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Table of Contents

Lead Story

Simple ways to better your business


Industry Update

Feds place chokehold on banks, processors

Apple changes app rules to include virtual currencies

Square ditches mobile wallet, offers cash advances


Your next third-party partner: Friend or foe?

mPOS shaking things up

Alternative payments gaining momentum


A fresh look at chargeback insurance

Gene Lieb and Laura Kaiser
Business Financial Resources


Street SmartsSM:
Auto-pilot and self reflection

Tom Waters and Ben Abel
Bank Associates Merchant Services

TRO/asset freeze: The FTC's nuclear option

Michael Thurman
Thurman Legal

Is that a terminal or a PIN pad?

Dale S. Laszig
DSL Direct LLC

Top five legal issues in the MCA industry

Andrew T. Hayner
Jaffe, Raitt, Heuer & Weiss P.C

Company Profile


New Products

Dynamic POS suite

DynaPro, DynaPro Mini
MagTek Inc.

FI-proven platform for merchants

SmartVista for Retailers
BPC Banking Technologies


Discovery leads to delight


Readers Speak

Resource Guide


A Bigger Thing

The Green Sheet Online Edition

June 23, 2014  •  Issue 14:06:02

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A fresh look at chargeback insurance

By Gene Lieb and Laura Kaiser

In the past, many ISOs and merchant level salespeople (MLSs) couldn't afford chargeback insurance. Such plans required entire portfolios to be included. This was very expensive. Today, less costly options are available. And it's time for MLSs to ask themselves whether they can afford not to have insurance.

This is due in part to the fact that agents can now choose to either insure individual accounts or an entire portfolio. For obvious reasons, insuring just those accounts deemed riskier cuts down on the costs of insurance. And it's a great way to shore up your business, especially if you're boarding high-risk or nontraditional merchants.

Chargeback insurance is essential for those working with these types of accounts, but it can offer significant benefits to virtually any MLS in the field. For those who have chosen to avoid high risk in the past, insurance makes it easier than ever to increase fee income by broadening their merchant-type appetite. And for ISOs not currently assuming liability, a chargeback insurance program can allow them to reduce expenses associated with sponsor banks and capture fee income previously earned by said banks.

Protection pays in multiple ways

Chargeback insurance programs can preserve an MLS's bottom line by reducing uncollectible chargeback exposure. Policies cover merchant fraud, card-not-present merchants, and include Internet transactions. Protection like this is particularly helpful with future-delivery merchants like travel, furniture sales, online retailers and many others.

Examples of accounts-gone-bad that could have used this kind of protection include:

In addition to protecting your business, chargeback insurance gives you the power to provide added value to your merchants. For example, you can reduce merchant churn with lowered reserve requirements. This will discourage your current clients from price shopping for merchant services and may attract new ones looking for less of an upfront capital commitment than your competitors can offer. In addition, merchants will be less likely to focus only on price, and will instead focus on the value of doing business with your organization. Policies can also free up reserve capital and are even tax deductible. Chargeback insurance has changed with the times; MLSs need to change, too.

Gene Lieb is the owner and Laura Kaiser the Marketing Manager at Business Financial Resources, a merchant service consultancy located in New Jersey that works with agents and partners across the world. For more than 15 years, the company has been working on behalf of all types of businesses, including those considered high risk or nontraditional, to help them accept credit cards and other forms of payment, secure loans and save money. For more information, visit U.S. companies should call us at 800-313-2265; international companies can reach us at +44 2036087504.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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