What Merchant Chargeback Protection Can Offer You

Jan 20, 2016

What is merchant chargeback protection, and can it solve your chargeback problems? Even if you have the best chargeback management plan, there will always be unauthorized transactions that slip through. If you have noticed that these fraudulent transactions are beginning to affect your bottom line, it might be time for you to consider what chargeback protection can offer you.

Before you sign up for chargeback protection, you should understand a little more about it. Many merchants interested in chargeback protection are under the assumption that it is some kind of insurance policy. Why? The term “insurance” suggests that it is a policy with the intent of protecting the policyholder’s financial interests. However, every merchant should know that no chargeback protection has the ability to safeguard you from all the negative effects of chargebacks and is NOT a traditional “insurance”policy.

Typically, chargeback protection will rely on the use of fraud filters. According to chargebacks911.com, “A fraud filter helps reduce the risk of profit loss by flagging transactions that are likely to result in chargebacks (those probably initiated by fraudsters).” However, even when a fraud filter does catch and label a transaction as “high risk”, merchants only have three options available to them:

  1. The merchant can follow the fraud filter’s advice and refuse to fulfill any “high risk” transaction.
  1. The merchant can manually contact each and every customer who has been associated with a “high risk” purchase; this will allow the merchant to validate and charge any false-positive transactions.
  1. The merchant can make the choice to ignore the fraud filters all together and process the transactions anyway.

This is where chargeback protection has something to offer a merchant. Ultimately, chargeback protection helps a merchant recover revenue they might have walked away from, simply because the fraud filter labeled the transaction as “high risk”. A chargeback company takes the time to manually review and analyze such transactions. While chargeback protection can increase your revenue, it does not eliminate all of the liability and risk involved.

According to chargebacks911.com, “Chargeback protection is a great way to help salvage previously identified “high risk” revenue without sustaining costs of the associated chargebacks. However, it is not a solution for merchants who suffer from high chargebacks.”

Keep in mind that chargeback protection does not cover chargeback scams (friendly fraud), and it does not reimburse for chargebacks resulting from “poor quality”. Also, it does not alter the chargeback ratio that a company sustains. While you may be reimbursed for any lost profits you experience, the policy will be unable to change your overall percentage of chargebacks.

If your chargeback rate exceeds 1-2%, you are still at risk of losing your merchant processing account. Consider what EMB’s chargeback shield can do for you. Take advantage of EMB’s team of specialists and inquire after their chargeback protection and prevention programs today.

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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