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.
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.