The Role of E-Contracts in Successful Chargeback Mitigation

Dec 26, 2018

In the payments industry, many discuss a variety of ways of cutting chargebacks, but the most efficient way may be through e-contracts.

What are E-contracts?

E-contracts, also known as electronic contracts, work just like paper contracts. They outline the terms and conditions of agreements for the parties involved. They are signed via computer apps or through email, and if they contain e-signatures, they are legally enforceable just like paper contracts.

The Benefits of E-Contracts

Getting customers to sign e-contracts has advantages. Having a signed agreements proves that customers were given the terms, including payment costs, refund and return policies, and the scope of services, and that they agreed to them. Signed e-contracts also can help businesses cut down on chargebacks and win disputes.

Information E-Contracts Should Include

To get the benefits of e-contracts, merchants should include as much information as possible. The idea is to ensure that customers get full understandings of the services they are receiving and at what they cost. It is also a piece of evidence that can be forwarded to a credit card issuer  when there is a chargeback dispute. Important information to include:

  • Itemized lists of all products, services, and their prices
  • Any recurring costs
  • Refund and return policies
  • The length of the agreement
  • Cancellation polices, including early termination fees
  • Full business name, address, and contact information

Many customers forget or feign forgetting the terms and conditions of agreements, and then use their lack of knowledge to dispute a transaction. Including information, like return policies and terms and conditions, minimizes customers’ chances of claiming they were unaware of these details. In some cases, customers have won chargebacks even though a merchant clearly displayed refund and return policies and terms and conditions on their sites. Having the details on an e-contract further strengthens your business when you fight a chargeback.

E-Contracts Matter for Recurring or Subscription Billing

E-contracts can be especially important when it comes to those businesses that use recurring billing. Merchants that cannot prove that customers were aware of recurring charges can expect to lose any transaction disputes they face. In addition to noting on e-contracts that recurring billing is used, businesses should protect themselves by ensuring details about how customers will be notified of the charge in advance, such as receiving emails a week or so before their credit cards are charged. Smart merchants also give customers regular opportunities to update their contact information, such as emails.

Keep Proof that Customers Received E-Contracts

Having signed e-contracts are not always enough. It is better when you can prove customers actually received signed copies of agreements. Having software that maintains the email address or IP address of the customer, as well as the date, time, and signature will make it more difficult for a consumer to fight a charge and win.

A Final Say on the Benefits of E-Contracts

Excessive chargebacks can make or break a business. The hefty fees and penalties that come with chargebacks not only cut into profit margins, but they can put your merchant account, which you need to accept credit and debit card transactions, at risk. Using e-contracts that contain vital business information and keeping clear records as proof can minimize transaction disputes, cut down on customer confusion, and help you fight chargebacks effectively. Backing up your claims with signed e-contracts helps level the playing field, which often tips more in the favor of customers than merchants. Do yourself a favor and protect your business and merchant account the best way you can.

If you are need of a payment solution, contact merchant service provider, (EMB). It works with high-risk businesses, as well as businesses of all sizes and credit histories.

EMB offers an easy online merchant account application process in which most applicants get approved quickly. To begin, start your application process 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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