You may wonder if chargeback insurance is available for credit card chargebacks if your business is small. Yes! Small businesses can get chargeback insurance. It can protect their business from financial losses caused by chargebacks.
What is Chargeback Insurance?
Chargeback insurance reimburses businesses for any losses they suffer from chargebacks. This insurance is a good way to protect your business against the high fees and lost revenue caused by customers disputing charges.
Protecting your small business against financial loss due to credit card chargebacks can be done with chargeback insurance. Here are some things to keep in mind if you are considering chargeback insurance.
It is crucial to first understand the types of chargebacks that are covered by chargeback insurance.
What Chargebacks are Covered by Chargeback Insurance?
Chargebacks can be very frustrating for small businesses. Chargebacks can not only consume your time and energy but also cut into your profits. You could also be responsible for more money if your chargeback insurance is not in place.
What types of chargebacks can chargeback insurance cover? Let’s begin with the basics. Most insurance policies cover fraudulent chargebacks. If someone purchases without your consent, your insurance policy will cover the entire amount of the chargeback.
Many policies also cover “friendly Fraud” chargebacks. This happens when someone buys your business and then disputes the charge with their card issuer. Although friendly fraud chargebacks in most cases are not fraudulent, they can be costly for businesses.
Some policies also cover “transactional mistakes.” These could be billing errors or problems with the service or product you provided. These types of chargebacks can be avoided, but insurance can help reduce financial losses.
Small businesses can use chargeback insurance as a valuable tool. However, it is important to know what charges are covered by your policy. Knowing what is covered will help you be prepared for any chargebacks.
You should also be aware of your policy’s deductible.
What is the Chargeback Insurance Deductible?
The deductible is the money you, as a small business owner, must pay in case of a chargeback. Rest will be covered by your insurance company. The deductible amount will vary depending upon the insurer. However, it is usually a small percentage (usually between 1-2%) of the transaction value.
You should also know that not all insurance companies offer chargeback coverage.
Are Small Business Owners Able to Get Chargeback Insurance?
You may wonder if chargeback insurance makes sense for a small business owner. Chargebacks can be expensive and time-consuming to resolve.
Chargeback insurance can protect your business against financial loss due to chargebacks. This insurance will reimburse you for charges such as bank fees and customer refunds.
Although chargeback insurance is helpful, it’s not an all-encompassing solution. Small businesses may be excluded from some insurers’ coverage. It is worth checking with your insurance company to determine if chargeback insurance is available for them.
Is chargeback insurance worth it? It depends on the needs of your business. Chargeback insurance is a viable option if you are concerned about potential financial losses from chargebacks. However, you need to take steps in order to avoid them.
What steps can a small business owner take to avoid chargebacks?
To avoid chargebacks, there are some key steps that small business owners can follow:
- Keep accurate records of all transactions. If there is ever a dispute, this will be very useful.
- It is important to make your prices clear and understandable. Customers who feel they have been misled may file a chargeback.
- Strong fraud prevention measures should be taken. Use verification tools and AVS checks to prevent fraud.
- Maintain a high standard of customer service. Customers who are unhappy with the purchase may be more inclined to request a chargeback or a refund.
These simple tips can be used by small business owners to reduce the chance of chargebacks.
Is there a way to dispute chargebacks without incurring charges by the card issuer?
Can a Chargeback Be Disputed?
Many chargeback disputes can be a problem for small businesses. It may seem tempting to let the card issuer handle the matter, but there are things you can do.
You will first need to collect all documentation related to the transaction. You will need to gather all documentation related to the transaction. This includes invoices, receipts, contracts and any communication with the customer. A timeline will be needed to show the events that led up to the chargeback.
Once all documentation is in order, you can reach out to the customer to try and resolve the problem directly. If this fails, you can file a dispute against the card issuer.
You should be prepared to submit all documentation and evidence supporting your case. The card issuer will investigate and make a decision. If they decide in your favor, the chargeback is reversed.
You can appeal if you are unable to resolve the dispute, or if the card issuer rules against your case. It’s a last-ditch effort but is worth it if you believe that you have a strong case.
Although chargeback insurance is a useful tool for small businesses that take credit card payments, it can also be expensive. A credit card processing expert can help you determine if your credit card processor or provider is causing a lot of chargebacks in your business.
Balanced Processing Partners offer small businesses credit card processing options that can work better for them and prevent them from having to pay chargeback insurance. If you would like to learn more please reach out to us at (800) 354-6256 or via email at [email protected]. We will provide you with the best credit card processing service that suits your business needs.