The ABCs of Obtaining an Educational Seminar Merchant Account
eMerchantBroker.com offers merchant accounts for companies providing educational services and seminars. Educational seminars tend to have a higher chargeback rate than more traditional businesses.
Speedy technological changes and advancements and overall shorter product life cycles have altered the skills that employees and managers need. To stay in front of these changes, workers need to sharpen their skills and gain new ones by attending educational seminars, like business coaching and management training sessions and workshops. As more businesses have accepted of the value of professional development and continuing education classes, the industry has benefited greatly because often seek out experts instead of holding seminars in-house. This business coaching industry generates $11 billion revenue with the sector seeing a 3.5% increase in annual growth from 2012, according to an August 2017 report from industry research firm, IBISWorld.
Currently, there are 51,946 businesses in the industry and the growth of online training is expected to further boost the sector. Since online training is a more affordable and flexible option for companies and reduces operating costs for training providers, industry revenue is expected to rise through 2022.
Though growth of the industry shows there is market demand for these services, trainers don’t have an easy time getting approved for an educational seminar merchant account. Businesses who receive most payments via credit card, like educational training and business coaching merchants, are considered high risk by banks. Traditional financial institutions turn down many of these businesses they don’t want to take on the risk.
Merchants that want to effectively process credit card payments need to turn to a processor, like eMerchantBroker.com (EMB), for apply for an educational seminar merchant account.
Fill out EMB’s online application today and get approved for a merchant account within 24 and 48 hours. EMB offers educational seminar merchant accounts with multiple PCI-compliant payment gateways to accommodate every business’ technological needs. Additionally, EMB offers chargeback management tools and fraud filters.
Types of educational seminar services
The educational seminar industry includes companies that offer training and courses for management and professional development. Training can be provided at a company’s training facilities, client or educational institutions, or at home via the internet.
EMB offers educational seminar merchant accounts to many types of businesses in the industry. Merchants offer the following services:
- Management development training
- Professional development training
- Quality assurance training
- Business coaching
In addition, EMB has a long history of working with new and existing businesses of all sizes, merchants rejected or terminated by other credit card processors, as well as merchants with no credit, bad credit, or high chargebacks.
Educational seminar merchant account application requisites
Businesses can apply online now for an educational seminar merchant account by filling out EMB’s quick online application. To apply, merchants will need to submit the following items to processors and underwriters along with their applications:
- A valid, government-issued ID, such as a driver’s license
- A bank letter or a pre-printed voided check
- Three months of the most recent bank statements
- Three months of the most recent processing statements, if applicable
- A SSN (Social Security Number) or EIN (Employer Identification Number)
- Chargeback ratios must be under 2%
- A secure, fully-operational website
Also, all online merchants must maintain secure, fully-operational websites.
EMB cannot guarantee any approvals, but it does promise a fast, streamlined application process. Apply today and get approved within 24 hours.
Get schooled in the underwriting process
Underwriters main jobs are to determine risk and to ensure educational seminar businesses are operating as law-abiding, reputable businesses. During application reviews, underwriters look for any practices that could have a negative financial impact on credit card processors. Having a solid business model shows underwriters that the merchant likely will have fewer credit card transaction disputes. Too many credit card transaction disputes lead to chargebacks, which can result in a processor terminating an educational seminar merchant account.
Underwriters determine risk by looking at businesses’ credit scores, credit card processing history, bank statements, and websites. Previously terminated merchants, negative bank account balances, excessive chargeback ratios, a history of missed or late payments also are considered a greater risk to a processor.
Businesses that want to increase their chances of approval should:
- Save some money
- Pay all outstanding bills and debts
- Encourage the business principal with the best credit history to apply for the merchant account
Merchants that take these steps are not only more likely to get approved for an educational seminar merchant account, they may get fewer restrictions, such as caps on higher processing volumes and lower rolling reserves.
Why educational seminar merchants are considered high risk
Seminars are great opportunities for people to learn new skills or improvement their management potential, but they are a very attractive business model for traditional financial institutions. They are commonly considered high risk because they are paid for by credit card either online or over the phone. In general, service-oriented businesses that don’t get paid during a face-to-face transaction are considered a higher risk to banks and processors because there is a greater chance of fraud.
Some training experts, such as those who promise to teach people how to make lots of money quickly or other lofty claims, may not deliver on what they pledged. This can lead to angry, dissatisfied customers who want refunds after the training seminars. If they aren’t given refunds, they could dispute the charge on their credit card statements.
Advanced registration often is required for educational training and professional development seminars. Change of plans or minds can lead to clients cancelling a registration. This also makes the merchant a high risk. If they are not handled properly, they can end up as chargebacks.
