New EMV Rules Leading to Spike in Chargebacks

Apr 18, 2016

The fight to end fraud has unearthed a familiar enemy. Since the implementation of EMV chip card technology, there has been a spike in card-present chargebacks. Merchant-service providers are noticing this troubling trend across the country. Chargebacks for card-present transactions have jumped by 50% since the Oct. 1 EMV liability shift. The exact reason for the increase is unknown, but some professionals think issuers are using the EMV reason code during chargeback processing. However, when a reason code is used there is generally a surge in consumer retrieval requests. But that has not been the case.

Some issuers suspect that consumers are using the EMV liability shift to commit “friendly fraud” against merchants that don’t have EMV chip enabled terminals. New laws push liability for fraud onto merchants that don’t have EMV chip terminals. As a result, some consumers are filing chargebacks once they’ve made purchases at these establishments to get money back for legitimate purchases. Most chargebacks have been for minor transactions at food delivery places and discount stores.

Card issuers fear that an increase in chargebacks will negatively impact merchants that are not used to dealing with chargebacks and the costly fees associated. If this continues, small merchants may decide to stop taking credit cards all together. Unfortunately, banks have not been sympathetic to merchants that have been crippled by chargebacks, as officials reiterate that merchants have had ample time to make terminals EMV compatible.

For merchants that are not ready to adopt EMV technology, card issuers suggest that they pay attention to the last four digits of card numbers, ensuring that they correlate with the numbers that show up on the receipts for suspicious transactions. If these numbers don’t correlate, employees must ask customers for another form of payment.

High chargeback rates are hurting small businesses. Now more than ever, merchants need chargeback protection. Can your business afford a spike in chargebacks? Take a proactive approach to chargeback prevention. EMB provides high quality merchant systems to prevent chargebacks. We offer Chargeback Shield, powered by Verifi and CDRN a program that practically eliminates the frequency of chargebacks by 15-30%. Chargeback Shield is a specialty chargeback suite that will monitor, track, and alert you whenever a customer files a dispute with their bank. Start reducing your chargebacks today with EMB!

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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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