention solutions can lower chargeback rates and resolve disputes before they become chargebacks — overall reducing the amount of chargebacks you need to fight.

Tools like Order Insight, prevention alerts, and Rapid Dispute Resolution (RDR) allow you to share additional information with banks to clarify transactions or proactively refund disputed transactions — eliminating the need for a chargeback.

• Order Insight allows you to share purchase information in real time when a transaction is disputed. If you can empower the issuing bank to clarify the transaction, you can usually eliminate the need for a chargeback.
• Prevention alerts and Rapid Dispute Resolution (RDR) allow you to refund disputed transactions — stopping the chargebacks from happening.

Collect data.

Compelling evidence typically makes the difference between winning and losing. If you don’t have evidence to support your claims, you can’t win — especially in cases where there is a question of friendly fraud vs. true criminal fraud.

One of the best ways to gather compelling evidence is to collect and share approval codes from identity verification tools like address verification service (AVS), card security codes (CVV2, CVC2, etc.), and 3D Secure 2.0.

Analyze your metrics at the right time.

It’s vital that you evaluate your win rate when it matters most. The best time to calculate your win rate is about 60 to 90 days after a chargeback is issued. Losses are typically reported right away, but it can take several weeks for a win to be reported. Cases are finalized once the pre-arbitration filing deadline passes.

Prioritize your chargeback response.

To win a chargeback, you need a compelling response — which is made up of a rebuttal letter with a persuasive argument and supporting documents. Make sure this response is the best it can be. Customize it for the specific case, don’t just submit a blanket statement.

Most importantly, make sure you submit your response before the deadline!

Need help managing chargebacks?

Want to fight chargebacks with the highest win rate possible? AltoShield can help.

We’ll help you develop an effective chargeback management strategy that meets your business’s goals.