What are Chargebacks and How do I stop them?

Dec 20, 2012

Chargebacks can be a frustrating thing for a business operators – they are when a customer who has made a purchase from you by credit card makes a claim to their credit card company saying they did not receive their purchase or what they bought was not as it was advertised. A chargeback essentially means that the credit card payment made into your merchant account will be reversed. This can wreak havoc on cash flow and lead to much bigger problems if you don’t understand why it happens, how to deal with it and how to make sure it happens less in future.

How to Reduce Chargebacks

Some businesses are more prone to chargebacks than others, and for businesses with high chargeback rates it’s worth looking into getting a special high chargeback merchant account. Some traditional merchant account providers may inflict penalties if you have an unusually high chargeback rate, making running your business even more difficult. That said, there are some things all businesses can do to lower their chargeback rates.

Most importantly, you should be up front and open with customers about exactly what to expect when they make a purchase from you. Be clear with them about refund policies right from the start so that you’re on the same terms when the purchase is made. Also make them aware of what the should expect to see on their credit card statement, including the company name that will appear on the billing – they may be perfectly happy with their purchase from you, yet still request a chargeback because they don’t recognize the purchase when they see their next credit card statement.

Another little tip you can use for online transactions is to require a phone number and make note that phone verification will be required for large transactions. This will help scare off fraudsters and reduce the amount of fraudulent chargebacks you have to deal with.

High Chargeback Merchant Accounts

There’s an obvious risk involved in having a high chargeback rate, or more significantly, having a sudden upward spike in chargebacks: if you’re not expecting it, you can suddenly find yourself in a difficult cashflow crunch.

But that’s not the only problem. Having a high chargeback rate can also hurt your business’s reputation in the eyes of lenders and merchant account providers, including your current one. It may make it difficult for you to maintain your current account or switch to an account with a different provider.

That’s why, if you’re operating a business which you know has higher than usual chargeback rates, you’re best to pre-empt any problems by finding a service that specializes in higher risk, high chargeback merchant accounts.

This is what we help businesses do here at eMerchantBroker. We’re a brokerage service that helps business owners like you find the right kind of high risk merchant account provider so you can keep your credit card transactions processing smoothly without putting your whole business at risk.

 

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 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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