Will Chargebacks Make Small-Business Owners Get EMV Terminals?

Jun 05, 2016

Based on a recent survey by Javelin Strategy and Research, 8% of small and micro businesses don’t accept EMV chip cards because of the lack of a business case for the cards. The survey was conducted in February. The numbers are down 33% from November 2014. Other reasons include the need for new hardware (17%), security concerns (16%), and consumer impact (8%).

According to Javelin, a small business is a business that has $1 – $10 million in its annual sales. A micro business is defined as an entity that boasts $100.000 – $1 million in its yearly sales.

Merchants Vs. EMV Chip Cards

EMV liability shift of the payment card networks went into effect in October 2015. These days, merchants have more reasons to accept EMV chip cards. This is mostly conditioned by the fact that banks and credit unions have chosen chip cards to replace millions of magnetic-stripe debit and credit cards. However, chargeback prevention is still a major concern for merchants.

According to the survey, nearly 54% of small and micro businesses not accepting EMV cards in February are going to switch to EMV within a year. 46% of businesses accepted EMV cards in February, which is up from 22% from November 2014 and 11% from December 2013.

Merchants, especially those operating in the high-risk sector, should turn to a reliable payment processor like emerchantbroker.com to provide top chargeback prevention for their businesses. In partnership with Verifi and Ethoca, EMB offers unmatched protection from fraud, including a Chargeback Prevention Program and Chargeback Prevention Insurance. Thanks to EMB’s chargeback resolution networks, merchants can reduce chargebacks by 30-50%.

The Future of EMV Chip Cards

Beyond any doubts, EMV has had its impact on consumers. According to panelist Shannon Johnson, senior vice president and head of deposits and payments at Atlanta-based SunTrust Bank, the marketplace witnessed a lot of confusion regarding EMV chip cards. Panelists note consumers were dissatisfied with longer transaction times required by chip cards, which cannot be said about mag-stripe cards.

Tom Misson, another panelist and manager of MasterCard Inc.’s North American small-business segment, mentions that, overall, EMV has had an exceptionally success. Misson says fraudsters will be focusing on card-not-present (CNP) channels, and it will become more difficult to commit point-of-sale (POS) fraud. However, EMV can count for a net reduction in overall fraud losses in the US. He further mentions that Canada and Brazil have had counterfeit-fraud reductions of over 80% since their EMV conversions. In Mexico, the decline has counted for 77%.

According to Michael Moeser, director of payments at Pleasanton, about three-quarters of small businesses across the nation will be accepting EMV cards in 2017.

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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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