Chargeback Risk Scorecard for NMI Gateway Merchants

How NMI gateway merchants should read their score

NMI is a gateway, not your processor. Your gateway logs the transaction, but chargebacks are reported by the processor that holds your merchant account. For the 'Chargebacks in the last 90 days' field, pull the count from your processor's dispute portal or monthly statements, not from NMI transaction reports. Count chargebacks the processor actually posted, not retrieval requests or pre-dispute alerts you resolved.

For 'Card transactions per month', use settled card sales only. NMI reports also show declines, voids, and authorization attempts. Including them inflates the denominator and makes your ratio look healthier than the ratio your processor calculates. If card testing hit your Collect.js form, API, or hosted payment page last month, those declined attempts should not be counted.

Most NMI merchants are card-not-present heavy: ecommerce carts, virtual terminal orders taken by phone, recurring billing from the Customer Vault, and emailed invoices. Card-not-present sales carry more fraud and 'I don't recognize this charge' disputes than tapped or dipped cards, so the ratio component of your score tends to move faster. A merchant with a few countertop terminals on NMI plus a large online channel should still expect the online side to drive most disputes.

If you run more than one merchant account (MID) through the same NMI login, for example a separate MID for a subscription product, run the scorecard once per MID. Monitoring programs generally look at each merchant account, so a blended number can hide one account that is over the line.

NMI gateway settings behind the scorecard questions

Fraud tools: NMI offers AVS and CVV rules in its fraud settings, and 3-D Secure through its Payer Authentication service. Both may be add-ons depending on how your reseller set up your account. Seeing AVS and CVV results in transaction details does not mean you are declining on mismatches. If you are not sure whether rules are enforcing or just reporting, answer 'Not sure' and check the settings before relying on them.

Billing descriptor: the text on your customer's statement is usually set at the processor or merchant account level, not inside NMI. Some processors support dynamic descriptors passed through the gateway; many do not. If your statement shows a legal entity name or a processor-assigned string instead of the brand customers bought from, that is a common source of 'unrecognized charge' disputes on keyed and recurring sales.

Billing model: if you use NMI's Recurring Billing or store cards in the Customer Vault for scheduled charges, answer as a subscription. Recurring charges without a pre-renewal email are a frequent dispute trigger, especially on annual plans. Invoice merchants who send one-off payment links can usually answer 'One-time'.

Refund policy: hosted payment pages and invoice templates in NMI can carry custom text. If your policy only lives in your website footer, adding a short version to the payment page and the receipt email is a low-effort change.

Worked example: a hypothetical NMI subscription merchant

These numbers are made up for illustration. A subscription box seller (eCommerce) runs $60,000 a month through NMI across 1,500 card transactions, so the average ticket is $40. The processor posted 42 chargebacks in the last 90 days, which is 14 per month and a 0.93% ratio. That lands in the Caution zone (the 0.65% caution line is the tool's own buffer, an assumption, not a card brand rule). At 14 a month, the count is below the 100-chargeback minimum Mastercard uses, but a processor may act on ratio alone. Headroom: about 1 more chargeback per month before reaching 1.00%. Their Visa ratio may be higher once fraud reports are counted.

Their answers: refund policy in the footer only (6 points), AVS/CVV on but no 3-D Secure (5), brand name but no phone on the descriptor (4), subscriptions with no renewal reminders (8), eCommerce baseline (3), plus 31.1 ratio points. Score: 57, Elevated.

Gated results, using the tool's assumptions ($25 chargeback fee, $15 handling cost, 100% of the disputed amount lost): about $80 per chargeback and $13,440 a year ($6,720 lost sales, $4,200 fees, $2,520 staff time), a worst-case figure excluding goods shipped, shipping, and any card brand program fines. Five fixes trigger, ranked by assumed reduction: renewal reminders and easy cancellation (15%, about $2,016 a year), pre-dispute alerts (15%), turning on 3-D Secure (10%), adding a phone number to the descriptor (5%), and refund policy at checkout (5%). The reduction rates are planning assumptions, not measured results. Combined assumed reduction: about 41%, projecting a 0.55% ratio, roughly $5,553 a year in avoided cost, and a score of 21 (Low).

Estimates are based on published industry averages and are not a quote. Actual rates depend on card mix, ticket size, industry, and underwriting.

Seasonality, fees, and what a good result looks like on NMI

Disputes arrive weeks after the sale, so your 90-day window can lag your busiest period. Holiday orders tend to show up as chargebacks in January and February. Annual plans that renew on the same date, or a large free-trial cohort converting at once, can produce a spike in a single month. If you have one of those coming, run the scorecard again with a projected chargeback count and see whether your headroom covers it.

Look beyond the chargeback fee on your statements. NMI merchants are often billed separately for the gateway and for processing, which can mean a gateway monthly fee, a per-transaction gateway fee charged on every attempt (including declines from card testing), and separate fees for fraud, 3-D Secure, vault, or recurring modules. Processing statements may add retrieval fees, PCI non-compliance fees, and batch fees. The scorecard's cost estimate uses an assumed $25 per chargeback; replace it mentally with your actual fee if yours differs.

A good result for an NMI merchant is a Low band, a ratio below the 0.65% caution line, and enough headroom to absorb a seasonal spike without crossing 1.00%. For subscription and keyed-entry businesses, staying there usually means enforced AVS/CVV rules, 3-D Secure on online checkout, a descriptor customers recognize, and a reminder before every renewal.

Frequently asked questions

How this works: every assumption behind your score

These are the exact values the scorecard uses. Threshold values, cost figures, and fix reduction rates are assumptions, not card brand guarantees or measured statistics. Confirm current card brand rules and your actual fees with your processor.