Banks consider high-volume merchants high risk, so they won’t approve them for merchant accounts, which are necessary for them to accept credit card payments.
High sales are a blessing. More transactions mean more profits for business. If that business, is a merchant that has a high sales volume and relies heavily on customers paying by credit cards, it should hold off on the celebrations. High-volume merchants run into many of the same challenges that high-ticket merchants face. They deal with larger-than-usual numbers of fraudulent transactions, chargebacks, and cases of friendly fraud.When traditional financial institutions turn High-Volume Merchants away, businesses that handle many sales per day must turn to a high-risk credit card processor for a merchant account. Those that choose otherwise can find themselves dealing with account freezes, data security liabilities, and irregular payment schedules.
Businesses that want to a chance to succeed should turn to a trustworthy credit card processor, like eMerchantBroker.com (EMB), to obtain a high-volume merchant account. Specializing in high-risk merchant account and backed by the experience needed to serve enterprise-level payment environments, EMB offers top-notch customer service and reputation for offering fair, transparent prices for payment solutions that meet the needs of businesses of all sizes and in a variety of industries.
Whether a business is brand new or has been in business for decades, EMB can provide secure, customized payment solutions.
Types of high-volume merchants
When a business obtains a high-volume merchant account, they must be able to accept credit card payments from customers. This is especially important for merchants that work exclusively with online and telephone products and services.
Business must process at least $100,000 per month to be eligible for a high-volume merchant account. Apply for merchant accounts from EMB for businesses that engage in the following activities:
- Property management companies that process monthly rental payments or timeshare fees
- Merchants that have recurring annual or monthly fees for services
- Subscription companies that ship products monthly or bi-monthly
- Companies that have recurrent membership fees
- Online businesses that sell single downloads of songs or e-books
Merchants that have hundreds of single transactions or micro-payments per day that need a secure, trusted way to accept credit card payments but don’t see their business scenarios here should reach out to EMB. Begin the process by filling out an application to begin accepting credit card payments. EMB prides itself on working with high-risk merchants, such as high-volume businesses.
Documents needed when applying for a high-volume merchant account
To begin the high-volume merchant account application process, fill out EMB’s quick and simple online application. Though nothing is guaranteed, EMB promises a streamlined process.
In addition to the application, the following documents must be submitted to processors:
- A valid, government-issued ID, such as a driver’s license or passport
- A bank letter or a pre-printed voided check
- A secure, working website
- Three months of the most recent bank statements
- Three months of the most recent processing statements, if applicable
- SSN (Social Security Number) or EIN (Employer Identification Number)
- Chargeback ratio below 2%
- A fully operational website
What occurs during the underwriting process
When underwriters review merchants and high-volume merchant account applications, they want to legal, responsible businesses that don’t carry unnecessary risk. Companies that were built on a strong business foundation and complies with all rules and regulations are the most likely to get approved for accounts.
Risk is determined by reviewing merchants’ credit scores, credit card processing history, bank statements, and websites. These are checked to ensure that merchants don’t have negative bank account balances, outstanding bills, or a previously terminated merchant account. A history of high chargeback ratio also is an important risk factor. Underwriters also view a high-volume merchant’s website to ensure it has a secure (SSL), as well as easy-to-understand, prominently-displayed privacy and refund policies.
Some savings and no outstanding bills or debts also helps applications. Most importantly, the business stakeholder with the best credit history should apply for the merchant account.
Finally, it is best to give the most accurate transaction volume estimates during the application process. This prevents merchants from having their accounts suspended or shut down unexpectedly. Once merchants build trust with processors, it is easier to get to the point of unlimited processing volumes.
Businesses that take the time to put their companies in the best lights are more likely to get approved for merchant accounts without restrictions, such as higher processing volume caps and lower rolling reserves.
How to get processing volumes increased for high-volume merchant accounts
It is common for high-risk businesses to be given merchant accounts with monthly credit card processing volume caps. This means merchants are only permitted to handle a specific number of credit card transactions per month. Once the cap is reached, a merchant can no longer take credit cards as payments during that month. Online businesses that depend on customers paying with credit cards, basically must stop taking sales until they reach the next month.
High-volume merchants that are given capped counts can get them raised over time. They can request new processing volume caps in as few as three months. At that time of their requests, they must prove that they pay their bills, have low chargeback ratios, and have some money saved.
It’s all about the numbers – why chargebacks are so high
As transaction volumes climb, so do chargebacks ratios. As chargebacks soar, so does a merchant’s chances of going bankrupt or closing up shop and disappearing. This leaves processors and their sponsor banks are the ones left paying for refunds and chargeback fees.
