Uncollectible Chargeback Insurance

What is Uncollectible Chargeback Insurance?

Uncollectible Chargeback Insurance protects ISOs and acquiring banks from the liability they face as a result of their merchants’ inability to pay their chargebacks.

Will the policy cover a loss from a fraudulent merchant?

Yes. The policy is very broad as it covers ISOs and acquirers from being defrauded by merchants and merchants that have become insolvent.   The policy responds when a chargeback cannot be collected from a merchant regardless of the cause.

 

Can this be offered to a merchant to insure their chargebacks?

No. The policy is does not insure merchants or their chargebacks. It covers ISOs’ and acquirers’ liability if their merchants are unable to pay their chargebacks.

 

How does this compare to other chargeback products and services offered in the industry?

It doesn’t. Other chargeback related products and services available are for merchant-level chargebacks and are not insurance. These programs do not pay the loss that an ISO or acquirer absorbs if they suffer a chargeback loss that they cannot collect from their merchant.

 

What types of companies need this type of insurance?

Any ISO or acquirer that has chargeback liability for their merchant portfolio.

An ISO or acquirer that needs to increase their processing capacity without the burden of additional reserves.

 

Claim Scenarios

A public mobile payment company suffered a $5.7M in uncollectible chargeback loss from a fraudulent merchant.

After a major fashion designer sued a payment processor for facilitating transactions of a merchant selling counterfeit goods, in addition to defense costs and damages, the processor becomes liable for the ensuing chargebacks from the merchant.