Merchant accounts often come with a processing limit. When opening an account, the merchant account provider asks you for a daily transaction average and expects you to stay under that amount. Such a system protects both the provider and the credit card–issuing bank. The more cards processed, the greater the risk of a bad transaction or a refund. But this limit doesn’t help you as your business grows or if you find that customers make large purchases. Here’s where a high-volume merchant account is critical.
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A high-volume merchant account gets treated much the same as a high-risk merchant account, especially when average sales are regularly higher than expected. The same is true when businesses that have recently opened their accounts haven’t established a transaction history or demonstrated reliability to a traditional merchant services provider. In particular cases, the provider might cite these as reasons not to trust a new account with a high limit.
Credit card theft is an ongoing problem. What’s more, it is a hard one to stop. Protection is improving, but thieves still manage to find ways around the strictest security measures. Since the use of credit cards to buy goods isn’t going to go away, merchant service providers come up with the means to lower their exposure to theft. One way of doing so is to leave retailers to deal with the results of theft.
Many credit card purchases are above board, and most cardholders don’t aim to steal from a business. The few who do use cards with intent to steal tend to make multiple purchases of high-dollar items. They continue to do so until a cardholder or bank determines that a card is in the hands of a thief.
If the activity isn’t caught soon, the business could be left with no recourse. The same happens with refunds. Low-risk providers prefer safety. They are typically loath to let a merchant account owner have a high limit without proof that such a limit won’t pose undue risk.
As mentioned, when you apply for a merchant account, you’ll estimate your average daily transactions. If you feel that your daily average is on the high side, you can ask for an upper limit. But The problem is that you most likely won’t get the limit you ask for even though you’ll need a high-volume merchant services account. Several reasons can result in this denial, including the following:
Some companies process multiple payments on one day each month. Others do so every other month, quarter, or year. These types of businesses need a high-volume merchant account provider that understands how they run — and that knows that card denials are likely to happen. Some of these firms include the following:
High-volume credit card processing is treated the same as high-risk merchant accounts because the risk of fraud is greater in both. However, a merchant account provider might raise the limit if the business goes over the limit for the day. The provider might temporarily increase the limit to allow the transactions to process, then lower the limit again for the next day. This action is made with the understanding that every merchant has a high-volume day periodically. However, such a high period of activity isn’t expected again for some time.
While this action might seem generous on the merchant account provider’s part, it doesn’t help a business that sees a surge in ticket sales for a pricey product.
A high-volume business needs a high-volume merchant account. But when sometimes a product moves off shelves as soon as it’s stocked. In such a case, a business doesn’t always have time to set up a relationship with a merchant service provider on the fly. Also, time pressures might not allow the business owner to improve a personal credit score.
A high-risk merchant account may need a balance kept in an account to cover refunds. This balance makes sure that the provider and bank aren’t out their money for any longer than necessary. Leaving a balance in an account can keep them happy, but the business may write off the income even though the money is still in the account.
You want to make sales easy for your clients. But you also want your merchant account provider to treat you fairly. After all, the ability to process credit cards without worrying about account closure is itself a form of freedom. The best solution to this problem is to work with a high-risk merchant services provider. You want one that understands that high-volume business comes with a greater potential for unwanted customers.
When an account holder’s income exceeds the limit for too many days, the provider has the right to close the account. But since you have no control over how much product gets sold each day, you may feel as though the provider is punishing you for your success.
Have you thought about working with a high-risk merchant services provider to avoid account closure? A high-risk merchant account provider knows that theft and refunds are more likely with a high-volume credit card processing account. Such a vendor can have more tolerance for the issues that your business may face.
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