Merchants that sell a large volume of goods or services are targets for fraud. It is easier for merchants to pay less attention to every purchase since there are so many on a regular basis. Cybercriminals take advantage of this. With the large volume of business, sometimes it takes a while before merchants and customers catch on to what they are doing. Whatever the circumstances are surrounding the fraudulent purchases, the merchant, processor, and its sponsor bank are responsible for refunding the consumer.
In businesses in all industries, friendly fraud is a problem. This is when customers buy items, receive them, claim they were damaged, did not arrive, or were not what it was marketed as, and then, calls their credit card companies and disputes the charges. The result is a customer get whatever they ordered without paying.
The real number – calculating a high-volume merchant’s chargeback ratio
The number of transactions divided by the number of monthly transactions determines a high-volume merchant’s chargeback ratio. For example, a merchant with 100 transactions and four chargebacks in any given month has a chargeback ratio of 4%.
Credit card processors feel the financial sting of chargebacks
Credit card processors take on a lot of risk when they approve high-volume merchant accounts. They don’t just foot the bills for any unpaid refunds or chargebacks that merchants can’t or don’t pay. Credit card brands, like MasterCard or Visa, may fine credit card processors thousands for every of their merchant accounts that maintains an excessive chargeback ratio. Whenever a merchant has a chargeback ratio above 2%, credit card companies can fine the processor that provided the high-volume merchant account.
When merchants can maintain good chargeback ratios, their processors have no choice but to shut down their high-volume merchant accounts. To avoiding putting merchant accounts in jeopardy, businesses must have strategies in place to avoid chargebacks, maintain good customer service, and display clear, understandable refund and return policies. No business can afford to have their merchants accounts closed. Once a merchant has an account terminated, it is much more difficult to get another one in the future.
Strategies for keeping chargeback ratios low
Turning away sales is no way to decrease chargeback ratios. There are many more effective ways to prevent a credit card transaction dispute from snowballing into a chargeback.
In addition to a solid business model and clear return and refund policies, businesses that process a large volume of transactions need to up their fraud prevention game. Adding an identity check, such as an electronic ID verification, on buyers before they submit transactions is an inexpensive and simple way to cut down on disputes. Requesting customers take selfies of themselves while holding their driver’s license or another state-issued ID and then email the image to a merchant is a simple step that can prevent a customer from claiming he or she did not make a purchase.
Merchants that make it a practice to thoroughly review any orders that appear suspicious, obtain a digital signature from customers, and avoid sales from countries that have reputations for committing internet fraud have managed shave their chargeback ratios.
Also, it is important to note that when high-volume merchants accept telephone or e-commerce payments, a customer’s credit card information is entered through a payment gateway or virtual terminal. Using a gateway, which is a user interface that transmits card data to the processor securely, can reduce credit card transaction disputes. Using an ACH (Automated Clearing House) payment processing, as well as other check solutions also can decrease the number of chargebacks. ACH, which is an electronic payment solution that is similar to the way a debit card payment works, enables businesses to deduct funds directly from a customer’s bank account.
Other business basics are adding clear billing descriptors, which include a merchant’s name, contact number, and return and refund policies, to all paper and electronic correspondences. Since many chargebacks are due to customers not remembering or recognizing transactions on their credit card statements, using descriptors are no-brainers. In addition to sending all customers electronic receipts following purchases, merchants’ customer service staff should always be trained to give dissatisfied customers full refunds. Nipping the problem in the bud like that will prevent a customer from making a complaint to a credit card company.
Most importantly, it also is recommended that merchants with high processing volumes to use a more advanced payment gateway. To reduce a merchant’s chances of having their funds held up in risk or terminated due to excessive chargebacks, high-volume merchants should have several merchant accounts available so that they can have their transactions spread across all of them.
Mitigate chargebacks the easy way
Trim chargeback ratios by 25% by using a chargeback mitigation system, like the one offered by EMB partnered with Verifi and its new Cardholder Dispute Resolution Network (CDRN) and Ethoca’s alert system to create an alert and chargeback prevention that was made to help high-risk merchants, such as high-volume businesses.
Merchants can resolve credit card transaction disputes directly because CDRN operates with banks and card issuers. By using this cutting-edge system, merchants achieve the largest rate of chargeback resolutions while being directly involved in the process. The only way to maintain a merchant account is to chargeback ratios down.
Finding the right high-volume merchant NAICS AND SIC categories
From real estate to beauty and wellness, high-volume merchants can fit into many different industries. Data is collected on all types of businesses so they can be analyzed and compared. Federal statistical agencies classify establishments using a list of six-digit numerical codes known as the Northern American Classification System (NAICS). The use the information to publish statistical information about similar types of businesses and determine the way they impact the economy in the U.S.
Another four-digit numerical classification system known as Standard Industrial Classification (SIC) codes are used to identify the main purposes of businesses, which are assigned by the United States and other countries.
Since high-volume merchants fall into so many areas, it is most prudent to visit