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Why You Need Chargeback Protection

No matter you’re a subscription-based business or e-commerce store, chargebacks can create major problems for your business. E-commerce business owners consider credit card chargebacks awful. However, if you prepare ahead of time and use a reliable chargeback prevention system, a chargeback will never hurt your business and can be prevented easily.

What Are Chargebacks?

A chargeback begins when a customer files a dispute with his/her bank concerning a credit/debit card transaction. The problem stems from the fact that the merchant is left out of the dispute process or is notified too late.

Unfortunately, the number of customers who prefer not to inform the merchant of the dispute is growing. 58% of merchants are never notified of the pending dispute. As a result, merchants become helpless and unable to protect themselves against the initial chargeback.

Chargebacks are among the fastest-growing forms of online retail fraud. According to the analysts in the field, it’s estimated e-commerce fraud (chargebacks, identity theft or newly organized campaigns such as “card testing”) is increasing by 30% annually. Card testing refers to those cases when stolen card numbers are tested first on small purchases.

Recent Statistics

Based on a recent survey by the Centre for International Governance Innovation (CIGI), in collaboration with the United Nations, consumers all over the world are becoming more cautious of online transactions because cybercrime and privacy breaches are becoming more widespread. However, there is nothing showing that e-commerce is slowing down.

Online sales in the US are growing by over 9% year over year and are projected to account for $523 billion by 2020. In the US, 90% of all internet users purchase a thing using the Internet at least once on a monthly basis.

Chargebacks alone now result in $40 billion in lost revenue on a yearly basis, comprising almost half of all online retail fraud.

According to a risk management firm, 58% of cardholders file a transaction dispute without contacting the merchant before doing this. 28% contact the merchant after they have already filed a dispute. As the co-founder of the firm notes, 86% of chargebacks may be caused by friendly fraud.

The term “friendly fraud” stands for those cases when a customer makes a purchase with his/her own credit card, receives the merchandise and then files for a chargeback.

Chargeback Protection from (EMB), a reputable payment processor, has partnered with Verifi and Ethoca to provide merchants with the very best in chargeback prevention services. As a merchant chargeback provider, EMB offers an unmatched alert and prevention system in the industry. Thanks to the system, merchants get notified when disputes occur.

Verifi’s Cardholder Dispute Resolution Network (CDRN) enables merchants to be notified immediately and decide whether or not they should be refunded or decline. EMB is voted the #1 high risk processor in the US and is rated A+ by the BBB.