Chargeback Insurance, Safeguarding your Business for EMV Liability Shift

Nov 25, 2015

In August of 2011, Visa made the announcement that it was moving toward EMV contact and contactless chip technology in the U.S. The first milestone, effective on October 1, 2012, involved Visa expanding its Technology Innovation Program (TIP) to merchants in the U.S. The deadline for the EMV liability shift was set for the beginning of October 2015. These deadlines have obviously come and gone with the end of 2015 fast approaching. The biggest concern now is for the merchants, and whether or not they fully understand what this liability shift means for them.

Fraud has always been a problem for merchants, but the amount of fraud is about to change. According to Javelin Strategy & Research, a Pleasanton, Calif.-based payments-research firm, there is about $6 billion is lost, stolen or counterfeit card fraud at stake. Before the EMV liability shift, issuers absorbed these losses. Now, the liability has been shifted over to acquirers in cases where fraud occurs due to merchants being unprepared for EMV.

According to Stephanie Ericksen, head of Authentication Product Integration of Visa USA, “The merchants that have not yet deployed contact chip technology at the point of sale may take on some additional liability for counterfeit transactions if chip could have prevented that counterfeit.”

In truth, a shocking 44% of small-business owners are completely unaware of the liability shift. A lack of clarity is to blame for merchants not fully preparing themselves. When merchants receive their November and December processing statements, they will feel the reality of the chargeback liability. The focus of conversation is quickly going to move from potential fraud liability to the reality of actual chargebacks and the reasons for them.

Acquirers, on the other hand, have made the EMV rollout a top priority. Many acquirers, afraid of falling on the wrong side of the shift, have begun to churn out chip cards. In other parts of the world where EMV is already adopted, acquirers generally equipped merchants faster. So far, the U.S. has had a different experience in that issuers are pumping out cards faster than merchants are equipped or even aware of the liability shift.

According to the vice president of ISO channel management at Clearent LLC, a Clayton, MO.-based merchant processor, the fraud is more than likely to move online where “nobody knows who you are”. Merchants are going to experience a significant, shocking increase in chargebacks.

One source merchants can utilize in order to protect themselves from the potential increase in fraud – especially online – is credit card chargeback insurance providers. Credit card chargeback insurance from EMB can not only protect your business, but your customer’s personal information as well. Chargeback insurance can help you distinguish between authentic charges and charges that are indeed fraudulent. In the end, a low chargeback rate means you can maintain your low prices. Don’t wait for those processing statements to arrive to properly educate yourself and equip your business.

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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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