High ticket or transaction businesses, such as automobile repair businesses and body shops can run into problems as they have very few customers with high returns that are hard to put on a graph for consistency.
No matter what people are buying, they are often looking for best deal, making selling expensive or luxury items and services a competitive business. Selling these products and services online is even more difficult. When a business is selling items that start in the hundreds of dollars and can top out in the thousands, any potential transaction can make or break a company.
Building a steady customer base and continuing to grow profits aren’t the only problems in these types of businesses. Getting a chance to operate an online business on its own is its own hurdle. High-ticket merchants, such as online furniture stores and electronics businesses, must be able to accept credit cards for payments. To do so, a business needs a high-ticket merchant account. Since these merchants sell expensive items or services and have a reputation for excessive chargebacks, banks find them too risky and won’t approve them for merchant accounts.
Unlike banks, eMerchantBroker (EMB) isn’t afraid to take a chance on a high-ticket merchant. EMB is a credit card processor that provides customized payment solutions to all types of new and established businesses of all sizes.
Succeeding in business is important to EMB, which is why it makes customer service a priority. To obtain a high-ticket merchant account, begin the process today by filling out EMB’s quick and easy online application. There are no guarantees, but EMB promises an open and honest application process. Merchants can be approved in as little as 24 hours. EMB also provides secure payment gateways, chargeback mitigation programs, and fraud filters.
A sampling of high-ticket merchants
High-ticket merchant accounts give businesses the ability to accept credit card payments for pricier services and products from consumers.
Get a merchant account from EMB for businesses that sell the following products and services:
- Collectibles
- Electronics
- Jewelry
- Furniture
- Tech support
- Credit repair
- Auto accessories and parts
- Designer fashion
- Luxury goods and services, such as private planes and travel
- Precious metals
- Tickets for flights, concerts, excursions
Merchants that have single transactions in the hundreds to thousands of dollars range and don’t see their types of businesses here should fill out an application to begin accepting credit card payments. High-risk merchants, such as high-ticket businesses, are EMB’s specialty.
Documents needed when applying for a high-ticket merchant account
To begin the 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
Reputable, law-abiding businesses are the most likely to get approved for a high-ticket merchant account. During their reviews, underwriters want to ensure companies are built on stable business models and in compliance of all rules and regulations.
To determine risk, underwriters review merchants’ credit scores, credit card processing history, bank statements, and websites. These are evaluated to ensure that merchants don’t have negative bank account balances, outstanding bills, a previously terminated merchant account, and a history of high chargeback ratios. Also, a travel merchant’s website is examined to ensure it has a secure (SSL), as well as clear, prominently-displayed privacy and refund policies.
Some savings and no outstanding bills or debts will put a merchant in a positive light. Also, it is a good idea to have the business principal with the best credit history apply for the merchant account.
Businesses that take these steps are more likely to get approved for merchant accounts without restrictions, such as higher processing volume caps and lower rolling reserves.
Getting higher credit processing volumes for high-ticket merchant accounts
Due to the financial risk associated with high-ticket businesses, many are 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.
Caps eventually get lifted for most businesses. High-ticket merchants that need higher processing volumes can request new caps in as few as three months. At that time, they must prove that they pay their bills, have low chargeback ratios, and have some money saved.
High-tickets equal high chargeback ratios
The reason high-ticket merchants see excessive chargebacks is pretty basic. The risk of loss is higher if a consumer charges back a $2,000 sale than a $20 sale and consumers are more likely to change their minds and dispute a transaction when item or service is more expensive. When chargebacks add up, it is not rare for a merchant to go belly up. If a merchant shuts down unexpectedly or just disappears, processors and their sponsor banks are the ones left responsible for the hefty chargeback fees.
Merchants that sell expensive goods also are more vulnerable to fraud. Cybercriminals target high-ticket merchants. It is not uncommon for them to use stolen credit cards to buy jewelry or electronics and then have them shipped to the United States and then quickly have them re-shipped to another location overseas. The merchant, processor, and its sponsor bank are responsible for refunding the product or the cost to the consumer.
There also is friendly fraud, which is when customers buy items, receive it, claim it was damaged, did not arrive, or was not what was promised, and then, calls their credit card companies to dispute the charges. Basically, customers end up get the product or service for free.
Most importantly, it is vital that merchants explain to processors up front that they sell products and services that have higher-than-average price tags. Therefore, merchants will get approved for an account that can accommodate those ranges. High-ticket merchants that fail to do this can end up have their merchants accounts suspended or shut down permanently because their business operations look sketchy.
