A rise in reports of water-borne diseases, industrial development that has caused water pollution, and increased concerns about health have boosted the water purification industry. Purifiers are needed to remove toxins, chemicals, bacteria, fungi, biological contaminants, and other impurities from water supplies.
By 2022, the water purifier market is projected to generate $45.3 billion, according to Allied Market Research Report’s “Water Purifier Market by Technology, End-User and Channels of Distribution – Global Opportunity Analysis and Industry Forecast, 2015 – 2022”.
Despite the industry being a growth market, the unique characteristics of the water purification industry is why banks consider businesses in this sector high risk. They are labeled high-risk merchants, primarily, due to excessive chargebacks from customer complaints and faulty manufacturing. When traditional financial institutions won’t work with them, online water purification businesses must work with a high-risk merchant account provider, like SecureGlobalPay, if they want to accept and process credit card payments. They can’t process transactions without a water purifier merchant account.
To securely process payments, apply for a water purifier merchant account by using SecureGlobalPay’s simple, online application. Merchants can get approved within 24 and 48 hours. Once approved, SecureGlobalPay also sets up chargeback management tools, payment gateways, and fraud filters.
When merchants work with SecureGlobalPay, they are working with a high-risk processor that understands the challenges that online water purifier merchants face. Regardless of risk levels, SecureGlobalPay offers customized payment processing solutions for water purifier businesses of all sizes.
What to expect during a water purifier account application review
To get approved for a water purifier merchant account, a business must show underwriters they are complying with all necessary rules and regulations. To determine potential financial risks to processors and their sponsor banks, underwriters assess a merchant’s risk by exploring several factors. These assessments essentially determine whether a merchant account is approved or denied.
To further determine risk, underwriters review credit scores, credit card processing history, and bank statements. They also check merchants’ sites to ensure they have clear, prominently-displayed privacy and refund policies, as well as secure SSLs. A negative bank account balance, unpaid bills and late payments, and a history of high chargeback rates increase a merchant’s risk. Satisfying any debts and saving money increases the chances of a merchant account approvals. Also, it is a good move to have the person within the business who has the best credit history apply for the account.
Proactively addressing these issues and taking care of anything that looks questionable are more likely to result in an approval of a water purifier merchant account without limits, such as stricter caps on processing volumes or lower rolling reserves.
Other water purifier merchant account application requirements
Businesses that want to apply for a water purifier merchant account can begin today by filling out SecureGlobalPay’s online application. To swiftly move the process along, businesses need to make these documents available to processors and underwriters:
- 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)
- Chargebacks must be under 2%
- Secure, fully-operational websites
SecureGlobalPay cannot guarantee approvals. SecureGlobalPay does promises a quick application process that can result in approvals for eligible merchants in as few as 24 hours.
Get processing volumes increased for water purifier merchant accounts
High-risk businesses, such as water purification merchants, often are approved for merchant accounts with monthly caps on credit card processing volumes. A cap limits how many credit card transactions a business can accept in any given month. Once the limit is reached, merchants need to stop accepting sales until they reach the next month.
Caps can get raised in as few as three months if water purifier merchants can prove that they pay their bills, have low chargeback ratios, and have some money saved.
Clearing up the reasons behind high chargeback ratios
Excessive chargebacks, which is when credit-card providers demand retailers to make good on losses from disputed or fraudulent purchases, are common in the water purification industry due the volume of customer complaints associated with filtration systems. Most of the complaints are due to faulty manufacturing. However, other factors also come into play within this industry in terms of chargebacks.
Not only are online businesses more vulnerable to chargebacks than bricks-and-mortar businesses, water purifiers can be expensive. They can range in price between hundreds of dollars and thousands. High-ticket products are always subject to more chargebacks. Oftentimes, customers will dispute the charge when they review their credit card statements because they can’t afford the item or decided their budgets couldn’t handle it.
Additionally, cybercriminals target high-ticket merchants. This is when a person uses stolen credit cards to buy water purifiers and, then, has 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 whenever this occurs.
Also, water purification merchants experience many more customer complaints than other industries. Customers will initiate chargebacks for numerous reasons, including:
- The quality of the good wasn’t as advertised
- The water purifier was never delivered
- The product had a manufacturing flaw
The water filtration industry also falls victim to friendly fraud. Friendly chargebacks are when legitimate customers contact their credit card issuers to request refunds for products rather than contacting a merchant and requesting refunds. In these situations, customers are doing this so they don’t have to pay for their purchases.
In addition to water purifiers, some merchants will offer service plans. These plans often require recurring billing, which notoriously is linked to excessive chargebacks. It is not unusual for customers to review credit card statements because they no longer want the service or don’t want to pay for it. Instead of going through the proper termination procedures, customers initiate a chargeback.
