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 themselves whether or not the dispute should be refunded or declined. This is the pivotal step 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 transactions 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.