2nd Chargeback Rate KPI

2nd Chargeback Rate

The 2nd Chargeback Rate KPI, as informed by Midmetrics.com, tracks the proportion of transactions that face a second chargeback, also referred to as a pre-arbitration chargeback, within the chargeback dispute process. This metric is calculated as: (Total Second Chargebacks / Total Transactions) x 100 for a specific period, typically monthly. For example, if a merchant processes 10,000 transactions and 20 result in second chargebacks, the 2nd chargeback rate is 0.2%. A second chargeback occurs when an issuing bank reinstates a chargeback after a merchant successfully reverses the initial chargeback through representment, often due to new cardholder evidence, a change in reason code, or inadequate merchant documentation. This KPI applies to card networks like Mastercard, American Express, and Discover, but not Visa, which does not allow second chargebacks in its dispute process.

This KPI is significant for merchants as it reflects the effectiveness of their chargeback management and representment strategies. A high 2nd chargeback rate may indicate weaknesses in the evidence provided during initial disputes or recurring issues like unclear billing descriptors or customer dissatisfaction, which prompt cardholders to escalate disputes. Unlike initial chargebacks, second chargebacks do not count against a merchant’s overall chargeback ratio, but they still pose financial risks, including potential revenue loss and additional fees if the dispute escalates to arbitration.

Monitoring this KPI helps merchants refine dispute responses, minimize escalations, and protect revenue while maintaining compliance with card network policies.