High sales volumes can be a dream come true for business owners. But they can also bring some real challenges that are difficult to manage, with an increased risk of fraudulent transactions, chargebacks, and friendly fraud.
Merchants who yield a large volume of credit card transactions need a consistent processing solution from a provider that specializes in these high-volume accounts, and the specific challenges that come with them.
What Is High-volume Payment Processing?
No set amount classifies a business as high-volume, but stereotypically, businesses that process payments of at least $100,000 per month are considered high-volume. This may differ from processor to processor, but most processors fix the transaction limit for most merchants between $2,000 and $10,000 per month.
If a merchant regularly processes more transactions than their limit, their funds may be temporarily withheld by their credit card processor. This is done to prevent fraudulent merchant accounts and financial scams concerning stolen credit cards.
The processing limit protects high-volume payment processing service providers from damage that can be inflicted by merchant accounts with no transaction limits, it’s not set for the best interest of the merchant.
What Is a High-Volume Merchant Account?
A high-volume merchant account is designed to handle a higher volume of transactions. These accounts offer the same features as other merchant accounts, such as the ability to process debit and credit card payments (Visa, Mastercard, Discover, American Express, etc.), access to payment gateways and virtual terminals, and funds deposited into your bank account.
The main benefit of a high-volume merchant account is that it allows you to process more transactions than a regular account. This is especially beneficial for businesses that are growing and expanding their sales. In addition, high-volume merchant accounts usually have higher levels of security to protect your transactions, and potentially including a verification process to guarantee your customer’s authenticity.
With High Fees Comes a High Volume
High-volume merchant account providers usually offer discounts on their processing fees for high-volume businesses. However, most providers may charge more for credit card processing compared to regular merchant accounts, as they consider these high-volume businesses to be high-risk.
Providers may also try to hit you with these high-risk accommodations…
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Additional required documents
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Higher Chargeback Fees
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Early Contract Termination Fees
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Higher Account Fees
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Rolling Reserve Requirements
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Longer Contract Dates
The Difference Between a High-Volume Merchant Account and a High-Risk Merchant Account
A high-volume merchant account is defined as a merchant account that processes a high volume of sales transactions. On the other hand, a high-risk merchant account is a merchant account deemed high-risk due to the type of business or the products/services sold.
These high-risk industries may include…
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Credit repair and restoration
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Online CBD
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Direct marketing/MLM
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Coins/collectibles
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Adult related eCommerce
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Legal advisory
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Jewelry
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Web development
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Debt relief/consolidation
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Check cashing
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eCommerce
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Document preparation
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eCigarettes and vape
Most businesses that belong to these industries will require high-risk merchant services. This can oftentimes include high-volume merchants, as the processors who approve these accounts are taking on a greater stake just by approving a higher volume merchant.
What categorizes you as High Risk?
A payment processor may classify your business as high-risk for several reasons, including:
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If your monthly sales volume is significantly higher than average
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If your business is new and doesn’t have much credit card processing history
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Operating a business in countries at a higher fraud risk
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If your business has a poor credit rating, you may be regarded as high-risk until you demonstrate an ability to meet your financial commitments.
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As stated previously, if your business operates in an industry with high risk of returns, fraud, and chargebacks, you will be considered high-risk.
Businesses that meet any of the conditions above will most likely need to fit themselves with a high-risk merchant services provider to fully thrive.
What Documents are Requested?
These are the required documents your high-risk processor will usually request from you.
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Evidence of chargeback ratio under 2%
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Operating website
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A bank letter or voided check
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Three months’ worth of bank statements
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Valid government-issued ID, (e.g., passport or driver’s license)
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Your Social Security Number (SSN) or EIN (Employer identification number)
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Three months’ worth of processing statements (if applicable)
What is the Underwriting Process?
Underwriters evaluate a merchant’s risk by reviewing their website, processing history, credit score, and bank statements; to ensure the merchant does not have any unpaid bills, negative account balances, or previously terminated merchant accounts.
Essentially, an underwriter’s’ main job is to ensure the high-volume merchant they’re taking on carries no undocumented risk. Businesses that follow rules and regulations are usually accepted through this process with no problem.
Increasing Your Chance of Approval
Those who take the time and effort to lay out their business in the best way possible are most likely to be approved. It’s not about making everything shine on the surface, but about providing accurate facts to your processor that illustrate your strengths.
However, there are a few procedures that can directly affect your chance of approval
Chargeback Limiting
High chargeback rates can considerably increase the risk level of your business. This is easily combated by implementing both a transparent return and refund policy, as well as a proper set of chargeback prevention procedures. This can deviate between businesses, for eCommerce stores, this could include taking extra care not to send incorrect or damaged products. If customers receive the products they ordered intact, the rate of returns will go down.
There are numerous procedures on the payments side of things that can also help decrease your chargeback risk. Through either utilizing secured payment gateways that transmit card data directly to the processor, or similarly, using Automatic Clearing House (ACH) payments and eChecks.
Fraud Prevention
Preventing fraud is essential for merchants to keep their risk levels low, so, appropriate digital procedures must be put in place to avoid it.
Electronic ID verification is the main utility used for fraud prevention, if further authentication is needed, merchants should obtain a digital signature from the customer. Additionally, it may be beneficial to avoid doing business with countries that have a reputation for fraudulent transactions.
Can Your Credit Card Processing Limit be Increased?
Two main factors are considered when setting processing limits for high volume merchant accounts.
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High ticket sales
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Monthly processing volume
If your volume extends past this current limit, you can request an increase via your merchant service provider. This is usually dependent on these key factors
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Business account balances
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Reasoning behind the increase
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Most used payment methods
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Industry type
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Credit score
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Recurring Billing
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Processing History
Take the Time, Find What You Need
Rigorous stamina and analysis are your best friend when determining the right processor for you. Take the time to see what different accommodations other processors can provide you and narrow down which offer suits your unique operations the best.
Revitpay is a merchant services provider readily equipped with the services and knowledge that can aid your high-risk high-volume business. If you’re in need of a provider that can properly support your industry, contact us today.