Chargeback Protection, Is it Worth It?

Feb 29, 2016

Overall, U.S. retail sales increased by 7.9 percent during the 2015 holiday season compared to 2014. The largest jump, however, came from e-commerce. According to cardnotpresent.com, revenue for e-commerce surged 20 percent from 2014 to 2015 during the Black Friday to Christmas Eve period. As the New Year winds down, however, and we move into the beginning months of 2016, consumers are starting to receive their credit card statements – along with a case of buyer’s remorse.

Many consumers will be regretting their generosity when they see the total of their holiday spending sprees. Some consumers will make it their New Year’s resolution to spend less in the future, while others will call their credit card companies to dispute charges in the form of chargebacks. The industry has named this situation “friendly fraud”, though merchants would tell you it is anything but friendly for them.

The Benefits of Taking Action

Many merchants choose not to review or respond to their chargebacks because managing them can be so overwhelming. Responding to chargebacks is very time intensive. It involves researching the original transaction, determining what the right course of actions is and then creating rebuttal documentation. Before throwing your hands in the air and walking away, consider the following benefits:

  • The opportunity to recover revenue

According to a recent study from Javelin Strategy & Research, out of the 43 percent of chargebacks merchants incur, they actually win 60 percent of them.

  • Avoiding future chargebacks

According to cardnotpresent.com, in a 90-day case study involving 12 merchants, chargeback management company Chargebacks911 found that when it actively responded to chargebacks on a merchant’s behalf that came from one of the top 10 issuing banks in the U.S., there was a 9.4 percent reduction in future chargeback issuances. “The reduction in chargeback rates was based solely on the merchant’s improved reputation—a direct result of positive impact through re-presenting chargebacks.”

  • Learning the reasons for chargebacks to prevent future losses

Taking the time to review the reasons why consumers are filing chargebacks and researching the original transaction provides a merchant with insight into gaps in its processing. Pinpointing the gaps leading to chargebacks will help prevent future losses.

If you are already seeing those chargebacks from holiday purchases trickling in, consider the benefits of taking action. Choosing to respond can reduce future chargebacks by showing consumers that friendly fraud is not tolerated at your business. To make the process less overwhelming, consider securing chargeback protection. EMB’s Chargeback Shield and partnerships – like with Chargebacks911 – provide merchants with immediate chargebacks notifications so they can be proactive in the dispute process. EMB is happy to help online businesses manage their chargebacks so they can prevent loss and minimize risk. To learn more about chargeback prevention, contact EMB today.

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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 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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