Furniture retailers are moving online in increasing numbers. Traditional furniture businesses are accustomed to traditional merchant services providers. Banks however are more hesitant to open merchant accounts for furniture businesses that are online than those with retail locations.
Growth in U.S. furniture store sales has exhausted considerably over the years. The online furniture sales market has taken a comfortable seat as the more attractive way to update and decorate a home.
From 2013 to 2015, the U.S. retail e-commerce revenue from furniture and home furnishing sales rose $6.5 billion to $26.7 billion, according to Statista. Sales are projected to increase to $38.5 billion in 2018 and to $42.7 billion in 2019.
The revenues clearly spell out loud how much the e-commerce furniture sale market is growing and expected to continue thriving. Meanwhile, factors, like soft growth in existing home sales, a lack of real income growth, an increased number of people renting their homes or living in apartments and a bigger senior population that wants to “age in place,” also depressing the U.S. furniture store market, according to the report, Deep Dive: US Furniture Market 2016: Preferences and Trends, from Fung Global Retail & Tech, a think tank for the retail and technology sector.
Though the online furniture sales industry is a market with lots of potential, traditional banks often don’t want to work with them. Sponsor banks don’t like to take a chance on higher risk businesses, such as online furniture sales merchants. It is riskier because the online furniture sales industry has a history of chargebacks due to the unique characteristics of this sector. Fulfillment company issues, potential damage during shipping, and long waits between order and delivery dates, make online furniture stores vulnerable to chargebacks.
An e-commerce company that wants to process credit card payments efficiently and effectively must turn to eMerchantBroker.com (EMB), a credit card processor, for an online furniture sales merchant account.
EMB approves online furniture sales merchant accounts within 24 and 48 hours. Additionally, EMB provides chargeback management tools, PCI-compliant payment gateways, and fraud filters. Merchants that want to succeed need must accept credit card payments. Begin the process now by filling out EMB’s quick and easy online application today.
Types of Online Furniture Sales Merchant Accounts
A sleek home entertainment center or a space-saving Murphy bed is a click away thanks to the online furniture merchants. To keep up with demand, e-commerce furniture businesses need to keep up with inventory and offer secure payment processing solutions via merchant accounts.
Get a merchant account from EMB for businesses that offer the following products and services related to:
- Seating, including chairs, sofas, and benches
- Wall décor
- Desks and tables
- Entertainment tables, such as pool or hockey tables and home entertainment centers
- Beds, mattresses, headboards, and footboards
- Storage, such as chest of drawers, baker’s racks, shelving units, and hutches
- Garden and patio furniture
Online furniture sales merchants that don’t see their products listed here and need help processing credit card payments should start by filling out EMB’s online application. High-risk merchants are EMB’s specialty, so it works hard to help businesses of all sizes to succeed.
Documents needed to get an online furniture sales merchant account
To obtain an online furniture sales merchant account, businesses must begin by filling out EMB’s quick and easy online application. After filling out the application, merchants must provide the following items to underwriters:
- A valid, government-issued ID, such as a state-issued driver’s license
- A bank letter or a pre-printed voided check
- 3 months of the most recent bank statements
- 3 months of the most recent processing statements, if applicable
- A SSN (Social Security Number) or EIN (Employer Identification Number)
- A secure, fully-operational website with clear privacy and refund policies
- Chargeback ratios must be under 2%
EMB can never guarantee an approval, but it does promise applicants a fair, streamlined process. EMB is steadfast in its pursuit of maintaining a satisfied customer base. Businesses can find out for themselves by applying today. Eligible businesses can get approved in as little as 24 hours and begin processing credit card payments.
An underwriter’s application review – how risk is assessed
When underwriters begin reviewing applications, they want to ensure merchants operate legal, responsible businesses. During their reviews, underwriters look for indicators that could become financial burdens for credit card processors. They want to see that merchants have good business models. Merchants that don’t have a good foundation often get a high volume of credit transaction disputes, which lead to expensive chargebacks.
Underwriters also review merchants’ credit scores, credit card processing history, bank statements, and their websites. If a business was shut down by another processor in the past, that will also increase a merchant’s risk. Merchants that carry bank accounts with negative balances, excessive chargeback ratios, and have a history of missing payments or not paying bills also negatively impact approvals of online furniture sales merchant accounts.
Businesses that want to increase their chances of approval should:
- Save some money
- Satisfy outstanding bills and debts
- Encourage a principal in the business with a stellar credit history to apply for the merchant account
In a nutshell, anything that looks questionable should be handled before it gets to an underwriter. Savvy merchants will take these steps to improve their chances of getting approved for an online furniture sales merchant account without limits, like caps on higher processing volumes and lower rolling reserves.
Getting higher processing volumes for online furniture sales merchant accounts
In general, the per transaction cost for online furniture sales merchant account is slightly higher than businesses in other industries. This and the other risks associated with these types of businesses are why many merchants are given monthly credit card processing volume caps. A cap limits the number of credit card transactions a merchant can accept each month. Once a business reaches its limit, the merchant can no longer take any more credit card payments. This prevents a business that work exclusively online from doing any business.
