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. 

Chargeback Protection for Merchants

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Accepting credit cards has become synonymous with finding ways of avoiding chargebacks for many merchants today. What are chargebacks? If you’re unfamiliar with the concept, chargebacks occur when customers contact their credit card company to dispute a charge on their cards. If the dispute is deemed to hold some merit, your merchant account is actually debited the amount of money in question (even if it has already cleared), and you have to pay chargeback fees, which can be as much as $100 in some cases. 

For many small businesses, finding merchant protection against chargebacks is nothing short of an absolute must. What can you do to end the problem for your company? These tips can help. 

Preventing Chargebacks

There are a number of things you can do to prevent customers from filing a chargeback with the credit card company.

  1. Understand why Chargebacks are Occurring: The single best move you can make is to take a look at the data you’ve already gathered on chargebacks. If a common theme emerges, you can address that problem immediately. If the chargeback reason codes are all over the place, you may have to address issues in several areas. 
  2. Create Stronger Policies: If customers don’t understand your purchase policy, your restock policy, your return policy, or even your subscription policy, they’re going to get frustrated. What often happens when customers get frustrated is that they don’t know where to turn, and one of the easiest, fastest ways for them to deal with the problem is to contact their credit card company and get their money back. You can avoid all of this if your policies as far as shipping, billing, and returns are carefully worded on your site and easy to find. Many sites even put a little info section next to their product or service description so customers understand what they’re purchasing. 
  3. Build Better Customer Service: What happens when a customer contacts you? Your team and policies with regard to customer service may need to be revamped as well. Make it easy for customers to reach out to you. Offer a phone number, 24-hour chat service, an email address that you check regularly, or even social media links to help better connect with customers. Not only will this step help to prevent chargeback problems, but it may also increase your brand’s credibility, and that could lead to repeat customers. Just remember that rapid replies are essential. They’re already frustrated when they reach out to you. Be ready to help as soon as possible. 
  4. Consider Shipping Updates: If you sell physical products, be sure customers know when their items have shipped and how soon they should arrive at their doorsteps. There are many automated services you can deploy to do this for you, and the more insight you can offer customers, the more likely you are to avoid shipping related chargebacks. 
  5. Beef Up Anti-Fraud Tools: Fraud happens, and it can actually create more chargebacks than you’d imagine. While criminal fraud represents the minority of those chargebacks, friendly fraud happens quite often. Sometimes it’s buyer’s remorse. In other cases, they just don’t know how damaging it is to the merchant at the other end. Either way, use the anti-fraud tools you have at your disposal. Address verification, customer blacklists, and more can all help you prevent problems. There are lots of antifraud platforms, too, that can help you build a more robust strategy. 

A Note About Subscriptions

If you’re one of the many merchants who offer subscription-based services, you need to recognize that you’re at real risk for chargebacks. It should be an opt-in option if possible. Ensure you make it incredibly easy to cancel those subscriptions, too. Additionally, you need to ensure the description that goes to a customer’s credit card statement helps identify what’s going on. If you have another name that you’re doing business as, it should be part of what actually gets charged to a customer’s card. Furthermore, customers should know what that charge will look like on their cards. 

The Moral of the Story

Chargebacks happen, but they don’t have to happen to you. At Y2 Payments, we have a number of solutions aimed at preventing chargebacks. Contact us today to learn more about how we can help

Preventing Chargebacks on Recurring Payments


Too many chargebacks mean serious losses for your business. It could also mean you have trouble finding a credit card processor who will work with you in the future. Chargebacks are more likely to occur with recurring charges to a customer’s card than they are anywhere else, but is there anything you can do to prevent them?

What Are Chargebacks?

If you’re not already familiar with the term, chargebacks occur when the customer disputes the transaction. The merchant has the charges debited from its bank account, and the customer gets his or her money back. The goal of the card industry is to protect consumers and the merchant bears the risk.  Unfortunately, though, sometimes customers just aren’t happy and choose to initiate a chargeback. In settings like that, it is possible to reduce your numbers. 

Preventing Chargebacks

If you have a recurring service that customers can sign up for, there are several ways of avoiding chargebacks.  First, make sure you clearly inform customers about free trials. Help them understand how long that trial lasts and what happens at the end of it. As it gets closer, make sure they know how much time is remaining and how long they have to renew. Ensure they know exactly how much they will be charged, too. 

Beyond that, you can clearly state your refund and return policy. Highlight your policies on your sign up page. You may even want to have them check a box so you know they understand when they can get a refund or make a return. You may also want to make canceling a subscription a fairly easy process. After all, if a customer knows he or she can easily cancel, you’re more likely to empower them and help them understand that they have control. That means less risk, which usually translates to more loyal customers. 

Finally, make certain the bill is posted on a regular bill. Keeping the same billing date and the same format creates a level of transparency that is a must with recurring charges. Chargebacks happen, especially with recurring services, but they don’t have to happen to you. Contact Y2Payments today at 888-693-1850 to learn about our payment processing and chargeback protection system.