Jul 16, 2014

Understanding Chargebacks and How They Affect Your Credit Repair Business

business womanWhilst many companies have to deal with chargebacks, these are when a merchant, whose customers have queried a charge on their credit or debit card account. If you are a credit repair merchant account user, this can have problems in the long-term with trying to repair a person’s credit rating if they are experiencing problems or disputing the costs of goods or service.

A chargeback is a complicated process where many people are unaware of the problems these can cause, for not only the merchant company, but also long-term problems that can result in the merchant account withdrawal.

A chargeback originates when the cardholder queries a charge on their account; sometimes it is simple as a customer error, but more often, there is a deeper problem. Sometimes it is due to fraudulent use of the card or the merchant has neglected to use the same name as the company on the details that appear on the customer’s account. Human errors do occur and duplicate processing of a charge can happen.

However, whilst the customer wants a refund for an item they don’t recognise a merchant can end up refunding the price of the goods as well as other costs and charges. If they decide to take the claim to arbitration and lose, they face costs in excess of $400.

A common occurrence is a customer claiming not to have received the goods, which is where protection for the business is important, proof of delivery, making the items needing a signature on delivery or signing up for a verification process offered by Visa and MasterCard, to verify the customer is using their own card is essential.

A credit repair business looks to help improve a person’s credit file, sometimes credit used to purchase products are fraudulent and by a third-party. Getting these removed is essential that you work quickly, a consumer has 120 days to dispute a purchase and it can take another 75 days before the resolution is complete. This delay means that the client has to wait for an improved and accurate credit file.

Thereby, there are two sides to any chargeback, and whilst it is important to protect the consumer, many businesses suffer with loss of goods and pay high fees, associated with the costs of individual chargebacks. If they face a high percentage in chargebacks in comparison to their sales, they face losing the contract with the merchant provider completely.

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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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