High-Volume Merchant Accounts

Getting a high processing limit typically comes with time and a solid history of good business practices resulting in low chargeback percentages, low percentages of fraudulent activity and careful attention to the details.  The longer you have been processing, the higher the chances of increasing your processing volume.  Starting off, a merchant service provider will give you a maximum processing limit.  These limits protect the merchant service provider and its partner bank from an increase of chargebacks.  Those who obtain merchant accounts to scam customers out of their hard earned money typically set up accounts, run many stolen credit card sales and skip town when customers start issuing chargebacks after discovering the fraudulent activity.  This is one reason why it can be hard for new merchants to increase their processing volume right away.  Getting a high volume merchant account is dependent upon trust, history and a determination of risk.  If you want to increase your processing volume, treat every customer and transaction like your business depends on it.

Tips for getting a high volume merchant account

To increase your processing volume, the first thing you should do is “ask”… What’s the worst that could happen?  If they say NO, ask them why.  Then ask what you can do to increase your limit and then make sure you do everything they ask you to do.  In most cases, simple things make a big impact but the one thing most merchant service providers will want is for you to build some history with them, first.  As they see you processing orders, shipping product to customers and minimizing chargebacks, you will start to increase your processing volume allowed.  Merchant account providers make more money when you process more sales so they have a vested interest in seeing you increase your processing volume; however, they still have to do their own due diligence to decrease their liability from fraud and chargebacks.  Here are a few things you can do to increase your chances of a higher processing limit:

•  Minimize chargebacks
• Fulfill orders yourself by carrying your own inventory
• Use fraud detection tools to prevent fraudulent orders
• Improve your personal credit
• Decrease the amount of time it takes for the customer to receive the order
• Allow the merchant service provider to hold back a percentage of sales to cover chargebacks
• Maintain a good relationship with your account representative

Once you are successful in increasing your processing limit, make sure you maintain your account, limit chargebacks and continue building a great relationship with your merchant service provider.

Why Is My Processing Limit Lower than I Requested?

If you just got approved for a merchant account and your processing limit is lower than you would like, don’t worry!  Your processing limit can increase as your relationship with your merchant service provider grows.  This industry is all about trust and minimizing liability by vetting would-be merchants to ensure they run reputable companies.  As with any trust building endeavor, time is the biggest factor in increasing your processing limit.  Make sure you follow all of the instructions your merchant service provider offers and ask them what you can do to increase your processing volume.

What Happens If I Go Over My Processing Limit?

If you happen to go over your processing limit, do not get all worked up.  In many cases your merchant services provider will allow you a temporary increase in your processing limit or extend your limit as your sales grow.  This will be determined by your history with your merchant service provider, the percentage of chargebacks and other factors.  You should try to contact your merchant service provider ahead of any overages so they know you will be going over their limit.  Going over the limit can result in customers’ orders being denied so make sure you catch this before it happens, so you do not lose sales.

How Do I Apply for a  High Volume Merchant Account?

Applying for a High Volume Merchant Account isn’t as hard as you think, in most cases it’s the same process as applying for a regular merchant account only the processor will take a closer look at a few things like your credit, average ticket size, any past history you have processing similar products and your fulfillment policies.  If you can minimize charge backs, demonstrate good management of shipping products to customers and maintaining a great relationship with the processor, your chances for increasing your processing limit increase month after month.  Use the steps provided below to start the application process off right.  These tips will help you get a High Volume Merchant Account by helping you demonstrate just how on top of things you really are.

You will first need to apply for a new merchant account. This often involves a credit check to determine not only if you qualify for a merchant account, but how much you can qualify to process each month in payments.  If you have bad or no credit, there are still options available to you through a “high risk” merchant services provider like Charge.com.  As you process payments each month, the amount of processing volume you have available will increase.  Here are a list of items you will generally need in order to open a merchant account:

Corporations and LLCs:

• A legal entity – You will need to have a legal entity set up for your business. This can be an LLC, C-Corp and so on.
• EIN number – An EIN number stands for Employer Identification Number and is what the IRS uses to identify your company with.
• Business checking account – This will allow the merchant service company to deposit transactions directly into your business checking account.

Once you have these three things, you can then start the application process that your chosen merchant services provider requires.  Sole proprietors do not need these things, and instead can sign up using their personal name, Social Security Number, and personal bank account.  The next sections will talk about the underwriting process.

Sole Proprietors:

Sole proprietors do not need the three items listed above for Corporations and LLC’s and can open a merchant account under their personal name, can use a Social Security Number as their tax ID number, and can also use a personal checking account to receive deposits.

Underwriting

There is a high level of risk merchant providers and their partner banks take on when approving a new merchant.  Chargebacks occur when customers dispute activity on their credit or debit cards and request their credit card provider issue a refund to them.  These refunds are debited against the merchant services provider and their partner banks, creating a lot of potential liability.

Things that can hurt your chances of getting approved for a merchant account

Due to the risk merchant service providers and their partnering banks assume when approving merchants for a merchant account, certain factors can make it hard to open a merchant account.  Some of these are listed below:

Bad Credit

This is by far the most common reason for a denial; however, there are merchant service providers out there like Charge.com that work with high risk applicants.

New Companies

A brand new company newly formed is a much higher risk than an established company looking to change providers.

Type of Industry

The type of business you are in can also bring up a red flag.  For instance, industries where there has been a history of abuse by other people can make it hard to obtain a merchant account.  Types of industries having a hard time getting approval are listed below:

• Pornographic website
• Guns and ammunition
• Online gambling
• Free + shipping type offers
• Multi-level marketing companies
• Affiliate marketing companies
• Group buying websites
• Penny auction websites
• Discount memberships
• Gym memberships
• Membership clubs
• Recurring billing products
• Nutritional supplements

Expected Transaction Volume

If you apply for a merchant account and indicate that you need a high level of processing volume, your chances for obtaining a merchant account will greatly diminish.  The more volume you do, the more likely you will face a lot of chargebacks and the more risk you will pose to the merchant services provider.  Only apply for processing volume based on your expected volume, be conservative, and only ask for the minimum you need.  If your volume picks up, you can always apply for more volume later.  Build trust with your merchant services provider and you can eventually get to the point where you can have virtually unlimited processing volume.

Average Ticket Size

On the typical application, the merchant services provider will want to know what your average ticket size will be.  If you indicate a high average ticket price, the chances of approval will be greatly diminished.  The larger transaction size means a higher cost if there is a chargeback and more risk the bank and merchant services provider must take.

Summary

Getting a merchant account isn’t hard if you follow the advice we have offered and already have finished the things included in the “Getting Started” paragraph.  Once you get a merchant account, make sure you are staying on top of your customer service to minimize the number of chargebacks that you have.  Keeping your merchant account in good standing is vital to the long term success of your business.  Failing to maintain good standing with any merchant service provider will make it much harder to obtaining a merchant account in the future.  Contact Charge.com today to speak to one of our merchant service account specialists!