U.S. merchants that accept credit and debit card payments via in-store, e-commerce, mail order, or telephone phone purchases lost 1.32% of revenue to fraud, according to the Lexis Nexis Risk Solutions True Cost of Fraud Study released in 2015. Not only was this the first year that merchants that did not handle any face-to-face transactions saw losses of more than 1%, but this was a 94% increase from the previous 12 months.
The study also showed that large e-commerce businesses spend more than $115,000 annually for fraud protection and still lose 1.39% of revenues to fraud. These figures to account for the losses of merchandise and acquisition costs. This reinforces the idea that fraud is rampant but that merchants that want to succeed must have solid charge-back protection solutions in place. Merchants that fail to take charge-back protection seriously will succumb to cost increases, revenue losses, and business reputations that possibly can’t be saved.
Maintain Merchant Accounts with Chargeback Protection
Any merchant that handles credit card transactions are faced with chargebacks. A chargeback is when a credit card brand, such as MasterCard, demands a merchant pay for any disputed or fraudulent transactions. Chargebacks are triggered when a customer reverses an order due to a legitimate complaint, such as not receiving an item as it was marketed, or because they changed their minds about purchases. No matter what the reasons, excessive chargebacks are bad for business.
Once upon a time, chargebacks were set up to protect patrons from unscrupulous merchants. Instead of arguing a chargeback and move on without further hassles. Unfortunately, this has led to customers abusing this practice, initiating chargebacks whenever they feel like it.
When merchants rack up excessive chargebacks, it not only cuts into their bottom lines, it puts their merchant accounts in jeopardy. High-risk merchants especially must be mindful of chargebacks. Businesses that can’t keep chargeback ratios below 2% can have their accounts terminated by processors. Businesses must have merchant accounts if they want to continue accepting credit and debit card payments. Merchants, specifically those that operate mostly online and rely on credit card payments, must do whatever they can to protect their accounts. Taking chargeback protection measures, such as implementing a mitigation system, is necessary to keep businesses fully operational.
Businesses that want to safely and securely accept electronic payments should turn to a credit card processor, like eMerchantBroker.com (EMB). Since eMerchantBroker.com specializes in high-risk merchant accounts, it tailors payment processing solutions to meet every merchant’s needs while helping them with practical advice concerning chargeback protection. EMB specializes in providing merchant account services for old and new businesses of all sizes, including high-risk merchants.
Fill out EMB’s online application today and get approved for a merchant account within 24 and 48 hours. In addition, EMB also offers chargeback protection tools, PCI-compliant payment gateways, and fraud filters.
Types of businesses most vulnerable to chargebacks
Any business that takes a credit or debit card can end up with a chargeback. However, there are some businesses, many of which are deemed high-risk by traditional financial institutions, that are more prone to excessive chargebacks.
The following businesses that sell these products or services face more chargebacks:
• Adult entertainment and novelties
• Auto accessories and parts
• Cigarettes, cigars, pipes, and smoking accessories
• Collectibles and antiques
• Credit repair
• Debt consolidation
• Designer fashions
• Downloadable and mobile app software
• Educational seminars
• Luxury goods and services, such as private planes and travel
• Magazine subscriptions
• MLM and direct sales
• Moving companies
• Penny auctions
• Precious metals and coins
• Sports betting
• Tech support
• Tickets for flights, concerts, excursions
• Water purifiers
Chargeback protection – ways to fight disputes
With so much to lose, merchants need to be vigilant about preventing chargebacks. Evidence is a key to chargeback protection. Documentation of a transaction is one of the best ways to make it more difficult for customers to dispute a charge. Having copies of printed or emailed receipts can help prove customers authorized charges. Initially, customers may get their money refunded via a chargeback, but it can be reversed if a merchant can prove to credit card companies during the investigation period that a disputed purchase was processed properly. Also, it is important to ensure the number on the computer screen matches the one on the credit card during checkout.
Some chargebacks are initiated because customers fail to remember or recognize transactions when they review their credit card statements. Sending an electronic receipt with the merchant’s contact information, such as an email and billing support phone number, also helps customers remember.
Customer service is probably the number one way to afford chargeback protection to merchants. Customers who feel they received a positive resolution and extraordinary customer service are less likely to request refunds or dispute charges. When a refund is requested, a savvy, professional customer service representative can skillfully diffuse a situation and save a business a costly chargeback. Having 24-hour customer service support is a real benefit. If a customer can live chat with a representative, the employee could offer a full refund or come up with another solution that prevents the person from disputing a charge.
The best approach to chargebacks may be to have a strategy that focuses on gathering evidence of transactions, as well as stellar customer service. When people make purchases, make sure there are clear messages on websites that note security measures are taken to protect merchants and customers.
As the leading experts in the payment processing industry, we will work with you to help explain proper ways to help prevent charge-backs in your business. Give us a call at (877) 420-8625 to discuss how CannaGroup Can help your business today!