With the onset of the COVID-19 pandemic, businesses worldwide have suffered shutdowns, and with that, loss of revenue. However, those businesses that have either already had an existing online store or quickly pivoted and opened up one, are clearly the ones surviving the economic downturn.
Businesses that are more likely to be impacted, regardless of cataclysmic world events are the high-risk businesses. It’s simply because the very nature of high-risk businesses exposes them to more chargeback and fraud as compared to standard merchants. The pandemic has only magnified the instances of fraud and the trend is projected to grow in prevalence.
When a high-risk merchant is continuously battered by chargeback and fraud, the processor can freeze or outright close your merchant account without warning. With this, your cash flow will come to an abrupt end, and with that, the end of your business.
How To Stop Your Account From Being Frozen
Your payment processor has every right to freeze or terminate your account. This is why it is not enough to just choose any payment processor willing to take you on. It’s imperative that high-risk businesses seek out a trustworthy and reputable high-risk merchant account provider.
First of all, your chances for a merchant account approval are much higher if you go with a high-risk merchant processor. Secondly, partnering up with a high-risk merchant processor will mean that you are less likely to experience a freeze, hold, or termination.
Just remember that this extra level of security will cost you more than a traditional merchant account. Furthermore, the processor may require a rolling reserve before you even open a merchant account.
So now that you are convinced that pursuing a high-risk merchant account is the way to go, what other strategies can you incorporate to avoid getting your account frozen or terminated? Take a look at a few tips below:
- Be Honest About What You Are Selling: Nothing can jeopardize your right standing with your processor if you fudge about what you are selling. If there is any misrepresentation in your business and the products and services you sell, your account will be terminated. No questions asked.
When you open a merchant account, you will be assigned an MCC (Merchant Category Code). This will directly dictate your interchange rates and what you will pay per transaction. Banks will not be too happy if you provide the wrong information that will impact their profit margin.
- Mitigate Your Chargebacks: Although chargebacks are part and parcel to running an online business, it is still viewed negatively by processors. What it communicates to them is that you are not delivering on your promises. It might also give them the impression that you are negligently accepting fraudulent cards.
The best move is to clearly explain your return policy on a visible spot on your website and also on your receipts. Furthermore, make sure that your name identifies you clearly on the customer’s online bank statements. Include a phone number for customers to contact you if they have any questions.
- Talk With Your Processor: Take preventative measures to communicate with your processor before anything goes awry. For example, if you get larger than normal transactions, talk to someone in the fraud department of your processing company. You will need to provide some details such as invoice information.
Just taking a few of these steps can grant you a “pre-approval” for such a transaction. When it comes time to process the payment, you can avoid any issues.
Follow These Tips And You Can Ride The E-Commerce Wave With Confidence
Just following these aforementioned tips can save you time, money, and loads of headaches. Remember that taking preventative measures will keep your cash flow running freely and steadily.