Stop These 3 Most Common Types of Chargebacks: Merchant Chargeback Protection

Jan 18, 2016

Chargebacks can kill the profits of small businesses. Chargebacks happen when a customer claims that an unauthorized transaction has occurred. This often robs merchants of the sale by refunding the customer and charging the merchant a costly fee. In fact, some merchants can lose up to $270 in fees for every $100 in chargebacks. Chargebacks can be prevented by merchants through diligence and commitment to processes. The following are the common types of chargebacks and ways to fight them.

  1. Unauthorized Transaction—these are the most common types of chargebacks and occur when a customer claims a purchase has been made without their permission. These are often fraudulent claims that can cost small businesses a lot of profit because of chargeback fees. If the cardholder is not the perpetrator of fraudulent activity, proactive investigation often reveals that family members or friends of cardholders are actually responsible for chargebacks. The best way to combat this type of chargeback is to beef up credit card security and implementing fraud-prevention services at the POS.
  2. Authorization not obtained — this can happen for a variety of reasons, but generally occurs because of multiple partial deposits via a single authorization. These chargebacks can be prevented by following solid processing practices like fraud monitoring, successful merchant level dispute resolution, and responsive customer service that is attentive to customer transaction activities.
  3. Multiple Transactions —these chargebacks usually are the result of additional transactions that happen after a service is cancelled, or is supposed to be finished. Merchants can reduce these types of chargebacks by honoring cancellation requests immediately. Plus posting clear return policies, services policies, and billing descriptors will also cut down on these types of chargebacks.

Chargebacks will happen. But there are plenty of tools that will help merchants monitor and control them. EMB’s Chargeback Shield reduces the frequency of chargebacks by 15-30%. The Chargeback Shield provides premium merchant chargeback protection, and is one of many great services that separates eMerchantBroker from its competitors. Chargeback Shield allows for merchants to concentrate on making profits, and not dealing with excessive chargebacks. Take the risk out of high risk business 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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