TABLE OF CONTENTS
A high volume merchant account is one that processes large ticket items or a large number of smaller ticket items. The prospect of having a business that produces high volumes in transactions is the ultimate dream for any business owner. The higher the volume, the higher the revenue. Since the bottom line is typically the focus of doing business, most entities are looking to increase revenue performance.
There are common high volume business types that process a high volume of credit transactions on a monthly basis. For example, businesses such as grocery stores process an enormous amount of transactions on a monthly basis. Often, these transactions are smaller amounts that range from as low as $5 but can go as high as a few hundred dollars per transaction. But what about the companies that process high ticket items at a lower quantity? These companies also process a large dollar amount of credit transactions each month, however, the quantity is lower. Businesses such as furniture stores or auto repair shops process transactions for amounts ranging into the thousands. Despite the lowered frequency, these types of businesses are still considered “high volume.”
Get a High Volume Merchant Account
For companies that process a large amount of transactions or high ticket items, having a merchant account that supports high volume is essential to business operations. There are companies that specifically provide services for businesses that process a high volume or high amounts of merchant transactions. The process of selecting a credit card processor can be more difficult for this reason. The risks associated with fraud and chargebacks are two factors that make card processors think twice about approving businesses for high volume merchant accounts.
Nonetheless, these businesses do exist and they need services that tailor to a high risk merchant account. The key to obtaining a high volume merchant account is selecting a company that caters to credit card processing for high risk companies. Since there is a higher risk involved, business owners need to be prepared for higher processing fees and stricter underwriting requirements.
The Benefits of High Volume
The most obvious benefit of high volume transactions is high revenue. As mentioned earlier, the ultimate goal of most businesses is increased revenue and profit. The example used earlier with grocery stores is a prime indication. During the weekends, credit card volume spikes due to consumer patterns and behavior. Consumers are more likely to do their grocery shopping on the weekend due to their work schedules.
So how does this work for a payment processing company? Processors know that spikes in grocery store credit transactions during certain times of the week are normal. For this reason, processors utilize a baseline for a company’s usage. Like every business, a volume cap is implemented. These volume caps would naturally be much higher for businesses such as grocery stores.
What happens, however, when a new business suddenly has a spike in credit card transactions? This type of spike can be good for business but also poses a risk for credit card processors. Credit card processors have to be prepared for the risk and therefore implement a process to protect them in the event of chargebacks and merchant services fraud activity. This leads to the next factor in acquiring a high volume merchant account.
The Risk of High Volume
High volume is without a doubt great in terms of increased revenue. It is a business owner’s dream to have a high volume of sales. Ultimately, an increase in sales equals an increase in the bottom line.
But sometimes there are hurdles to maneuver when finding a profitable solution. How do credit card companies protect themselves from the risks associated with high volume credit card transactions? The risk associated with a high volume merchant account include:
- A large number of chargebacks – a customer-initiated reversal of a credit card transaction at the bank level
- Increase in possible fraudulent activity – a purchase made to a customer’s account that the customer did not authorize
While card processors use stringent guidelines in the underwriting process, they still have to implement other means of protecting themselves from these types of risks. Payment processing companies work to establish a baseline of regular transactions for the companies that utilize their services. There is also a cap placed on the number of monthly transactions made by a company. It’s also encouraged that businesses add clear descriptions for billing purposes. When a customer makes a purchase, the processing company encourages businesses to include the merchant’s name and contact number to avoid customers forgetting about purchases.
Types of High Volume Businesses
There are certain businesses that inherently have large volume card transactions. Credit card processors cannot simply ask a high volume merchant account to do less business. That just doesn’t make sense. Instead, there are credit card processors that specifically cater to businesses that produce a high volume of card transactions. Payment processors will require specific documents to verify the company and the amount of business they do every month. The processors implement an underwriting process that ensures the business relationship is mutually beneficial for both the business and the card processor. This includes reviewing a business’s credit standing, their credit card processing history, any bank statements, and any applicable websites. This ensures the businesses are legit and solid. There are certain businesses that process large ticket amounts or a large amount of smaller tickets. A few of these businesses include:
- Grocery stores
- Apartment communities
- Companies that charge an annual or monthly service fee
- Subscription companies
- Online businesses that sell a high volume of products
These businesses process a large number of transactions or higher ticket items per transaction. Again, card processing companies implement policies and procedures that protect them from fraud in the event there’s an issue.
How to Increase Processing Volume
When companies sign up with a merchant services company, they are set up with a merchant account with a designated processor. This credit card processor is responsible for giving a monthly volume cap which is determined by the corresponding underwriting department.
So what happens when a company exceeds that monthly cap? When a company goes over their monthly cap–by any amount–they are no longer able to deposit those funds until the following month. This scenario is an unfavorable one for businesses and card processors alike. However, there are ways to request an increase in your cap limit. One way is to simply ask. Since this method is not as cut and dry, there are factors that need to be considered before asking. The company would need to submit a request for a cap increase.
Criteria for changes to volume cap
Once the request is submitted, the processing company evaluates the business based on the following information:
- Business bank account balance
- Business credit rating
- Processing history
- Reason for the increase
Based on the above information, the credit card processor makes the decision on whether or not to grant the cap increase and for how much. This process is much easier when you’ve established a relationship over a period of time. For example, as your business grows and you have proven a low chargeback ratio, reaching out to the card processor is a much easier process because you’ve established a relationship with the company. Typically, businesses are allowed to request an increase in their approved monthly volume every three months.
Credit card processing for high volume businesses is necessary for many businesses. By nature, some businesses inherently process large amounts of transactions or a high quantity of transactions. Regardless, there has to be a method for accommodating these businesses and certain companies have found a way to offer this service while reducing their risk. Establishing a high volume merchant account is the best way to accept credit cards for your high volume business.