Many businesses within the water filtration industry are small and not well known. A lack of name recognition and reputation are problematic for water purifiers. Like other small businesses, they don’t know what they can be doing to stop expensive chargebacks. Many times, they are unaware of mitigation systems and fraud filters and their customer service representatives are not skilled with dealing with customers. When businesses can’t properly resolve customer issues, patrons often incur more chargebacks.
Also, many water purifier merchants often do not send electronic receipts or order confirmations after purchases. Without receipts, many customers have no way to know the way the merchant’s name will appear on their statements or any of their contact information.
Calculating a water purifier merchant’s chargeback ratio
A water purifier merchant’s chargeback ratio is calculated by the number of chargebacks divided by the number of monthly transactions. For example, a merchant with 100 transactions and four chargebacks in one month would have a 4% chargeback. The dollar amount of any given chargeback does not impact ratios.
Excessive chargebacks impact processors’ bottom lines
Why chargeback ratios are high, doesn’t matter to credit card processors. If chargebacks are excessive, processors are quick to terminate merchant accounts that don’t keep them in check. When water purifier merchants shut down, it is often due to too many refunds or chargeback fees. Anything that is outstanding credit card processors and sponsor banks are responsible for paying.
Also, high chargebacks negatively impact credit card processors relationships with their sponsor banks and credit card companies. Merchant account providers that continue to process credit card payments for businesses that have excessive chargeback also may face fines in the thousands of dollars from credit card companies.
Maintain a merchant account by curbing chargebacks
Since poor product experiences and friendly fraud are the primary reasons for chargebacks, water purifier merchants need to use strategies to prevent chargebacks from occurring.
A solid business model and clear return and refund policies aside, businesses that sell pricier items, such as water purifiers, need to cut down on fraud. Adding an identity check on buyers before they submit transactions or implementing an electronic ID verification at checkout are cost-effective solutions.
Additionally, when water purification merchants accept MO/TO (mail order/telephone order) or e-commerce payments, the customer’s credit card information is entered through a virtual terminal. Using a payment gateway, merchants know that card data is transmitted and processed securely, cutting down on credit card transaction disputes.
Merchants also can cut down on excessive chargebacks by using an ACH, or Automated Clearing House. ACH is an electronic payment solution in which funds directly are taken from a customer’s bank account.
To whittle down the number of chargebacks that occur due customers not recognizing a business or transaction, use clear billing descriptors. A descriptor should include a merchant’s name, contact number, and easy-to-understand return and refund policies.
Also, it is never a bad idea to have a policy of only shipping to home addresses. When buyers ask for items to be shipped to P.O. Boxes, they often are running scams.
One of the simplest way to avoid disputes is to provide customers with itemized receipts that include the amount of the purchases, the name of the vendor, and a customer support number, and accurate delivery timeframes. Updated shipping and tracking information also should be sent.
Since most chargebacks occur within four days of purchases, water purifier merchants should make it a point to stay connected with customers to ensure their satisfaction for at least one week after their purchases. Merchants have curbed their chargeback ratios by:
- Sending an email thanking a customer for a purchase
- Sending a final copy of an itemized receipt
- Asking customers to submit customer satisfaction surveys
Implementing a few of these strategies not only shows customers that their business is appreciated, it reminds them of their purchases.
Categories used in the water purification industry
The United States and other countries give Standard Industrial Classification (SIC) codes, which are four-digit numerical codes, to business establishments. These codes aim to identify the primary purpose of businesses.
Since water purification merchants can fall into different areas within the supply chain, including retailers, wholesalers, manufacturers, and installers, the SIC codes used vary. The most commonly uses ones are:
- 1711: Plumbing, Heating and Air-Conditioning.
- 5531: Auto and Home Supply Stores
- 5074: Plumbing and Heating Equipment and Supplies
- 7699: Repair Shops and Related Services, Not Elsewhere Classified
- 7389: Business Services, Not Elsewhere Classified
Visit the United States Department of Labor to view a complete SIC list.
Northern American Classification System (NAICS) are categories of six-digit codes used by federal statistical agencies to classify establishments. The information is used to collect, analyze, and publish statistical information about similar types of businesses and the way they impact the economy in the U.S.
In general, water purification businesses use these codes:
- 423720: Plumbing and Heating Equipment and Supplies.
- 23511: Plumbing, Heating, and Air-Conditioning Contractors
- 3334: Ventilation, Heating, Air-Conditioning, and Commercial Refrigeration Equipment Manufacturing
Visit the United States Census Bureau’s Northern American Classification System to view the complete NAICS code list.
Other Articles About High Risk Merchant Accounts
The Advantages and Disadvantages of Accepting Credit Cards for Your Small Business
An Easy Guide to Master Mobile Processing
Merchant Account Hardware and Software Guide
What You Should Know About Costly Downgrade Fees