Chargebacks: The Basics and How to Prevent Them

Jan 29, 2014

A chargeback can be a detriment to any customer that has to experience it. An overdrawn bank account can lead to cash flow complications and various financial problems. A credit card chargeback can be efficiently reversed by filing a particular complaint. Some of the different complaints that can be filed include fraudulence, erroneous billing, and identity theft. When a complaint is filed, the bank may make a decision to give the money back and reverse the charges. Many small and mid-sized businesses experience the chargeback crunch as they become strapped and cannot locate the needed documentation. Many financial businesses also are forced to charge additional fees for chargebacks that occur. Unfortunately, many customers and merchants incur chargebacks that can reach as high as $100 dollars.

Some important steps can be taken to prevent chargebacks from occurring in the future:

  • The business name should be accurate and precise so that customers can recognize it. Many chargebacks occur because a business name is inaccurate.
  • Responding in a timely manner when a chargeback does occur. An individual should make sure to respond within 12 days at the latest.
  • Make sure the receipt signature matches with the signature on the backside of the debit card.
  • When the credit card is declined, make sure to completely stop using it.
  • Procure an authorization for the sale that occurs.
  • When a purchase is made online, make sure to utilize AVS (Address Verification System).
  • The bank should be provided with a local number so that they can reach you anytime.

Another reliable service that can be obtained is called chargeback insurance and it will reimburse the charges. The chargeback insurance will typically cover a charge that occurs due to a stolen debit or credit card. A chargeback can serve as a major complication for many businesses.

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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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