Data Breaches Can Hurt a Small Business Without Chargeback Protection

Apr 22, 2015

It appears that every month there is a report on the news that another mega-company has been hacked and millions of customers’ information has been stolen. Target alone has to pay $10 million in settlement including legal fees for their breach. The attorneys reaped most of the rewards with the average affected customer only seeing $.25 if he filed a claim. However, now that there are so many breaches the courts are learning just how much it costs a customer who has had his identity stolen. Twenty-five cents is just not going to cut it. More money is going to have to come from somewhere. In times of uncertainty the wise merchant will have chargeback protection. We are not picking on Target. So far they have paid in excess of $162 million for the breach.

Stopping Chargebacks before they happen can help most merchants. In today’s processing environment there are four categories of chargebacks with the largest one being fraud. This is when the credit card is used without the authorization and consent of the cardholder. In cases like these, the merchant is held solely responsible. The other instances are the customer received a different item than ordered, the customer returned an item and did not receive credit, and numerous other scenarios. The crux of the chargeback system is that 58% of the time there has been no communication with the merchant. The chargeback has come as a surprise around 60 days after the sale was made.

With chargeback protection the merchant is included in the loop. When there is a problem with a sale, rather than the information going directly to the issuing bank, the merchant is alerted. This gives him the opportunity to save the sale or issue a credit. A credit is not a chargeback and does not have any impact on the chargeback ratio.

In addition to a merchant doing everything possible to ensure that it is the card holder making the purchase, chargeback protection can indicate that there is a likelihood of fraudulent activity way before a major retailer announces a data breach. Every consumer has a typical shopping pattern. When the software detects a major change in this pattern it sends up a red flag. For instance, a consumer has and keeps a $2,500 open to buy on his credit card. All of a sudden there are charges for multiple electronic items of the same kind and it is happening every day for a week. The red flag gets waved and the merchant has the option to accept or not accept the sale.

Merchants who want to protect themselves from excess chargebacks need chargeback protection from card processing specialists like EMB. A professional in the area will be happy to answer any questions you may have. The call is free and you are under no obligation.

*EMB is not an actual insurance provider. We offer an alert system that allows a merchant to refund a chargeback before it becomes one.

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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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