Is there such a thing as Chargeback Insurance?

Apr 04, 2014

Even though merchant account services provide good security, occasionally a fraudulent transaction can occur. When this happens, it can unnerve a vendor. However, many companies offer chargeback insurance, to ensure that your company is not hit too hard.

Chargeback insurance is just like any other insurance policy. It helps protect the policyholder’s financial interests when unforeseen events pop up.  Chargeback insurance is usually offered by merchant account processors, and a vendor should ask for information on it before deciding on a merchant account service provider. Chargebacks begin when a customer files a dispute with their bank regarding a credit or debit transaction. The problem arises when the merchant is left out of the dispute process or is informed too late. Customers are not informing the merchant themselves at an increasing rate. Right now for all chargebacks, the merchant is not notified of the dispute in 58% of all instances

Verifi has networked with banks and card issuers to create the new CDRN. This network kicks into action as soon as the customer notifies the bank of a dispute and the card issuer acknowledges that it involves a merchant with the CDRN. Once the CDRN is involved, they inform you, the merchant, immediately regarding the dispute. The merchant will receive the request and can then choose whether or not the dispute should be refunded or declined. This is the pivotal step in allowing your business and your transactions to come back within the realm of your control. Once the merchant has chosen to refund or decline, the CDRN will notify the card issuer of the merchant’s decision. This helps resolve the dispute in the timeliest fashion possible by simply bringing the merchant back into the loop and cutting out all the intermediaries.

While this can seem complicated, with a reputable merchant service provider behind you the process should go as easily as possible. The main thing for vendors and consumers is to be patient, as not all transaction disputes can be taken at face value; in fact, the vast majority must be looked into to further prevent fraud. While no one wants a chargeback, it is wise to have the best chargeback insurance in case it does occur.


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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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