Mastercard and Visa each publish exact numeric thresholds for excessive chargebacks and fraud, and crossing one is what puts a business on a terminated merchant list. These are not internal processor policies. They are the card networks’ own published rules, reproduced here with sources, because most businesses that get listed have never seen the actual numbers that caused it.
What is the Mastercard chargeback threshold, exactly?
Mastercard’s own MATCH reason code 4, Excessive Chargebacks, is defined as Mastercard chargebacks in a single calendar month that exceeded 1% of that month’s Mastercard sales transactions, and totalled USD 5,000 or more. Both conditions have to be true in the same calendar month. A business with a high ratio but a low dollar total does not trigger it, and a business with a high dollar total but a low ratio does not either. This definition comes from Mastercard’s Security Rules and Procedures Merchant Edition, reproduced in Stripe’s published documentation on high risk merchant lists.
What is the Mastercard fraud threshold?
Reason code 5, Excessive Fraud, requires a fraud-to-sales dollar volume ratio of 8% or greater in a calendar month, together with 10 or more fraudulent transactions totalling USD 5,000 or more that same month. Like code 4, this counts Mastercard-card activity specifically, and a calendar month means exactly that, compared against that same month’s sales rather than the transactions the fraud came from. Source: the same Stripe documentation, citing Mastercard’s definitions.
What is Visa’s equivalent, and how is it different?
Visa runs a separate system called VMSS, and its two comparable codes have different numbers entirely. VMSS code 22, Excessive Disputes, triggers at 1,000 disputes and a 1.8% dispute-to-sales ratio in a single month. VMSS code 21, Excessive Fraud, triggers at USD 250,000 in fraud amount and the same 1.8% ratio. Visa’s thresholds sit much higher in raw numbers than Mastercard’s, largely because Visa processes at a scale where a 1,000-dispute month is a meaningful signal rather than a small business’s occasional bad week. A processor can only remove a VMSS entry if it placed the business in error, the same narrow rule that governs MATCH removal.
Why do two businesses with the same chargeback count get treated differently?
Because both networks measure a ratio against that month’s transaction count, not a fixed number. A business doing 2,000 Mastercard transactions a month that gets 25 chargebacks is at 1.25%, over the code 4 threshold if those 25 chargebacks total USD 5,000 or more. A business doing 20,000 transactions with the same 25 chargebacks is at 0.125%, nowhere near it. This is why a sudden drop in sales volume, not just a rise in disputes, can push an otherwise stable business over a threshold it never crossed before. Understanding what makes a business high risk in the first place starts with this ratio math, not with the industry label alone.
Does winning a chargeback dispute remove it from the count?
No. Both networks count the chargeback in the month it was recorded, and reversing or winning a dispute afterward does not retroactively remove it from that month’s ratio. This is one of the more frustrating mechanics for merchants who do everything right on the representment side and still watch their ratio climb. It is also why a MATCH listing under reason code 4 can happen to a business that fights every single dispute and wins most of them: winning stops the money loss, not the count.
Do these thresholds apply the same way to every card brand?
No. These are Mastercard’s and Visa’s own numbers, and they measure only that network’s transactions. American Express and Discover run separate merchant monitoring programs with their own criteria, which are not reproduced here because Open Sign Payments has not verified a published, attributable source for their exact figures. Any business trying to understand its full risk picture should ask its current processor for a breakdown by card brand, not assume the Mastercard or Visa numbers describe the whole picture.
What should a business actually do with these numbers?
Calculate the ratio, not just the count. Pull last month’s total Mastercard and Visa transaction counts, divide the chargeback count and fraud count into each, and compare against the thresholds above. A business sitting close to either line, even without having crossed it, should treat that as an early warning and start working on the underlying cause before a processor’s own internal limit, usually set lower than the network threshold, forces the issue. Businesses that have already crossed a threshold and been listed should read our full explanation of what the MATCH list is and how it works for what happens next.
Frequently asked questions
Are these the exact same numbers a processor uses to warn a merchant? Not necessarily. These are the card networks’ hard thresholds for reporting to MATCH or VMSS. Individual processors often set internal warning limits well below these numbers to protect themselves earlier.
Does a single large chargeback count toward the dollar threshold? Yes. The dollar total is a sum across all chargebacks in the month, so one very large dispute can push a business over the USD 5,000 threshold on its own.
Do refunds count the same as chargebacks toward these thresholds? No. A refund processed before a cardholder disputes the charge does not count as a chargeback under either network’s definition. This is one reason a fast, generous refund policy lowers chargeback exposure directly.
Can a business ask its processor which threshold it is closest to? Yes, and it is worth asking directly. A processor that monitors ratios closely can usually tell a merchant where it stands relative to both the network threshold and its own internal limit.