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Chargeback Insurance: Is it Worth It?

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Credit chargebacks – as a business, they can sure ruin your financials in a hurry. Avoiding chargebacks for some companies means purchasing chargeback insurance, but is it really the right way forward for your organization?

What is Chargeback Insurance?

 Chargeback insurance works like most other insurance policies. You pay a premium to a company who covers the costs should a customer involve you in a chargeback dispute. Unfortunately, the simple explanation here only covers some chargeback insurance policies. There are many others out there that don’t always cover you when you need it. In those scenarios, knowing the answer to the question “What does chargeback insurance” do is key because you could have been paying a premium for years when you end up with a pricey chargeback that isn’t covered.

Chargeback insurance typically does not cover friendly fraud, one of the leading causes of chargebacks. This happens when a customer claims the item delivered doesn’t match the description or purchases that weren’t delivered. It also doesn’t usually cover chargebacks that exceed their defined limits or even those that involve digital goods like webinars and downloads.

Is Chargeback Insurance Worth It?

Chargeback insurance can be a huge help in many situations for many companies. The reality is that it’s not enough to be the only tool in your toolbox, though. Because it has so many limitations, you may still face chargeback problems if you aren’t staying on top of things. Dealing with customer service concerns promptly and understanding what the warning signs of fraud might be are key to preventing chargebacks. Better contracts with customers and good record keeping are also both important. Even chargeback management software may help if you have a problem, as it helps you fight back when you have a case.

Chargebacks are a problem for all kinds of merchants today, but chargeback insurance may be one way to help you prevent any issues for your company.

Learn more about how Y2Payments handles chargebacks by contacting us today at 888-693-1850. 

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How to Reverse Chargebacks

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Handling chargebacks is a process fraught with frustration. You have to convince the bank that a chargeback dispute isn’t legitimate. It’s difficult – the system is built to favor customers for some good reasons. However, when credit card chargebacks should be reversed, it’s difficult to get it done easily. There is chargeback protection for merchants, like chargeback insurance. Let’s start from the beginning about what you can do.

Challenge the Chargeback

The most important step is to dispute credit card chargebacks when there’s a good reason to do so. If you absolutely know the customer’s in the right, and wasn’t provided a product or service, then don’t waste your and their time. However, if you’re in the right, then challenge that dispute. Most merchants either challenge fewer than half their chargebacks or never contest chargebacks. You should challenge every chargeback that you feel shouldn’t have been made. There’s evidence that this helps reduce the overall number of chargebacks you’ll face down the road.

Chargeback Insurance

Chargeback protection for merchants is available in the form of chargeback insurance. It was mentioned above that many chargebacks are made legitimately. These could be the result of stolen credit cards or credit card information, for instance. In this case, a merchant with chargeback insurance has protection. Such insurance policies may only cover transactions made through a particular payment processor, so be aware how and when you’re covered.

Chargeback Time Limit

Remember too that there is a chargeback time limit. Cardholders in general only have 120 days to file a chargeback related to fraud. There are time limits set up for every step of the dispute and challenge processes as well. Make sure you’re aware of all the time limits at play – they’ll vary by card and other factors – so that you’re able to assess the dispute’s legitimacy as well as your own timing and ability in responding.

For more information on Y2Payments Chargeback protection and how it works, contact us today at 888-693-1850.