The Ins and Outs of Chargebacks

Jul 14, 2014

Chargebacks can hinder even the most profitable business, due to their unexpected occurrence. While high-risk companies are presumed to be at a higher risk of chargebacks, they are usually charged to the merchant unannounced. The chargeback fee can also be outrageously more than the price of the actual fraudulent charge, sometimes up to 270%! While chargebacks can damage a company, there are remedies that can help you recognize chargebacks before they become an unwelcomed surprise.

Electronic payment processing opens the door for merchants to reach markets worldwide, but they also come with drawbacks. One of the greater threats to your business’s bottom line is chargebacks. eMerchantBroker (EMB) has partnered with Verifi and Verifi’s new Cardholder Dispute Resolution Network (CDRN) as well as Ethoca and its alert system. By networking with both banks and card issuers, the CDRN is giving merchants something they have been lacking until now: direct control over resolving credit transaction disputes before they become one. By offering our merchants both chargeback resolution networks, they can achieve the highest rate of chargeback resolution.

Chargebacks begin when a customer files a dispute with their bank regarding a credit or debit card 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 of the dispute at an increasing rate. Moreover, in 58% of all instances, the merchant is never notified of the pending dispute, making them helpless and unable to defend themselves against the initial chargeback. With EMB’s chargeback insurance, you can help eliminate the unwelcomed surprise of chargebacks, as well as some of their fees.

Chargebacks are bound to happen, regardless of the type of company you operate. While it may seem like a lost cause to try to eliminate chargebacks or lessen their fees, it is possible. While not all chargebacks are eliminated with chargeback insurance, they are lessened, and their fees are lessened, as well. Chargeback insurance is something that all merchants, high risk or not, should invest in, as it not only helps protect their company but its customers, as well.

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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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