No matter the level of fraud prevention and protection offered on merchant accounts by payment gateways, the risk of chargebacks is still a very real one.
Of course, the higher the level of fraud protection provided by your payment gateway the better your chances of avoiding chargebacks – which you’ll want to do because those chargebacks will affect the charges levied on you by your merchant account (something you should bear in mind when going through a merchant account set-up).
According to recent figures from the European Central Bank (ECB), €1 of every €2,635 spent on credit and debit cards in 2012 was lost to fraud. That works out to approximately €1.33 billion, and 60% of this happens on ‘card-not-present’ transactions: predominantly through the internet. Whilst card fraud in general is reducing, fraudulent internet purchases increased by 21% between 2011 and 2012.
It’s clear, then, that despite all the extra online secure payment measures and secure payment methods, criminals will continue to seek ways to defraud you on your sales.
Chargebacks are automatic
Even worse, you have very little say in the payment of chargebacks – they can be demanded by the issuing bank or card provider and removed from your merchant account. You’ll also be charged for this process, if and when it happens.
Why buy chargeback insurance?
Chargeback insurance covers any chargebacks paid from your merchant account for the following reasons:
- Lost or stolen cards
- Fraudulent activity
- Accidental fraud
- Chargebacks issued before good received
Many merchant accounts are provided with chargeback insurance included, but you should check those clauses now, if you are in any doubt. With the level of online eCommerce fraud on the increase, it’s important to make sure you use a payment gateway that is as secure as possible.
For that extra protection, ensure you’ve have the right level of insurance to cover against the criminal element that is out there.