What does the chargeback-to-transaction ratio calculate?

The chargeback-to-transaction ratio is a critical metric used in payment processing and fraud management. It specifically measures the relationship between the number of chargebacks (disputed transactions that are reversed) and the total number of transactions processed over a specific period. This ratio provides insights into how many transactions are being disputed and helps assess the level of risk and potential financial loss a business may face due to chargebacks.

Understanding this ratio is essential for managing payment operations effectively. A higher ratio indicates a greater proportion of transactions are being disputed, which could signal issues such as fraud, customer dissatisfaction, or operational problems. Monitoring this relationship allows businesses to identify trends, improve their transaction processes, and enhance customer service to mitigate future chargebacks.

In contrast, other options focus on different metrics that do not directly reflect the proportion of disputed transactions relative to all transactions processed, making the option about the relationship between chargebacks and total transactions the accurate choice.