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4 Ways High-Risk Merchants Can Cut EMV Chargebacks

Don’t let chargebacks sink your profits!

Data breaches at Target, Facebook prompted the major U.S. credit issuers to insist on the EMV chip in October 2015. The move has made it much more difficult for fraudsters to create counterfeit cards, saving both companies and consumers money and headaches. According to Stephanie Erickson, vice president of risk products at Visa, the shift working: merchants are reporting less counterfeit fraud.

We applaud anything that reduces expenses to both businesses and their customers, but EMV has created another, although less costly, issue: chargebacks. Chargebacks occur when the card issuer holds the merchant liable for a payment transacted by a thief using a stolen or counterfeit card. Where once the banks absorbed much of these charges, today they are not so amenable. One payment network reported 250,000 merchants had experienced an 50% increase in chargebacks on card transactions. In effect, the banks, card processors and issuers are putting the burden of vetting for fraud on the merchants.

A few merchants aren’t accepting this responsibility. Claiming a lack of preparation time, they are now suing issuers. Networks counter that five years was plenty of time for even the smallest business to prepare for the increase in chargebacks they warned could follow the shift from magnetic stripe to EMV.

Merchants must know that if they have not yet switched to EMV terminals, they are liable for most of the chargebacks the banks had been absorbing. The top merchants affected have been gas stations, restaurants and quick service merchants like vending operations. It seems that large cities, college towns and border areas are the most likely to be the most tempting targets for thieves looking to take advantage of those who haven’t switched to EMV equipment yet. Smart criminals are avoiding the EMV terminals, another reason to get them into your stores. When a criminal successfully uses a magnetic stripe card at your business, you will get a chargeback and be liable for the purchase.

What can you do?

As mentioned above, Visa, Mastercard, and others have been adamant that merchants pay these charges. However, there are solutions that can limit the damage the EMV shift has brought to your high-risk business.

  • If you are not fighting chargebacks, start now. Won chargebacks do not count against your chargeback ratio. So, it means that a 75 percent win rate lowers your chargeback ratio by 300 percent. A better chargeback rate also helps you to keep your merchant account in good standing.
  • Fighting chargebacks can be a somewhat technical process. Consider getting an expert or service to fight these charges for you.
  • Lock down your eCommerce site or bricks-and-mortar business with front-end fraud prevention measures. These help identify the IP address of the customer by requiring them CVV and AVS. In this way, you filter most frauds and increase your chances in winning fraud disputes in chargebacks.
  • Use a chargeback alerts when you operate a service business. A chargeback alert is a type of alert that notifies you every time a customer initiates a chargeback. You have 24-72 hours to respond to it. If you are a service business such as technical support, you can always cut your losses by stopping your services whenever you get chargeback alerts.

 

Getting your merchant services streamlines is a great relief.

Most of All: Make the Shift to EMV Technology Today!

Magnetic strips on credit cards are just too easy for thieves to copy. Beyond this fact, credit card issuers now levy fees—often in the form of chargebacks—on merchants who do not use EMV technology. They want their customers to feel protected by offering the best, most secure, products. But this system doesn’t work if the merchants refuse to hold up their end.

When considering your options for taking credit cards, know that you’ll need a merchant services processor or merchant service account to safely process your transactions. A+ rated First Financial specializes in high-risk merchant accounts. Simply click here to apply and you’ll be able to start taking credit cards within 48 hours!

 

 

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