Refund Rate KPI

Refund Rate

Refund rate is a key payment processing KPI that tracks the percentage of transactions that are refunded by a merchant. It reflects how frequently customers are unsatisfied with a product or service to the point of requesting their money back. While refunds are a normal part of doing business, consistently high refund rates can signal deeper problems with product quality, customer service, unclear policies, or misleading marketing.

Refund rate is typically calculated as:

Refund Rate = (Number of Refunded Transactions / Total Transactions) × 100

To keep refund rates in check, merchants should:

• Offer accurate product descriptions and images.
• Provide clear return/refund policies.
• Invest in responsive customer service.
• Monitor refund trends by product, region, or campaign to identify issues early.

In short, the refund rate is a vital health metric for both customer satisfaction and operational efficiency in online payments.