With regards to the ticket value of products and services, a few industries just normally have higher costs than others. As a rule, a business that offers shirts will have very low individual order charges than an organization that offers high-end products that can luxury watches, smartphones or any premium products. Apparently, this appears quite evident, 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.
Payment processors are careful about organizations that have high average transaction charges. To you, these high value transactions speak to profit – yet to the credit card processor, they speak to risk. High-value charges are critical risks for your financial organization in two different ways: first, if your client is unsatisfied for any reason, the probability that they’ll make a move is straightforwardly corresponding to how much cash they spent. A client who burns through $10 on a grocery store may very well shrug it and proceed onward on the off chance that you make a mistake with their request. That is a much less likely response on the off chance that they’ve spent thousands of dollars on a precious ornament.
The second reason high value transactions are risky for processing organizations is the likelihood of fraud. Envision an identity thief steals a customer’s credit card number and personal information. It’s significantly more likely he will utilize that card to purchase high-end products and other premium merchandise, as opposed to a Venti Latte. Large buys of costly items give fraudsters the greatest value for their money, and in this manner, those transactions tend to raise the most eyebrows with payment processors.
Obviously, entrepreneurs aren’t unconcerned with worries about chargebacks and fraud, either. So what would you be able to do to lighten these issues? That depends to some extent on your industry. If your normal sales transaction is less than $1,000 and you all of a sudden get an order that is very greater than your average sale, it may be astute to ask for an alternate type of payment or – painful as it might be! – to deny the charge outright. Organizations that consistently 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.
At last, this means you will have a harder time finding a payment processing company willing to offer you a merchant account, and a large portion of the ones who will work with you will do as such with risk management on top of mind. One thing you should take care to stay away from is low-balling your evaluated ticket size and month to month volume. Credit card processing organizations ask on their merchant account applications about your expected average transaction size and month to month charge total , if you consistently surpass the values you evaluated by a substantial edge, you could discover your merchant account suspended or even for all time shut down, which will make things considerably harder for you going ahead.
Regardless of this, high– ticket merchant account holders aren’t destined to excessive fees in order to do business. Some payment card processors will negotiate with organizations in high-risk fields and achieve terms that recognize the risk included yet at the same time work for the merchant.
Example of high ticket items are as follows.
- Collectible items such as vintage or memorabilia or very rare items
- High-end electronics
- Fine jewelry and jewelry with precious metals
- High-end furniture
- Technical support including Marketing and SEO services
- Automotive including auto accessories, parts, and services
- Travel booking
- House or Car
- Luxury goods such as couture clothing, custom-made accessories and designer luggage
- Luxury services like a private plane or yacht travel
Why is High Ticket Business considered as a high risk?
CHARGEBACK – High ticket business is treated by banks as high risk because of the huge potential for chargeback of high ticket transactions and the business may not have enough available cash to cover should an unexpected chargeback arise.
FRAUD – Fraudulent transactions involving identity fraud often happens in purchasing high priced products.
Finding a suitable merchant account is of utmost importance since it alleviates all the hassles and helps a business ensure that it operates profitably and smoothly.
Factors to Consider When Looking For a Suitable High Ticket Merchant Account
1. Chargeback threshold set by the merchant account provider – It is important to determine if the chargeback threshold is based on the number of chargebacks filed by the customer or by the total dollar value of the chargeback. Chargeback threshold based on the dollar value is not suitable for high ticket business because transaction in this type of business has high priced value and may limit the number of chargebacks that a business may incur per month.
2. Find a High-Risk Merchant Account Provider through brokerage –a brokerage service may be useful to find a high ticket merchant account provider since the brokerage service will give the merchant a list of reputable providers with good track records and fair policies. Their past experience with similar clients can be helpful for them to direct the merchant to providers that can best suit the business needs.
3. The High Risk Merchant Account Provider must have a higher monthly credit card processing volume cap. Because the said cap limits the number of credit card transaction a business may take.
4.Ability to provide various payment solutions to all types of high ticket business whether it is new or established already.
5. Look for high risk merchant that can provide lower rates and fees for large ticket transactions and also provides security solutions for handling sensitive payment data.
Nowadays, Visa, MasterCard, and Discover have their own large ticket programs with various interchange rates and a different set of requirements for merchants.
Visa offers a large ticket interchange rate of 1.45% and $35 per transaction for transactions amounting to more than $5,000 which is a lower effective rate. For MasterCard, they qualify large ticket transactions for transactions above $7,255 and the accompanying interchange rate is 1.25% and $40 per transaction. The most recent company to implement the large ticket program is Discover which has so far, the lowest fee for both the interchange rate at 0.90% and the per transaction fee of $20 for large transactions of $5,000.
It may be challenging to set up a merchant account for c since they are considered as high risk. Thus, providing and complying with the basic requirements set by merchant account providers is a must.
Basic Requirements needed to open a High Ticket Merchant Account
i. A duly filled up application form
ii. A valid government–issued ID
iii. A voided pre-printed check with the following details.
- Company name and address
- Bank account number of the company
- Routing number
iv. A secure (with SSL) and working website with privacy and refund policies clearly indicated in its website.
v. Recent three months of bank statements to check the merchant’s credit score and to ensure that the applicant doesn’t have negative bank account balance and unpaid outstanding bills.
vi. Recent three months of processing statements if applicable to check the company’s credit card processing history and if it has a previously terminated merchant account and also to double check if the company has a history of high chargeback ratios.
vii. Social Security Number or Employer Identification Number.
viii. Below 2% chargeback ratio
ix. Be transparent with the average ticket size to include the estimated highest ticket of the business as well as the monthly volume. This can help the provider assess the appropriate scope of merchant account a business will need. The information can also help determine the necessary fees and rates a business must pay for the merchant account services.
Good Practices for High Ticket Merchant Accounts
- High ticket merchants must have a solid business model accompanied by clearly stated policies for return and refund to help lessen excessive chargeback.
- Must be actively trying to eliminate fraudulent transactions by verifying the customer’s identity before submitting the transaction by implementing online identity verification during check-out.
- Conducting an order review to check if there are orders that appear questionable.
- Requesting for the digital signature of customers that makes purchases.
- Restrict sales from countries that are known for high internet fraud.
- Billing descriptors for the transaction must be reflected in the billing statement of the customer including the merchant’s name and contact number to avoid chargeback that is caused by the customers not recognizing the transaction.
- Provide excellent customer service by responding to customer’s phone calls and emails easily giving the customer a positive customer service experience. Because customers who invest in high ticket purchases have greater expectations and are more likely to dispute even for the smallest reason.
- Clear and detailed product or service descriptions must be provided and disclosed to the customer to avoid customers’ dispute.
Additional benefits of the high ticket business merchant account:
If you get a high ticket merchant account with IPAYTOTAL, then you will also be eligible for other benefits that we offer, the best solutions for e-commerce businesses. We guaranty quick real-time credit card processing, top-notch services and at reasonable rates. Give us a call at +44 800 776 5988 or get in touch with us through our website. Businesses can receive the following additional benefits:
- Competitive rates
- Acceptance of multiple currencies and deposits
- Compatibility with major gateways and shopping carts
- Accept Visa / MasterCard / American Express at your store
- Integration assistance with more than 100 shopping carts
- Chargeback prevention tools and advice
- eCheck processing
- Our gateway comes with the industry leading fraud detection and prevention tools
We provide high ticket merchant accounts for the following:
- If you have been Previously rejected or discarded by another processor, we can help you get back on track
- Startups and existing businesses – we help all types of businesses
- High ticket merchants and merchants with bad credit