Why Your Business Has So Many Chargebacks

Apr 24, 2018

Chargebacks will not only cause you huge losses but also ruin your firm’s reputation among credit card processors. So when trading goods or service through the internet, always make sure you watch out for chargebacks.

Because operating a business profitably also means taking measures to ensure you have the fewest chargebacks, here’s a guide through what chargebacks are and tips on how to reduce their incidence.

What is a Chargeback?

We may refer to a chargeback as a disputed transaction. In other words, it is any charge a consumer disputes on his/her credit card. When a customer files a claim, the retailer must reverse the transaction to refund the money.

In essence, Chargebacks are designed to protect the shopper from unauthorized transactions. A buyer can simply file a dispute instead of arguing with the seller on the validity of a transaction.

What causes Chargebacks?

There are many reasons a shopper would initiate a chargeback. And understanding these reasons can help you fight against them. Here are some common causes;

Friendly Fraud

Chargeback fraud or friendly fraud occurs when a dishonest customers use chargebacks carelessly to cause your micro-business significant losses.  The consumer enjoys the service or product and then chooses to file a claim against you as if they didn’t receive whatever they paid for.

Initiating chargebacks on legitimate transactions is a common habit among dodgy buyers. Be cautious.

Technical errors

  • Human Error – there’s the possibility of an error if an accountant is manually processing the credit card transactions. Avoid manual processing at all costs.
  • Duplicate charge – Sometimes, due to errors in the system, a customer’s credit card may be charged two times for a single transaction. A duplicate charge is also possible if the customer hits the PAY button more than ones.

Late Shipment of goods or Delayed Service delivery

Failure to ship ordered items or delayed service delivery may prompt a customer to dispute a transaction. That’s why you need to ship the exact goods a buyer offers, keep receipts and be sure to track whatever item you send.

Unauthorized mail or through-the-phone transactions

Customers may intentionally deny making a transaction via mail or phone. Therefore, if you’re the merchant that accepts phone orders, always ask for as many details as you can— particularly the customer’s address and CVV of his or her credit card.

Invalid account or credit card numbers

If your system is not configured to rebuff any invalid or expired cards, then you’re in for multiple chargebacks. A chargeback is possible if the system fails to locate a legitimate account number of the used credit card. Find a tech support merchant account holder to check your systems and make the necessary updates.


The above are the most common causes of high chargeback levels. Most of them are things that require only a little attention. Start today to significantly cut down the number of chargebacks on your company.

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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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