Fight Payment Fraud with Chargeback Insurance and Other Tools

Jul 25, 2018

As the world continues to move full throttle away from cash transactions, cybercriminals have stepped up their games in terms of fraud. In 2017, there were 16.7 million reported victims of identity fraud, which is equivalent to 6.64% of the U.S. population, according Experian, one of the three major credit reporting agencies. Compared to 2016, this was a more than 30% increase in online fraud attacks.

As online and mobile payments outpace transactions at bricks-and-mortar businesses, merchants should expect fraud to continue to rise. Merchants that want to protect their businesses and merchant accounts must develop a plan to preventing payment fraud. A solid plan may include chargeback insurance, fraud filters, and other things.

Understanding Payment Fraud

Payment fraud is any type of transaction that involves falsely creating or intercepting payments, including using fake customer records, using stolen credit card information, or altering a purchaser’s details. Fraud results in chargebacks, which are when credit card brands force merchants to refund the loss of fraudulent or disputed charges. Too many chargebacks and merchant service providers can shut down your merchant accounts, which prevents you from accepting and processing credit card transactions.

Ways Cybercriminals Commit Payment Fraud

As merchants secure their networks with firewalls, antivirus software, and updates to their network security systems, which are all ways that can help cut down on fraud, cybercriminals find other ways to infiltrate businesses. Hackers will work together to find networks that have been updated and look for other gaps in security.

Also, cyberhackers will act as a legitimate credit card representatives and contact card owners to get their sensitive information. Hackers try gather sensitive data via:

  • Texting malware to smartphones and tablets
  • Email
  • Instant messaging
  • Rerouting web traffic to fake sites
  • Phone calls
  • Online auctions

How to Mitigate Online Payment Fraud

Similar to other coverage, you buy a chargeback insurance policy for a monthly premium from an insurer. The amount you pay and what it covers, however, depends on the insurance company. However, most policies don’t cover you from every type of chargeback. Like other insurance, the more you pay, the better the coverage.

In general, chargeback insurance covers purchases made with stolen credit cards or those transactions made by unauthorized account holders. But, many polices don’t protect businesses from friendly fraud, which can be just as detrimental to your business to good, old-fashioned payment fraud. Friendly fraud is when a shopper asks for a charge on a credit card to be refunded because he/she doesn’t want to pay for the product or service. Shoppers will claim an item is defective, didn’t receive it, or never ordered it. Friendly fraud is a good reason to explore more than one chargeback protection option.

In addition to chargeback insurance, there are several other ways to combat payment fraud, including:

  • Work with a verified payment processor
  • Keep on top of the current fraud trends
  • Secure networks
  • ·Use chargeback mitigation tools and fraud filters
  • Encrypt transactions and emails that contain personal, sensitive data, such as credit card numbers
  • Run security checks with antivirus software on a regular basis
  • Install firewalls on websites

The Final Say

Since payment fraud negatively impacts merchants and customers, businesses must proactively work to prevent chargebacks. Whether it’s through chargeback insurance, fraud filters, chargeback mitigation tools, or a combination of them all, having a solid plan will help ensure your business doesn’t get hurt by them.

If you are looking for a merchant account provider that believes in taking steps to prevent payment fraud, then consider (EMB). It offers Chargeback Shield, a mitigation tool that can prevent one in four chargebacks. By partnering with Verifi, its Cardholder Dispute Resolution Network and Ethoca’s alert system, EMB offers a tool that allows businesses to resolve credit card transaction disputes directly.

In addition to offering fraud filters and chargeback mitigation resources, EMB specializes in working with high-risk merchants. Its online merchant account application is simple and straightforward.



*Chargeback Shield is not an insurance service. EMB does not sell insurance and Chargeback Shield is not insurance; it is an alert system.

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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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