How a Chargeback Can Put Your Company Back at Square One

Mar 17, 2015

Everyone has heard of a fraudulent charge, and many have experienced one, two, or even more. Fraudulent charges are considered a normalcy in the high risk business realm. However, perhaps the biggest downside of the fraudulent charge is what happens next: The chargeback. Many, even some who have experienced a chargeback, are not sure what it really is. While the terms is scary, there are ways to protect your company from chargebacks.

What usually happens with a mainstream processor is that once you have a fraudulent charge, your account is “flagged”, and your fees rise. After a second or third fraudulent charge, they terminate your account. At times, this comes without notice, leaving you without a way to process any payments, or issue refunds. The second part of a fraudulent charge is the chargeback. The chargeback is the fees associated with the fraudulent charge. The chargeback is not just the refunded transaction, but penalties that your processor and the card companies have attached to it. These fees can become a headache, as they can be upwards of 270% of the original charge. This is outrageous! While a small chargeback of $5 isn’t a big deal to most businesses, a larger chargeback is.

There are few options to help guard against chargebacks. One of the best is EMB’s chargeback insurance. While our chargeback insurance, you can not only save funds when it comes to chargebacks, but we can help you determine if the fraudulent charge is actually fraudulent, or just a regretted purchase. While others punish or drop your company for fraudulent charges, we know that it is truly a part of the high-risk game. We will not drop your account, or raise your processing fees just because you are dealt a fraudulent charge. While our chargeback insurance is not required for a merchant account, it is a good idea to obtain one, as a chargeback can cripple a company at any time.

 

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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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