Depending on one acquiring bank for payment processing is a risky proposition in today’s volatile banking environment.  Multiple payment processing accounts are strategically desirable for ecommerce merchants to ensure processing can continue uninterrupted.

How Changes in Banking Regulations Affect High Risk Processing

New regulations, such as the Basel III Accords have changed capitalization/reserve ratio requirements for banks worldwide.  As a result, acquiring banks are examining merchant account portfolios in detail.

From a bank’s perspective, merchant accounts are short term lines of credit extended to a company.  When credit tightens, payment processing accounts are affected.  Persuading a bank to increase existing lines of credit is getting more challenging every day.

Acquiring banks are tightening lines of credit available for payment processing services.  Banks are putting caps on the amount of processing that can be run through high volume merchant accounts.

What the Changes Mean to High Volume Merchants

Businesses that have been processing with a bank for years are encountering roadblocks when applying for increases in payment processing volumes. The banks are examining payment processing portfolios looking for companies that represent increased exposure to loss.

Ecommerce in general represents a greater risk to banks than swiped processing because a card is not physically present when a purchase is made.  Internet retailers with high volumes of transactions may be surprised to find themselves reclassified as high risk merchants simply because they process a lot of payments.

Some banks, in an attempt to preserve risk/reserve/capitalization ratios are purging entire processing portfolios.  When this happens, all merchants processing with that bank, including those with stellar payment processing history, must find another bank to accept their business.

Conclusion: Take control of Your Payment Processing

Be proactive.  Facing reality is the first step in developing a successful payment processing strategy.

Don’t be lulled into complacency, thinking that your current provider will give you the processing volume you need.  Or, will continue processing for you at all.

Diversification of merchant accounts protects your cash flow and liquidity.  Participation in a banking network frees you from dependence on a single bank.   And provides virtually unlimited access to lines of credit for payment processing.

One processing platform unites all the banks.  A single “plug-in” lets you connect to all the financial institutions in the network.  Management and account reconciliation for all accounts is easy and simple.

Are you a high volume merchant seeking more payment processing capacity?

Contact info@paynetsecure.net today

 

A direct marketing company contacted us today with an all-too-common story.  Its current merchant account provider was terminating processing because the company had chargebacks http://www.riandalaw.com/Documents/MerchantChargebackLiability.pdf  that exceeded the card brands required ratios of keeping chargebacks under 1%.

Simply fighting a chargeback is not enough to keep chargebacks under control.  Even if you win a chargeback, it still remains on your processing history and figures into calculating your chargeback ratios.

Most Customers Call the Bank Instead of You

No matter how good your customer service is, the sad fact is that most customers will call their bank to issue and initiate a chargeback rather than calling you and asking for a refund.  In some high risk industries, more than 86% of customers will call the bank without ever contacting the merchant.

And let’s face it.  Consumers are getting more educated about how easy it is to initiate a chargeback.  They understand that in the majority of cases, the issuing bank will side with the consumer.

Sure, it’s not “fair” to you as the merchant.  Yet, the customers and issuing banks are not concerned about you.  That’s simply the way it is.

How Early Warning System Helps You

High volume, high risk merchants  now can take advantage of an early warning system to keep chargebacks under control.  The service can effectively reduce chargebacks by more than 50%.  As a result, merchant accounts are protected and processing can continue.

Here’s how it works:

When a customer calls the issuing bank to dispute a transaction, you are notified.  At that point, you can immediately issue a refund for the amount of the purchase.  Once the refund is issued, the dispute is closed and there is no chargeback.

The consumer still wins because the money is refunded.  And you are still out the cost of the goods or service you provided.

However, your merchant account processing is protected. Your chargebacks thresholds can remain under 1%.

Protect Your Business

Without a way to protect yourself from chargebacks, your merchant account is at risk.  Without payment processing, your business cannot not survive.

There is no perfect system to protect you against chargebacks.  But, the early warning system is a good tool to have in your arsenal to protect your vitally important merchant accounts.

For more information contact info@paynetsecure.net

Five Tips for High Risk Merchant Account Approval 

Accepting card payments is the single most important part of most businesses.  After all, debit and credit card processing represents the greatest source of cash flow into your company.

Here are 5 quick tips to help improve the likelihood of high risk merchant account approval. Pay attention to the details, prior to submitting the application.

1. Make sure all links on your website work. Go through every link on your site to be sure everything is functioning correctly. Common sense, isn’t it?
Don’t assume that because your links worked when your site launched that they still work. Glitches happen all the time on sites. Broken links create an unprofessional image of your company.

2. Is the phone number on the site working? How is the phone being answered? Polite, professional phone answering is the first impression callers obtain about your business. If the line goes to voice mail, identify the name of the business. Let the caller know when the contact will be returned.

As part of the underwriting process, a “cold call” is often made to the business. It’s amazing the number of times these calls are not returned in a timely fashion. Underwriters may also send out “cold” emails to support or customer service addresses to see how these requests are responded to. Provide a phone number, email address, and time frame of when customers can expect a response from you.

3. Ask your merchant account provider to give you a list of what should appear on your site. For example, shipping, returns, privacy policies need to be clearly displayed.

4. Underwriters are no different than anyone else these days. The first thing they do is to Google your company and the names of the principals of the company. Beat them to the punch. Prior to submitting your application, Google your company name. Google the name of all principals associated with your company.

If there are negative comments in forums, respond to them with your side of the story. If there are excessive negative comments, you can engage the services of an online reputation management company to help you get back on track.

5. Remember, a merchant account is essentially a short-term line of credit banks extend to a business. Therefore, credit rating are going to be checked. Be sure the signor on the account has a credit score of 600 or above.

Conclusion

Be smart when applying for your high risk payment processing account.  Follow the steps above.  And get your accounts approved quicker, easier, and with more favorable terms.  

Are you ready to apply for a high risk merchant account?   

For more information, contact info@paynetsecure.net today