High Ticket Merchant Account
When it comes to the ticket value of products and services, some industries just naturally have higher prices than others. Generally speaking, a business that sells t-shirts will have smaller individual order charges than a company that sells high-end electronics, which will in turn probably have lower individual transactions than a fine jewelry retailer. Superficially, this seems obvious enough, but what isn’t always as immediately evident to the business owner is the way this shapes how a credit card processing company will view them when they apply for a merchant account.
As a rule, payment processors are wary of businesses that have very high average transaction charges. To you, these big-ticket transactions represent profit – but to the credit card processor, they represent risk. High value charges are significant risks for your financial institution in two ways: first, if your customer is unsatisfied for any reason, the likelihood that they’ll do something about it is directly proportional to how much money they spent. A customer who spends $15 on a novelty coffee mug might just shrug it off and move on if you make an error with their order. That’s a much less likely reaction if they’ve spent thousands of dollars on a diamond tennis bracelet.
The second reason large transactions are risky for processing companies is the possibility of fraud. Imagine an identity thief steals a victim’s credit card number and personal information. It’s much more likely he’s going to use that card to buy high-end electronics and other luxury goods, rather than a Venti latte. Large purchases of expensive items give fraudsters the biggest bang for their buck, and therefore those transactions tend to raise the most eyebrows with payment processors.
Of course, business owners aren’t indifferent to concerns about chargebacks and fraud, either. So what can you do to mitigate these issues? That depends in part on your industry. If your average sales transaction is well below $1,000 and you suddenly receive an order that’s an order of magnitude (or more) greater than that, it might be wise to request a different form of payment or – painful as it may be! – to refuse the charge outright. But that doesn’t exactly work if, for instance, you sell swimming pools for a living. Businesses that regularly deal in high–ticket-value items simply exist in an environment of greater risk, and while there are steps you can take to reduce the risk of fraud, you can’t eliminate that risk entirely, or even bring it down to the level of a business with smaller-scale charges.
Ultimately what this means is that you’re going to have a harder time finding a payment processing company willing to offer you a merchant account, and most of the ones who are willing to work with you will do so with risk management on top of mind. One thing you should take care to avoid is low-balling your estimated ticket size and monthly volume. Credit card processing companies ask on their merchant account applications about your expected average transaction size and monthly charge total, and if you regularly exceed the values you estimated by a large margin, you could find yourmerchant account suspended or even permanently shut down, which will make things much harder for you going forward.
Despite all this, high–ticket merchant account holders aren’t doomed to excessive fees and huge rolling reserves simply in order to do business. Some payment card processors will negotiate with businesses in high-risk fields and reach terms that acknowledge the risk involved but still work for themerchant.
Durango Merchant Services is here to help secure your High Ticket Merchant Account
Our dedicated team has negotiated on behalf of more than 12,000 clients. We understand the back and forth and give and take of negotiating processing accounts for high risk merchants, including hundreds of high ticket merchant accounts.