If you Accept Mobile Payments, You Must Have Chargeback Insurance

May 22, 2015

Mobile payment apps are hot, and the number of users is growing by the day. It takes little time and effort for a merchant to accept mobile payments, but as with all good things, there is a catch. Mobile payments are prone to having more fraudulent transactions that other payment sources. We all know that one too many fraudulent transactions can leave you without a merchant account, and often, without a business. Fraudulent charge fees can take the wind out of even the most successful small business, and by obtaining chargeback insurance, you can help lessen these debilitating fees.

The biggest fraudulent issue with mobile payment systems right now is “friendly fraud”. Friendly fraud is when the purchaser knowingly buys the product, and then later claims that it was a fraudulent charge. With checks and plastic card payments it is easy to figure out if the charge is indeed fraudulent. However, since mobile payment apps use very little identifying information, many times these fraudulent claims cannot be questioned. This leaves merchants with nothing other than a big chargeback fee, otherwise known as the penalty for a fraudulent charge.

Chargeback fees are massive, and the higher the price of the original purchase, the more damage a chargeback fee can do to a business. These fees can be upwards of 270% of the original charge, which can add up if you are hit with expensive fees and multiple chargebacks. This is where chargeback insurance comes in. Much like health insurance, you still have pay a fee, but it would be a lot less than if you did not have insurance. Chargeback insurance, such as the program offered by EMB, can also help determine if the claim is indeed fraudulent, or just a case of “friendly fraud”. According to www.patmentsource.com, in 2013 merchants lost 11.8 billion in friendly fraud claims. If every merchant embraced chargeback insurance, this amount would be significantly lower.

Before signing with the first chargeback insurance option that you find, be sure to make sure that the company is the right fit for you and your business. Ask questions, and do not feel obligated to sign on right away. Remember, it is your business, and you have the ultimate decision when it comes to important financial decisions.

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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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