Online furniture sales have grown considerably in recent years as the best low-cost option for decorating a home.
According to Statista, U.S. retail e-commerce revenue from furniture and home furnishing sales rose $6.5 billion to $26.7 billion between 2013 and 2015. An increase from $38.5 billion to $42.7 billion is projected for 2018 – 2019.
These figures speak for themselves. This is a growth market.
Despite this exciting growth potential, many traditional banks refuse to work with the furniture sales industry. The unique nature of this sector means that furniture merchants are often penalized with credit card chargebacks due to the challenges of fulfilling orders, potential damage during shipping and long wait times for delivery.
Merchants seeking to gain a foothold in the emerging online furniture sales market would do well to consider SecureGlobalPay as their best option to process credit card payments efficiently and effectively.
SecureGlobalPay offers online furniture merchants, chargeback management tools, PCI-compliant payment gateways and fraud filters as part of the best online credit card payment system available. SecureGlobalPay often approves online furniture sales merchant accounts within 48 hours.
Types of Online Furniture Sales Merchant Accounts
Online furniture merchants provide customers a quick, easy way to decorate a new home. Two challenges facing e-commerce furniture merchants are keeping up with inventory demands and processing online payments securely and efficiently.
A merchant account from SecureGlobalPay provides full service online payment processing for businesses offering products/services related to:
- Seating (chairs, sofas, and benches)
- Desks and tables
- Entertainment furniture (pool, hockey, ping-pong tables & entertainment centers)
- Beds, mattresses, headboards, footboards
- Storage (drawers, baker’s racks, shelving units, hutches)
- Wall décor
- Garden and patio furniture
Merchants specializing in any combination of the above-captioned products or similar merchandise will require help processing credit card payments securely and efficiently. SecureGlobalPay’s secialist’s are there to assist you every step of the way.
Online furniture merchant sales account requirements
Merchants can get started on obtaining their online furniture merchant account by filling out SecureGlobalPay’s online application. The following basic’s are required for our processors and underwriters:
- A valid, government-issued photo ID (e.g., driver’s license, state/provincial ID, etc.)
- A bank attestation or void check
- Bank statements (3 months worth)
- Processing statements (3 months worth)
- SSN (Social Security Number) or EIN (Employer Identification Number)
- The URL to your secure, fully-operational website
SecureGlobalPay’s streamlined application process grants approval to eligible merchants within 48 – 72 hours. (Please note that application does not guarantee approval.)
Assessing merchant risk: an underwriter’s POV
Underwriters evaluating furniture businesses want to make sure those businesses operate legally and fairly from a sound business model. Merchants who fail to qualify for these targets often get a high volume of credit transaction disputes, which lead to expensive chargebacks.
In addition to a merchant’s business model and legal history, underwriters will also examine merchants’ websites, bank statements, credit scores and credit card processing history. Negative bank balances, poor credit history, excessive chargeback ratios and a troubled history when it comes to missing payments or paying bills could also factor into a negative evaluation.
Businesses seeking to boost their chances of approval should:
- Accrue savings
- Settle all outstanding bills and debts
- Identify the business principal with the best credit history to apply for the merchant account
Following these steps will increase your chances of approval and enable you to obtain an account with fewer restrictions, such as caps on higher processing volumes and lower rolling reserves.
Increasing processing volumes for online furniture sales merchant accounts
Online transaction costs for furniture merchants tend to be higher than in other industries. For this reason, online furniture merchants tend to receive monthly credit card processing volume caps, limiting the number of transactions merchants can accept each month. Once the cap is reached, the merchant can process no further transactions until the following month. This prevents businesses from reaching their potential.
Merchants that pay their bills, maintain low chargeback ratios and save money can request higher volume caps in as little as three months.
Online furniture sales merchants and chargebacks
Online furniture merchants represent a business that faces unique challenges. Customer dissatisfaction in the form of long wait times or product damaged during shipping and an industry track record of excessive chargebacks present much greater risk to traditional lending institutions.
The high cost of furniture also presents unique challenges in this regard. Customers who pay anywhere from $400 to $2,000 for an item often receive sticker shock when the credit card bill arrives. This leads to a greater number of returns than in other industries, which means a high chargeback ratio for online furniture merchants. “Friendly fraud” – that is, chargebacks based not on theft but on customers changing their minds – end up factoring negatively in an underwriter’s appraisal of an online furniture account merchant. The high price tags and unique challenges referenced above pose unique challenges for merchants wishing to succeed in this industry.
Credit card chargebacks: the hidden consequences for online merchants
Merchants with excessive chargebacks can cost credit card processors thousands of dollars in fees. When a business exceeds a 2% chargeback ratio, credit card companies like Visa and MasterCard can fine credit card processors.
Credit card processors can shut down merchants with a chargeback ratio of 2% or higher. Merchants can avoid this by integrating mitigation programs for chargebacks and keeping sales volumes high.
Curbing chargeback ratios: a guide
The more transparent, responsible and available a merchant is to clients, the less likely that merchant will be to face credit card disputes. Merchants who develop a reputation for providing quality products and good customer service and being available for their customers prosper in the online environment.
Sending electronic receipts and confirmation e-mails that include contact information like e-mails and phone numbers are a great way to cut down on chargeback activity. Customers sometimes forget that they have made credit card transactions, so business communications with merchant information displayed can serve as a powerful reminder.
Conducting surveys and inviting customers to post online reviews can serve to get the word out about your business and solidify a reputation for responsiveness to customer needs. Reviews and surveys can provide valuable feedback for adjusting inventory and better serving customers while reminding purchasers about recent credit card transactions.
Providing 24-hour customer service support is another way to cut down on credit card disputes and possible chargebacks. Available customer service representatives can run interference by providing refunds or other solutions to avoid credit card disputes that can lead to chargebacks.
Online furniture sales categories
Four-digit numeric codes known as Standard Industrial Classification (SIC) codes are common in the United States and many other countries for identifying businesses and their primary purposes.
Merchants in the e-commerce furniture industry fall into these SIC categories:
- 5023: Home Furnishings
- 5099: Durable Goods, not elsewhere classified
- 5712: Furniture Stores
A complete SIC list is available via the US Department of Labor website.
A similar classification system known as NAICS (the Northern American Classification System) is a list of six-digit codes used by federal statistical agencies to classify business establishments. The classification system aims to gather, analyze, and publish statistical information about similar types of businesses and what their impacts are on the U.S. economy.
Online furniture merchants are identified using the following codes:
- 442110: Furniture Stores
- 423220: Home Furnishings Merchant Wholesalers
- 442299: All Other Home Furnishings
Visit the United States Census Bureau to view the complete NAICS code list.
Merchant accounts for online furniture sellers
Among bankers, online furniture retailers have a reputation as a high-risk enterprise. Long delays in delivery and the likelihood of product becoming damaged en route leads to excessive chargebacks and disputes, making them unattractive prospects to traditional financial institutions.
The average transaction or ticket for online furniture merchants is high compared to other businesses. This represents a risk to traditional credit card processing companies.
SecureGlobalPay gets results
SecureGlobalPay has a wealth of experience in helping online merchants achieve their business goals by providing responsive online credit card processing services. Eliminate the red tape and use our streamlined application process to find the perfect merchant account to suit your needs.
- No Application Fees
- Competitive rates
- No VISA/MasterCard Required
- Multiple Secure Payment Gateway Options
- LOW Rates and Fees
- No extensive credit checks