The high cost often associated with educational seminars also lands them in the high-risk category. Getting expertise in fields, such as medicine, real estate, and the stock market, can come with expensive price tags. Sometimes, a ticket to this type of educational seminar can cost thousands of dollars. Once customers see the expense on credit card statements, they may change her mind about how many people they will send. The chance of this happening also adds to any potential risk.
Some educational seminar businesses don’t have a well-known reputation or a strong brand name because they are new to the industry. A start-up or smaller business may lack the finesse needed to handle customer service complaints. They may not have the staff or the funds to offer 24-hour customer service or provide refunds that larger, more-established merchants may give to clients to prevent them from disputing a credit card transaction.
Whether they are won or lost, chargeback ratios contribute to businesses’ abilities to continue doing business. Many businesses don’t know this until it is too late. Excessive chargebacks can lead processors to terminate educational seminar merchant accounts. Once it is shut down, it is much more difficult to get another.
Excessive chargebacks leave processors paying the price
Chargebacks are not just bad for educational seminar merchants. When high-risk merchants have excessive chargeback ratios, credit card processors can get fined thousands of dollars for each merchant account. Whenever a business exceeds a 2% chargeback ratio, credit card companies, such as MasterCard and Visa, can fine the processor that approved the educational seminar merchant account.
Since fines cut into processors’ bottom lines, they terminate high-risk merchant accounts with chargeback ratios of more than 3%.
Learn how to keep chargeback ratios down
A chargeback ratio is calculated by the number of transactions divided by the number of monthly transactions. For example, an educational seminar merchant with 100 transactions and 4 chargebacks in a single month would have a 4% chargeback. The dollar amount of a chargeback doesn’t matter. The fact the chargeback ratio is higher than 2% is what processors and credit card companies care about. When a ratio climbs to 3%, a processor can close a merchant account. If the account is terminated, a merchant can no longer accept and process credit card payments.
Therefore, keeping chargeback ratios law is essential. One of the best ways to keep chargebacks low is to offer clients full refunds. When a customer contacts a merchant to cancel a reservation, the customer service representative should immediately offer a full refund. After a refund and receipt are issued and received by the client, the merchant should then try to offer a new educational seminar in the future. Taking this action removes the chargeback potential of the first transaction and gives the merchant’s a chance to gain future business.
Since excessive chargebacks is due to customers not remembering or recognizing transactions on their credit card statements, merchants are encouraged to use and promote clear billing descriptors. The merchant’s name and contact number should be clearly displayed on websites, email confirmations and receipts, and any promotional materials about upcoming training and sessions. Transparency and open communications also are key to reducing chargebacks. Sending electronic receipts and other materials prove to clients that merchants are legitimate, trustworthy businesses.
Use a chargeback mitigation program
EMB’s chargeback shield program can cut a merchant’s chargeback ratio by 25%. By using EMB’s elite alert and prevention system for high-risk merchants, including educational seminar companies, businesses can mitigate three out of 12 chargebacks.
This system is unique because EMB partnered with Verifi, its new Cardholder Dispute Resolution Network (CDRN) and Ethoca’s alert system. CDRN operates with banks and card issuers, enabling merchants to achieve the greatest rate of chargeback resolutions directly.
By actively working to mitigate chargebacks, companies protect themselves from losing revenue and their educational seminar merchant accounts.
Credit card processing caps can change
Due to the risk associated with these types of businesses, many educational seminar merchants are given a monthly credit card processing volume cap. This means merchants are capped at the number of credit card transactions they handle each month. Once that cap amount is reached, the merchant cannot take any more credit cards purchases, essentially keeping a business from operating. Higher volumes are essential in educational seminar businesses because of the high costs for services.
Merchants that do well can ask for higher credit card processing volumes caps in as little as three months. Educational seminar merchants will have to prove that they pay their bills, have low chargeback ratios, and have saved some money for underwriters to consider an increase.
Categories for educational seminar merchant accounts
The United States and other countries assign four-digit numerical codes, known as Standard Industrial Classification (SIC) codes, to business establishments. The codes are used to identify businesses’ primary purposes.
Typically, merchants that offer business coaching, professional development, and educational seminars fall into one of these codes:
- 8742: Management Consulting Services
- 8299: Schools and Educational Services, Not Otherwise Classified
- 7389: Business Services, Not Otherwise Classified
- 8748: Business Consulting Services, Not Otherwise Classified
Visit the United States Department of Labor to view a complete SIC list.
The Northern American Classification System (NAICS) is a list of six-digit codes used by federal statistical agencies to classify business establishments. The codes are used to gather, analyze, and publish statistical information about similar types of businesses and the way they impact the U.S. economy.
In general, educational seminar businesses generally use one of these codes:
- 611430: Professional and management development training
- 561990: All Other Support Services
- 611710: Educational Support Services
Visit the United States Census Bureau to view the complete NAICS code list.