10 Tips Merchants Should Use to Avoid Credit Card Chargebacks

Oct 13, 2017

Chargebacks occur when a customer files a dispute with his/her bank regarding a credit/debit card transaction. The problem arises when the merchant doesn’t participate in the dispute process or is informed too late. In 58% of all instances, merchant are never notified of the pending dispute, which makes them helpless and unable to defend themselves against the initial chargeback.

Top chargeback reasons are:

  • Fraud/no authorization – 57.9%
  • Cancel recurring billing -18.6%
  • Product/services – 18.3%
  • Liability shift – 3.5%
  • Others – 1.7%

With a reputable payment processor like emerchantbroker.com, you can enjoy the top chargeback prevention and protection services in the industry. EMB is voted the number one high risk processor in the US and has an A+ rating with the BBB. EMB provides exceptional credit card processing and business funding opportunities to both traditional and high risk merchants.

Chargeback Statistics

  • Ecommerce industry lost of $6.7 billion in revenue because of chargebacks in 2016, out of which 71% ($4.8b) was caused by friendly/chargeback fraud
  • Every dollar of fraud cost ecommerce merchants $2.40 in 2016, up from $2.23 in 2015
  • Estimated average monthly value of successful fraud transaction accounted for $146 in 2016
  • 68% of online businesses were expecting more fraud this year
  • 62% of online businesses are going to invest more in fraud prevention
  • 40% of consumers filing a fraudulent chargeback will do it again within 60 days and 50% within 90 days
  • Credit card chargebacks are increasing at a rate of 20% annually
  • Friendly fraud increased 41% over the past 2 years

How to Avoid Chargebacks?

Here are steps you, as a merchant, should follow to reduce the risk of chargebacks:

  1. Check the expiration date and enter the security code on the front or back of the card.
  2. Stick to a DBA (doing business as) name or use clear payment descriptor that your customers will recognize. Your phone number should be printed on the customers’ billing statements.
  3. Ensure that the credit cards used to purchase your goods/services have not been stolen.
  4. Make sure your services are valuable to your customers and clearly indicating what they should expect when they make a purchase. Your website should have a refund policy page.
  5. Avoid accepting expired credit cards.
  6. Get your customers’ authorization in writing. Require customers to sign a contract that includes the specific services your company will provide.
  7. Learn to detect warning signs of fraud. Pay attention to alerts that inform there are any suspicious details like incorrect credit card security codes, or billing and shipping addresses that don’t match.
  8. Train your employees in how they can deal with both card-present (CP) and card-not-present (CNP) transactions, look for suspicious transactions, verify signatures in card-present transactions, and obtain signatures on contracts and sales orders when appropriate.
  9. Keep accurate records of customers’ credit card transaction dates, amounts and authorization information. This will help you win a dispute against a customer.
  10. Fight back only if you think you could win a case. A history of chargebacks can deteriorate your relationship with your merchant account provider.

Higher chargeback rates can result in huge losses and negatively impact your company’s image among credit card processors. Fortunately, there’re steps you can take to reduce or avoid chargebacks and protect your business against unfair chargebacks.

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 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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