What Recourse Does a Merchant Have for Chargebacks?

Nov 18, 2014

This is a question that has been asked by just about every merchant who processes credit and debit sales. There are several avenues to explore depending on the amount of your average sale. For a merchant whose average ticket is under $100, the best option is a processor who offers a chargeback insurance suite. Those whose average tickets are over $100 should take the chargeback insurance and also take a look at their sales contract and terms of use agreement.

There are dozens of reasons for chargebacks. We all know about identity theft and fraudulent charges. Individuals steal others credit cards and make unauthorized purchases. The merchant has done his due diligence by verifying the CVV and received an authorization from the credit card company. It isn’t until he receives a chargeback 60 days later that he realizes there has been a problem. For all intents and purposes, his merchandise has been stolen from him. To add insult to injury, he has to pay a chargeback fee to learn about the incident.

Then there are the legitimate sales to legitimate card holders who will swear on their mother’s grave they did not make the charge. We all know they did. However, the credit card issuers always side with the customer, no matter what. First, the merchant needs to have a clause in the terms of use that states if the customer issues a chargeback, the customer will be responsible for chargeback fees and any attorney’s fees. If the merchant has proof that the shipment was signed for by the customer, he had the right to invoke the clause asking for the cost of the merchandise, the chargeback fee and all legal fees. It truly does depend on the amount of the sale because it can be a long, drawn-out procedure.

Now we have the run-of-the-mill everyday chargebacks. These are the ones where the customer does admit he received the goods but for one reason or another the product was not what he expected, there was false advertising or statements, etc., etc. This is where chargeback insurance really comes in handy.

Like any other chargeback, the merchant is not notified until after the damage is done. With chargeback insurance the merchant is advised that the customer has a problem with his merchandise immediately. The merchant can perform due diligence and find out what the issue is. At this point he may decide to refund the purchase price to the customer – or tell him to take a hike. In the first scenario the merchant has been able to satisfy the customer and there is no chargeback to his account. In the second scenario the merchant takes a chargeback hit. The difference is that it was his decision and not someone else’s.

Having chargeback insurance helps mitigate fraud, avoid costly chargeback fees, fines and related operational expenses. If you have a high risk merchant account, this insurance can save you 30% or more in chargeback fees.

If you need a new high risk processor that offers this insurance, there is a processor who specializes in only high risk accounts. There is never an application fee or a set-up fee. Usually you can be approved within 48 hours. They also offer high volume solutions, load balancing gateways and multiple merchant identification numbers.

Let us help you get a high risk merchant account today!

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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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