Chargebacks Can Mean The Difference Between Remaining in Business or Going Under

Sep 10, 2014

This seems likes a very broad statement. However, the core is totally true. Any company that runs an e-Commerce business knows that money that chargebacks can cost. Not only is the service or product lost for good, the company has spent time and resources trying to defend the reversed charge. They have been assessed a chargeback fee of up to $100. And if the company should go over a three percent chargeback ratio, it runs the risk of VISA and MasterCard pulling the plug on their ability to accept credit cards at all, which can ultimately make them shut their doors. This is why finding a chargeback insurance provider is critical.

In the regular course of business, when a customer is unhappy with a product or a service they will contact their credit card issuer and report a dispute as soon as they receive their monthly statement. A rare few will contact the merchant to make things right prior to filing the dispute. Credit card companies tend to lean in favor of their cardholders, so oftentimes the resolution is not in the merchant’s best interest. Once the decision has been made, the merchant loses the income and receives an indelible mark on its reputation.

A return issued prior to a chargeback is not a black mark. It is considered normal business practices. If e-Commerce companies could move more chargebacks to an upfront position of issuing a refund, their chargeback levels would be reduced and they would retain more revenue. This is where a chargeback insurance provider steps in to save the day.

A really good example of this is when the customer purchases a product “As seen on TV” for a Magic Widget. They purchased that product and they are very pleased with it. When their monthly statement arrives they see a substantial charge from Apex Industries. The customer has made no purchase from Apex Industries and calls the card issuer and says someone used the card fraudulently. If this chargeback had been intercepted earlier, the customer would have discovered that Apex sent the Magic Widget and said, “Now I know!”

Chargeback insurance providers like have Chargeback Suites that that can reduce chargebacks by as much as 30%. The suite is powered by Verifi and Verifi’s new Cardholder Dispute Resolution Network (CDRN) as well as Ethoca and their alert system. Most chargeback problems exist because the actual merchant never is contacted until the funds are subtracted from his account. He never knows there is an unhappy customer. By then it is too late to remedy the chargeback issue.

CDRN comes into play when customer notifies the bank of a dispute and the card issuer acknowledges that it involves a merchant with the CDRN. Once CRDN is involved they contact the merchant immediately. Then the merchant can make the decision to refund the purchase price or decline the dispute. This puts the merchant back in charge of the direction of his company. His sales have been protected by his chargeback insurance provider.

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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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