Posted by tina on Oct 30, 2015

 

high volume merchant accounts, high risk merchant accounts

Tired of Being Told How Much You Can Process?

You've got a fast growing business.  And need processing volume to accommodate growth.  Orders are coming in. Month on month growth rates are escalating.  

And yet, your payment processor refuses to increase your processing limits.  Maybe you haven't been processing very long.  Or maybe you are in a high risk industry.  Or maybe there are a hundred other excuses on why your growth is being restricted.  

No excuse matters when all you need is the ability to take orders and accept payments. Quickly and easily.  Without chains on your payment processing accounts.  

Banks are Not Excited about Your Growth.  Even if You Are.  

At first, it's hard to believe that payment processors are not as excited as you are about your growth.  After all, don't the banks make more money when you process more?  More transactions equal more payment processing fees, right?

But, let's get real.  Banks are risk adverse.  

Sure, your business is booming.  But what the underwriters see when they look at high volume accounts is risk.  High volume processing means more risk of chargebacks.  More risk of fraud.  

Obtaining the processing volumes you need challenging.  Especially for high risk merchants.  Finding and maintaining reliable merchant accounts at reasonable rates is an on-going project.

With the constant changes in today's banking  environment, it is crucial for you to have a strategic plan in place. When you secure your payment processing volumes, you give yourself the ability to grow your company.  

Diversify Merchant Accounts to Ensure Your Business Success

What does diversification mean?  Simply stated, it means to you need to have more than one merchant account to protect your business.   Important for merchants of all types.  

Vitally important if you are a high risk merchant that needs high volume processing.

Once you have established your accounts, load balance them on a single gateway.   Which makes account reconciliation, accounting, management and reporting simple & easy.  

For the ultimate in diversification, some companies establish merchant accounts with acquiring banks internationally.  

Offshore merchant accounts are helpful for merchants in some high risk industries since underwriting guidelines and chargeback thresholds can be more flexible with international acquiring banks. In addition, merchant accounts offshore often do not have caps on volumes.  You can process as much as volume as you need.

International merchant accounts are also valuable for companies involved in global ecommerce.  Giving you the ability to take advantage of lower regional interchange rates, eliminate cross-border fees, save money on foreign exchange, and offer multi-currency processing to international buyers. Moreover, some offshore jurisdictions offer you additional business benefits.    

How Do You Diversify Payment Processing?

It's a good idea to get several accounts.   Grow them all equally.  Compare providers.  

If you like them all and you need the volume, keep them.  Or whittle them down to simplify.

The fastest and easiest way to establish accounts is to pick one or two brokers with which to work.  Then stick with them and don't "shop" your processing by contacting lots of other brokers.  

Working with a payment processing specialistis is quite helpful.  But don't go too crazy and think working with lots of brokers is better than working with only one or two. That works against you.

Everybody in the high risk industry uses the same acquiring banks domestically.  Because there are only a few banks that accept high risk businesses.    

It's wise to avoid having the same bank see your paperwork from multiple brokers.  And having your credit checked repeatedly and unnecessarily. Plus the more your account is declined, the less likely it is that another acquirer will accept you. So, you want to carefully mange how and to where your paperwork gets sent.

Having a broker is incredibly useful, of course.  Spend a couple of hours doing some research and interviewing a few. You'll know when you connect with the right one.  

You'll find the industry knowledge and valuable connections a broker brings to you will save you huge amounts of time and work.  Best of all, the services a broker provides you are free.  Now, that's a good deal.

How Payment Processors Evaluate Risk

High volume merchants are treated differently within the payment industry because of the high risk associated with processing large amounts within a short time.  The reason behind this are the  contingent liabilities associated with fraud and chargebacks.  The higher the number of transactions, the greater the perceived risk.  

Having good payment processing history is helpful to mitigate the risk.  Although fast growing companies sometimes are simply growing too fast to accumulate "history".  

Then, you go with what you have.  If you are requesting high volume accounts and have limited payment processing history, be prepared to show other documentation to substantiate the volumes being requested.  

It is customary for payment service providers to offer payment processing with a yearly or monthly volume cap.  If you go over the cap, underwriting may reevaluate the account to see if the terms of service need to be changed. And, if a processor decides that the risk has become too great to handle, it might drop the account entirely.

Digging deeper into the peculiarities of the high volume payment processing niche will clarify the cautiousness with which merchants in this category are handled.  It all relates to perceived risk.  

Some merchants process high volumes because they sell expensive products and services. The higher the price, the more valuable they will be for fraudsters as well.  

On the other side, merchants with very low tickets and high volume can also be high risk.  Scammers "slam" stolen cards on low ticket items to see if they have been reported stolen yet before buying larger items.  

Legitimate customers may experience buyer’s remorse and seek to obtain a refund for the products they purchased, a practice known as "friendly fraud".  Customers know how to "play the system" to avoid paying for purchases.  

And fast growing companies can represent "unknowns" to processors.  Without a proven track history, processors don't know what chargebacks will be.  

High risk merchants in any industry  have to deal with chargebacks on a regular basis.  And the chargeback  risk increases exponentially as the volume goes up.

If the processing goes smoothly through appropriate fraud and chargeback management, the sheer volume should not have a negative impact on your account.  However, if fraud is not addressed, or if customers are unsatisfied, your merchant account company will be flooded with chargebacks, and the risk associated with processing a high volume merchant becomes unmanageable.  

Of course, this worst case scenario rarely happens.  There are many proven effective methods of managing chargebacks and fraud.  

Conclusion

Diversification of accounts is an an important element in payment processing for high volume merchants.  

Your payment processing accounts are the lifeblood of your business. Relying on a single bank for your high volume processing accounts leaves you open to unnecessary risk.  A smarter strategy is to establish more than one account and load balance processing among all accounts.

High risk merchants often discover diversification of domestic and international merchant accounts is a prudent strategy to mitigate risk.  

Protect your processing with early warning systems to prevent chargebacks.  And enable fraud fighting tools in your payment processing gateway to keep your processing safe and secure.  

Are you a high volume merchant who needs needs reliable processing to grow your business?  

Contact info@paynetsecure.net today.