Do the math – calculating a high-ticket merchant’s chargeback ratio
To calculate a high-ticket merchant’s chargeback ratio, the number of transactions is divided by the number of monthly transactions. For example, a merchant with 100 transactions and four chargebacks in any given month would have a 4% chargeback ratio.
The high stakes of chargebacks to credit card processors
In addition to being on the hook for unpaid refunds or chargebacks, credit card processors may be subject to thousands of dollars in financial fines for each merchant account that maintains an excessive chargeback ratio. Whenever a business exceeds a 2% chargeback ratio, credit card companies can fine the processor that provided the high-ticket merchant account.
When the ratios remain high, processors have no choice but to terminate their high-risk merchant accounts. To avoiding put merchant accounts in jeopardy, businesses must work to keep their transactions volumes high and work to avoid chargebacks.
Ways to keep chargeback ratios low
High-ticket merchants need to be vigilante when it comes to avoiding excessive chargebacks. Merchants that regularly deal in items with high-ticket values can’t eliminate the risk of fraud completely due to the markets in which they exist, put small changes can help. A solid business model and clear return and refund policies aside, businesses that sell more expensive items need to up the ante in terms of fraud prevention.
One good way to cut down on fraud, which then leads to disputes and chargebacks, is to add an identity check on buyers before they submit transactions. Implementing an electronic ID verification at checkout is a simple and cost-effective solution. Asking customers to email a selfie of themselves holding a driver’s license or other form of ID is another way to prove a purchase was valid.
Other good practices include:
- Thoroughly reviewing any orders that appear questionable
- Obtaining a digital signature from customers who are making the purchases
- Avoiding sales from countries that are known for internet fraud
Additionally, when high-ticket merchants accept MO/TO (mail order/telephone order) or e-commerce payments, the customer’s credit card information is entered through a payment gateway or virtual terminal. Using a gateway, an user interface that transmits card data to the processor securely, is a great way to cut down on credit card transaction disputes. Merchants also can cut down on a large volume of chargebacks if they use ACH, or Automated Clearing House, payment processing, as well as other check solutions. ACH is an electronic payment solution that enables businesses to deduct funds directly from a customer’s bank account.
Other important moves to make are adding clear billing descriptors, which include a merchant’s name, contact number, and return and refund policies. This is valuable because many chargebacks are due to customers not remembering or recognizing transactions on their credit card statements.
Communicating openly and often also can go a long way in any high-ticket business in any industry. Once a transaction is complete, send an automatic electronic confirmation or receipt. If a dispute arises, get ahead of the situation by training staff to offer full refunds. A refund is much cheaper than a chargeback. Too many chargebacks not only cut into profit margins, they can lead to processors shutting down merchant accounts.
Start using a mitigation system
Implementing a chargeback mitigation system is another way to trim chargeback ratios by 25%. EMB has created an elite alert and prevention system for high-risk merchants, including high-ticket businesses, by partnering with Verifi and its new Cardholder Dispute Resolution Network (CDRN) and Ethoca’s alert system.
It’s unique because CDRN operates with banks and card issuers, enabling merchants to resolve credit card transaction disputes directly. This state-of-the-art alert and prevention system allows merchants to achieve the greatest rate of chargeback resolutions while being directly involved in the process.
Finding the right high-ticket merchant NAICS AND SIC categories
Federal statistical agencies classify establishments uses a list of six-digit numerical codes known as the Northern American Classification System (NAICS). The data is used to collect, analyze, and publish statistical information about similar types of businesses. Also, it is used to determine the way they impact the economy in the U.S.
The four-digit numerical Standard Industrial Classification (SIC) codes are used to identify the main purposes of businesses are assigned by the United States and other countries, such as the United Kingdom.
Since high-ticket items and services fall under numerous industries, it is best to visit
the United States Census Bureau’s Northern American Classification System to view the complete NAICS code list and to visit the United States Department of Labor to view a complete SIC list.
Merchant Cash Advance for Automotive & High Ticket
A common problem for high ticket or high average transaction industries is finding a merchant services provider that will process your electronic payment processes. The risk from high ticket price transactions will scare off a lot of traditional banks and service providers.
Dealing in high-end, high-priced items?
No need to worry, we’ve got you covered.
We offer a variety of merchant processing accounts set up specifically for the high-ticket industries.
We have no transaction limits or restrictions for our programs.
- No Application Fees
- Competitive rates
- No VISA/MasterCard Required
- Multiple Secure Payment Gateway Options