Chargeback Insurance Providers Protect Merchant Accounts

Jul 10, 2018

To keep a healthy, open merchant account, merchants must prevent and fight chargebacks.

Merchants that don’t take chargebacks, which are when credit card providers force merchants to repay the loss of fraudulent or disputed charges, seriously can lose their merchant accounts. If merchants don’t keep chargeback ratios below 2%, providers can terminate merchant accounts. Without a merchant account, a business cannot accept and process credit card transactions.

One way to maintain a merchant account is to reach out to a chargeback insurance provider for coverage. Chargeback insurance works like other policies, in which you pay a monthly premium to an insurer to cover chargeback costs and fees. Also, similar to other policies, coverage varies depending on the plan you have accepted. Therefore, not every chargeback reason is covered by insurance. If you sign up for chargeback insurance, you must read the fine print and figure out what it covers.

What Chargeback Insurance May Cover

In many cases, chargeback insurance covers fraudulent charges, which are those purchases that are made with a stolen credit card or an unauthorized account holder. Insurance also may cover when a fake card and account number is used or when the shipping address is different from the billing address of the purchaser.

However, chargeback insurance providers don’t sell coverage that protects you from everything, such as friendly fraud. This type of fraud is when people claim they didn’t receive an item or service but says this just to avoid payment. Friendly fraud and other reasons are why it is imperative that you implement a solid chargeback protection plan.

6 Ways to Curb Chargebacks

Here are some of the steps that you can take to reduce your organization’s risk against chargebacks:

  1. Use a Clear Payment Descriptor: By using a business name that the purchaser can recognize, there is less likely a chance the person will trigger a chargeback. Also, it is a good idea to include a phone number in the description, so that a purchaser can call if there is a problem or question.
  2. Check the Card Twice: Be sure to check the expiration date and security code on the front and the back to ensure they are valid.
  3. Display a Valid Return and Refund Policy: The best way to prevent a chargeback is to ensure that buyers know what they are getting and what they need to do if they have a problem with a product or service. By prominently displaying your return and refund policy, you likely are preventing a number of transaction disputes.
  4. Get It in Writing: Anytime you can get authorization in writing it is good. Make all of your customers to sign terms and conditions that prevent you from accepting liability for certain circumstances.
  5. Look for Fraud Warning Signs: Merchants that are aware of the signs of fraud, cut down their chargeback numbers. Incorrect security codes and shipping and billing addresses that don’t match are dead giveaways.
  6. Keep Accurate Records of Customers and Their Behaviors: Maintain good records of your customers’ credit card transaction dates, amounts, and authorization data. You will be able to compare this information to future transactions. Having this information organized and within reach will help you fight disputes and win.

In Conclusion

If you fail to take the appropriate measures to prevent and fight chargebacks, expect to experience a blow to your business reputation, revenue losses, a higher fees and rates. Also, it is important to remember that merchants that have accounts terminated have a much harder time getting a second merchant account from another provider.

One good way to protect your business is to get coverage through chargeback insurance providers. Another option is a valid chargeback mitigation program.

If you are looking for a merchant account provider that takes chargebacks seriously, then consider (EMB). It offers a chargeback mitigation program, Chargeback Shield, that can prevent one in four chargebacks, which is especially ideal for high-risk businesses. EMB partnered with Verifi, its Cardholder Dispute Resolution Network (CDRN), and Ethoca’s alert system to create a system that allows businesses to resolve credit card transaction disputes directly.

In addition to offering chargeback mitigation tools and fraud protection, EMB makes the merchant account process simple. After filling out EMB’s quick online application, you simply need to provide some standard paperwork to underwriters and processors for review.


*Chargeback Shield is not an insurance service. EMB does not sell insurance and Chargeback Shield is not insurance; it is an alert system.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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