Every business owner hopes for a high volume of business. But with success comes a whole new set of problems if you are not careful. Accepting a higher volume of credit card & debit card sales is fantastic. However, a higher volume of transactions means a greater risk of fraudulent transactions, chargebacks and friendly fraud. As these present a potential liability, many financial institutions are reluctant to partner with high volume merchants.
Successful high volume of transaction merchants partner with credit card processors that understand the risks and needs of high volume merchants. SecureGlobalPay specializes in enterprise level payment environments and services. SecureGlobalPay provides these services and more for businesses of all sizes in a variety of industries.
Turn to SecureGlobalPay for secure, customized payment solutions.
Types of High Volume Merchants
High volume merchants must also be able to process credit card & debit card payments from customers. This is especially true for merchants that work exclusively online and with Mail Order and Telephone Order products and services.
A business must process at least $100,000 per month in credit card & debit card sales to be eligible for a high volume merchant account. SecureGlobalPay provides high volume merchant accounts for:
- Property management processing & monthly rental payments or timeshare fees
- Merchants charging recurring annual or monthly fees for services
- Subscription companies shipping products monthly or bi-monthly
- Companies with recurrent membership fees
- Online businesses selling single downloads of songs or e-books
Applying for a High Volume Merchant Account
To apply for a high volume merchant account, fill out SecureGlobalPay’s quick and simple online application.
Click here for a list of items you will need to provide underwriters for review.
Application does not guarantee approval. But successful applicants can begin processing online payments in as little as 24 hours.
The Underwriter’s Review
Underwriters must ensure that an applicant is running a law-abiding, reputable business.
Click here for a preview of what to expect during the underwriter’s review of your merchant account.
During their review, underwriters seek to identify any potential risk to processors. These can include:
- A history of high chargeback (credit card transaction disputes) ratios
- Bank statements
- Credit card processing history
- Credit scores
- Negative bank account balances
- Unpaid bills and late payments
Settling any unpaid debts and putting some savings in the bank will also increase a merchant’s chance of approval. Having the principal with the best credit submit the application will also help.
Taking these steps will improve your chances of approval. They will also diminish the likelihood your account will be restricted by processing volume caps or a mandatory rolling reserve.
Increasing Processing Volumes
High volume businesses are often required to operate with volume processing caps. This limits the number of transactions a merchant can process each month. Once the cap is reached, the merchant can not process any more credit card or debit card transactions until the following month.
Merchants can appeal transaction volume caps in as little as three months. Keep up to date on bill payments, chargeback ratios and put money in the bank. This can help increase the likelihood your volume cap will be lifted.
Why do Chargeback Ratios Climb?
The higher the number of transactions, the greater the likelihood of chargebacks. This increases the chance that a merchant may have to close up shop. Sponsor banks and processors can often be left responsible for refunds and chargebacks fees.
High volume environments also present ideal targets for cybercriminals. Merchants selling a high volume of goods are ripe for fraud. Processing multiple transactions at a time makes it more difficult to pay attention to individual transactions. Thieves take advantage of this, leaving the merchant, bank and processor on the hook for refunding the customer.
Friendly fraud is also a problem. This is when customers buy and receive items but then claim they never arrived, came damaged or were not as advertised. The result is a customer getting whatever they ordered without paying.
Calculating Chargeback Ratios
The total number of monthly credit card & debit card transactions divided by the number of monthly transactions determines a high volume merchant’s chargeback ratio. A merchant with 100 transactions and four chargebacks in any given month has a chargeback ratio of 4%.
Credit Card Processors and Chargebacks
Credit card processors mitigate risks from high volume processors by fining merchant accounts for chargebacks, holding money or placing them on the TMF list . Once a merchant reaches a chargebacks ratio of 2% or higher, the processor can face fines from credit card companies and the merchant account can be shut down. Continued high chargeback ratios therefore will most likely lead to account closure.
It is important to have a strategy to fight chargebacks. Maintaining good customer service and clearly displaying refund and return policies will help. This is critical to your long-term success. Once a merchant has an account terminated, it is much more difficult to get another one in the future.
Strategies for Chargebacks
Here are some useful strategies for combating chargebacks.
Record keeping. Be sure to accurately record customer information at every stage of the transaction. Obtain the customer’s name, address, telephone number, e-mail contact and even the IP address of their computer. All this info can can help merchants appeal fraudulent chargeback claims.
Extra steps. Some merchants conduct ID verification, request customers take selfies of themselves while holding their driver’s license or avoid sales from countries that have reputations for committing internet fraud.
Payment gateways. Using a payment gateway or virtual terminal allows the merchant to transmit data to the processor securely. This can reduce credit card transaction disputes. Using an ACH (Automated Clearing House) payment processing can also decrease the number of chargebacks. ACH enables businesses to deduct funds directly from a customer’s bank account.
Billing descriptors. Include your merchant name, contact number, and return and refund policies on all correspondence. This helps customers remember and recognize transactions on their credit card statements.
Customer service. Merchants can reduce chargebacks by having trained, experienced customer service staff available to listen to customer concerns. Customer service staff should always be trained to give dissatisfied customers full refunds. Nipping the problem in the bud prevents customers from making a complaint to a credit card company.
High Volume Merchant Categories
The United States and other countries assign four-digit numerical Standard Industrial Classification (SIC) codes to businesses to identify their primary purposes. Visit the United States Department of Labor to view a complete SIC list.
Federal statistical agencies classify establishments using six-digit numerical codes known as the Northern American Classification System (NAICS). The codes serve to collect and analyze statistical information about similar types of businesses and how they impact the US economy. Visit the United States Census Bureau’s Northern American Classification System to view the complete NAICS code list.