What You Should Know About Chargebacks and Preventing Them

Apr 07, 2017

Accepting credit cards as payment in your business transactions can help you enjoy increased revenue and customer base, as well as improved productivity. A merchant account that you can open for accepting cards for payments will enable you to run your business with convenience, cost-effectiveness, and professionalism. Chargebacks are one of the important aspects concerning merchant accounts that you should be well aware of.

Chargebacks

Customers or cardholders get credit cards from banks, which are also known as “issuing banks.” A chargeback, which is also referred to as a reversal, is a type of customer protection that the issuing bank provides.

A chargeback begins when a customer files a dispute with their bank concerning a credit/debit card transaction. The problem arises if the merchant isn’t involved in the process of dispute or is informed too late.

Customers are more often leaving merchants out of the dispute process. In 58% of all instances, merchants never get notified of the pending dispute. Thus, they get into a desperate situation, being unable to defend themselves against the initial chargeback.

Why Chargebacks Occur

Almost all chargebacks are caused by cardholders Here are the 4 main reasons for chargebacks:

  • Fraudulent Transactions – Are the most common cause for chargebacks.
  • Credit That Isn’t Processed – When the merchandise is returned by the customer to the merchant, the customer requests his/her money back, but says credit isn’t posted to his/her account. The merchant is also held liable.
  • Item That Isn’t Received – Is among the most common reasons. The customer didn’t get the item he/she had paid for by credit card. The merchant is also held liable.
  • Technical Problems

Sometimes, it’s impossible to avoid chargebacks. Of course, it’s important for a business to process credit card payments, but chargebacks can sometimes lead to major problems indeed. When a customer disputes a transaction for this or that reason, a rather complicated chargeback process will be awaiting for you. As a result, you’ll end up with lost sales and be obliged to pay unnecessary fees.

How to Prevent Chargebacks

According to The Nilson Report, the most trusted source of global news and statistics about the payment industry, $31 billion will be lost to chargebacks by 2020. 70% of customer disputes are associated with fraudulent or service-related chargebacks. According to Invespcro, a leading provider of Website Conversion Optimization Intelligence, AB and multivariate testing software and services, every dollar of chargeback fraud costs e-commerce stores nearly $2.4.

Online merchants incurred nearly $7 billion losses in the form of chargebacks in 2016 alone. To successfully fight chargebacks, you should turn to a reputable payment processor like emerchantbroker.com to get the best chargeback protection for your business. EMB is voted the #1 high risk processor in the US and boasts an A+ rating with the BBB.

In partnership with Verifi and Ethoca, EMB offers exceptional chargeback prevention solutions to merchants of any type and size. Thanks to Verifi’s new Cardholder Dispute Resolution Network (CDRN) and Ethoca’s alert system, EMB provides unmatched chargeback protection services in the industry.

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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