Merchants that succeed won’t get stuck with processing caps forever. Online furniture sales merchants that need higher volume ceilings can request new caps in as few as three months. Merchants must show that they pay their bills, have low chargeback ratios, and have some savings.
Why online furniture sale merchants get hit with so many chargebacks
The plain truth is that online furniture sales businesses carry more risk than other businesses. Excessive chargebacks, long waits between the time a product was ordered and delivered, and the potential for an item to be damaged during freight or shipping makes them a much greater risk to traditional lending institutions.
Also, a sofa can cost anywhere between $400 and $2,000 and a credenza also can have steep prices. High-cost items, like furnishings, often have double the chargebacks than other purchases. People want the chicest home décor and furnishings but get sticker shock when they see their credit card statements. Whether a customer thought their budgets could handle the updates doesn’t matter. Customers are known to still dispute transactions if they feel the purchases don’t end up fitting into their budgets or lifestyles. This type of chargeback is called friendly fraud, which means a credit card wasn’t stolen to pay for it. Instead, customers changed their minds after the purchases were made. Friendly fraud occurs when clients make online purchases with their own credit cards, and then, contacts the issuing bank and requests a chargeback after receiving their purchased products. Also, there is plenty of credit card fraud within this industry because the items have higher price tags.
The high cost of excessive chargebacks for credit card processors
When businesses have excessive chargeback rates, credit card processors can get hit with thousands of dollars in fees per merchant. Whenever a business exceeds a 2% chargeback ratio, credit card companies, such as MasterCard and Visa, can fine credit card processors.
Merchants can shut down high-risk merchant accounts with chargeback ratios of more than 3%. If a merchant has 100 transactions and four chargebacks in a month, the business has a 4% chargeback. Since there are small margins for error, merchants must do whatever they can to avoid chargebacks, such as integrating mitigation programs and keeping sales volumes high.
Ways to curb chargeback ratios
The more responsible, transparent, and available merchants are to customers, the less likely they are to dispute credit card transactions. Though there is always going to be some unsatisfied customers, when merchants offer quality products, good customer service, and a willingness to listen to and help clients, patrons take notice.
Sending electronic receipts and confirmation emails are two solid ways to cut down on chargebacks. It is not rare for people to forget about transactions or not recognize a retailer on their card statements. An electronic receipt with the merchant’s name, email and billing support phone number is a good way to remind a customer.
Sending a customer satisfaction survey email or asking for a customer to post a review after a purchase can also reduce chargeback ratios. Reviews give people a better idea of what they are buying and whether it is really what they want. Surveys may offer some value in terms of any customer services changes that need to be made. They also remind customers about the expensive furniture purchases they recently made.
Having 24-hour customer service support is another way to cut down on credit card transaction disputes. If a customer can live chat with a representative, the employee could offer a full refund or come up with another solution that stops the person from disputing a transaction.
An easy way to trim chargeback ratios
Businesses that don’t prevent chargebacks are risking the futures of their online furniture sales merchant accounts. If chargeback ratios are not kept below 2%, processors can terminate online furniture sales merchant accounts.
A business’ chargeback ratios can be cut by 25% with EMB’s chargeback mitigation program. This means the program can prevent three out of every 12 potential chargebacks. This can mean the difference between a 2% and a 4% chargeback ratio.
EMB partnered with Verifi and its new Cardholder Dispute Resolution Network (CDRN) and Ethoca’s alert system to create a system that really works for high-risk merchants. By working with card issuers and banks, CDRN allows businesses to resolve credit card transaction disputes by dealing with the issues directly, resulting in the highest rate of chargeback resolutions.
Online Furniture Sales Categories
Standard Industrial Classification (SIC) codes are four-digit numerical codes given to business establishments that are assigned by the United States and other countries, including the United Kingdom. These codes aim to identify the primary purpose of businesses.
Businesses in the e-commerce furniture industry use the following SIC code categories:
- 5023: Home Furnishings
- 5099: Durable Goods, not elsewhere classified
- 5712: Furniture Stores
Visit the United States Department of Labor to view a complete SIC list.
The Northern American Classification System (NAICS) are six-digit codes used by federal statistical agencies to classify establishments. The codes are used to collect, analyze, and publish statistical information about similar types of businesses and the way they impact the economy in the U.S.
Most online furniture stores use the following NAICS codes:
- 442110: Furniture Stores
- 423220: Home Furnishings Merchant Wholesalers
- 442299: All Other Home Furnishings
Visit the United States Census Bureau’s Northern American Classification System to view the complete NAICS code list.
Merchant Accounts For Online Furniture Sales
The bankers have categorized online furniture businesses as high risk due to chargeback rates. Furniture that is damaged en route to the customer during the shipping process leads quickly to chargebacks and disputes, which causes banks to shy away from this online sector.
The average transaction, or average ticket for online furniture stores is high in comparison to other online businesses. This average ticket and higher volume also causes issues for traditional credit card processing companies.
We cut out the red tape
Build a solid foundation built on the legs of our team’s wealth of experience. Get high risk card processing services and a merchant account for your online furniture store through eMerchantBroker. Have your online furniture merchant account up and running in as little as 48 hours
- No Application Fees
- Easy Process
- Competitive rates
- No VISA/MasterCard Registration Required
- Multiple Secure Payment Gateways