Why Are High-Volume Merchants Considered High Risk?

High-Volume merchants face unique hurdles in operating their business, especially when it comes to running the business online. Providing High-Volume goods and services online requires a High-Volume Merchant Account and the ability to process credit card payments. Unfortunately, just as consumers are attracted to luxury goods and services, so are criminals. One fraudulent sale or return of a product or service that costs hundreds or thousands of dollars could be a significant problem for a merchant and their payment processor. Blue Wave Merchant Solutions will guide you through the proper steps to mitigate these risks and assist your business with several options that fit your payment processing needs.

Why are High-Volume merchants considered high risk?

  1. Inconsistent revenue cycles. In some cases, High-Volume businesses typically accept a large number of credit card payments related to a single upcoming event, workshop, or seminar. These businesses do not process payments on a daily basis. They process a significant volume of payments before an event and may process a low amount of payments at the event. This irregular processing pattern raises red flags for banks and payment processors.
  1. Larger transactions size. Some High-Volume businesses have a large single transaction size or price. Hefty single fees (those above $2,500) present more significant financial risk for credit card processors. Big transactions are more likely to be charged back by customers when they are dissatisfied with the product or not able to attend events, seminars, workshops, or business training programs that they have paid to attend.
  1. High chargeback rates. High Volume Accounts can lead to higher chargeback thresholds. If they are breached, your credit card processor can put restrictions onto your account or decide to close it altogether. It is crucial to have your ducks in a row and a plan “B” and “C” ready to execute should you need to suddenly change processors. Ask us about our multiple solution platform and Payment Gateway that will streamline this entire process.

In other cases, people purchase a High-ticket item with the expectation that they will be getting something that will significantly impact their professional or personal life. Customers could easily misinterpret what they are getting. Unrealistic expectations or feelings that the product or service failed to deliver what they thought was promised could lead to unhappy consumers, who are more likely to initiate chargebacks. One $2,500 chargeback is more of a setback to a merchant than five $20 chargebacks. Therefore, High-Volume merchants carry a higher risk for the merchant account provider who will be liable for the transaction should the merchant be unable to reimburse a chargeback.

Beware of Friendly Fraud – This is when a customer receives a product from a seller and claims it never arrived, or was damaged, or did not meet expectations – it is very important to have all invoices, signed contracts, proof of delivery, and terms and conditions clearly visible on your website and contracts. This will help you win your chargeback disputes and keep your processor happy.

What are some types of High-Volume merchants?

Examples of sellers of High-Volume goods and services are:

  • Business consulting
  • Coaching
  • Corporate events
  • Credit repair
  • MLM
  • Educational conferences or seminars
  • High-end electronics
  • Furniture
  • Jewelry
  • Travel packages
  • Marketing
  • Premium beauty, health, and fitness products
  • Precious metals
  • Travel tours, booking sites, or clubs

Why most banks decline or close High-Volume merchant accounts:

A merchant account is like an unsecured line of credit provided by the bank or payment processor. When a customer spends $100 at your business, you get that $100 within 24 to 48 hours instead of waiting for the customer to receive their credit card statement and pay for the purchase over time.

If a fraudulent charge is made at your business, the cardholder can initiate a chargeback dispute and, if they win, require the merchant to refund the amount of the transaction. If the merchant processor tries to deduct the amount from the merchant’s bank account and the funds are not there, then the merchant processor would be responsible for paying for the refunded transaction.

High-Volume merchant accounts have a higher risk of chargeback thresholds than other types of merchants. Many banks prefer not to take this type of risk on Card Not Present Accounts.

What are the adverse effects of a merchant account being closed?

A bank or payment processor usually has language in their contract stating they can place a hold on your account or close your account if:

  • Suspicious processing behavior of fraud is detected.
  • You break the terms of the merchant agreement.
  • Excessive chargebacks occur.

If your merchant account is closed, it is the same as closing your business down.

  • You would not have access to your account.
  • You won’t be able to accept any new credit card transactions.
  • You will lose customers.
  • New customers will be wary of doing business with you.

Blue Wave Merchant Solutions is the leading payment processor for High-Risk Merchants.

We offer many services tailored to your specific business and specific industry, no matter what size business you have or in what industry you operate. Our services are specifically designed for businesses that have trouble being accepted by traditional banks or merchant processing companies.

There are no setup or application fees. We offer competitive rates and can process your application quickly. Our approval rate is 95%.

What to expect when accepting credit cards with Blue Wave:

We offer decades of experience in the merchant processing industry and a strong reputation for providing reliable high-risk merchant services.

We act as your business partner, offering chargeback prevention and fraud protection tools, and secure payment gateways to help your company process profitable transactions with the highest level of security available.

What documents you should have in order:

  • Valid official government ID such as driver’s license, state ID card or passport
  • Bank account verification letter or voided check
  • Credit processing statements (if applicable)
  • Bank account statements
  • Social Security number or EIN
  • Information on the business

Business practices to consider:

 Chargeback Mitigation. Merchants lose money on chargebacks, and excessive chargebacks can cause problems with your payment processing company. Especially when dealing with Pay Fac companies like Stripe, Square, Paypal, etc. Blue Wave’s chargeback retention service monitors chargeback requests and enables real-time merchant alerts starting from the initial dispute.

In addition to credit card payments, your business may benefit from the lower risks and processing costs of taking advantage of echeck or ACH processing instead of paper check processing.

Fraud Prevention. Establishing a strong front to protect you from fraudulent transactions will not only save you time, energy and most importantly money, it will keep your relationships with your payment processor intact. We are partners with the leading Digital Fraud company in our industry which will give you assurance that your company will be secure and flourishing as it grows over time.

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