David talks about the most important things for small businesses to keep in mind when setting up credit card processing. This includes staying away from long term contracts, avoiding cancellation fees, putting your best foot forward for approval, getting lower rates, having automatic rate reductions built into your agreement, and addressing technical concerns so everything works smoothly upon launch.
In the latest episode of our merchant education series we tackle the seemingly simple topic of costs. In addition to exploring the discount rate and interchange costs, we outline and provide some metrics for the actual rate you should be willing to pay for your business.
Why do some businesses get lower credit card processing costs than others? In this video David explores the criteria that cause some businesses to get lower rates than others and techniques that you can use to reduce your processing costs.
If you've ever been confused by the difference between a merchant account, a payment gateway and processor you are not alone. In this discussion we break down the role each of those elements play, and how they affect your overall processing costs.
In order to accept credit card payments a business needs a merchant account. In this article we explain what a merchant account is, how to get one for your business, and the costs involved.
There is a lot of confusion when it comes to pricing in the payments industry. The most important cost of all is the discount rate. Learn what the discount rate is and why it's the most important and significant cost when processing credit card transactions.
Making the wrong choice can be costly when choosing a payment processor. David explores 3 of the most common mistakes so you can avoid them when choosing your credit card processor.
The debit system in Canada is called Interac. It's totally different from Visa or MasterCard so it works in its own unique way when it comes to making purchases online.
If you've not accepted credit cards previously you may wonder how long it takes to get your money. In this video David explores the most popular funding schedules for e-commerce and brick-and-mortar merchants.
How to pick a good credit card processor for your business. David gives advice so you can ask the right questions, avoid mistakes, and figure out which payment processors have the potential to be a good solution for your business.
When you work with a payment processor it becomes a long-term partnership. It requires a deep integration if you're doing e-commerce payments, and will have a long-term cost impact on your business. Outages are problems along the way can cause a major issue. In this video David explains when and how to look for references when searching for a payment processor for your business.
An original credit transaction is where a merchant sends money (gives money) to a cardholder. It's a unique service, but merchants should be very careful when using it.
MCC stands for Merchant Classification Category. Every type of business that accepts Visa or Mastercard has a MCC code associated with their business. David explains why the MCC code used for your business can impact the approval rate for your transactions (the wrong MCC code can result in more declined transactions), as well as the costs that you pay when opening your merchant account.
Certain types of businesses are more difficult to administrate from a payment processing perspective than others. In this video David explains what Visa HBR and Mastercard BRAM fees are, how much they cost, and why they apply to some businesses but not others.
Most credit card processors will ask for a copy of the most recent balance sheet and profit and loss statement when you apply to get a merchant account. David explains why payment processors care about company financials, how it can impact your application, and what you can do if the financials for your company are not as good as you'd like.
How to get approved to process high value transactions
(Slightly edited from video transcript for greater readability)
Hello, David at Merchant-Accounts.ca. Today I'm tackling a pretty simple topic, what to do if you need to process transactions for big-ticket items and you're not getting approved. Think amounts approximating $20,000 per transaction or even greater but you're not getting approved to process those amounts. Stay tuned, I'll tell you how to do it in one second.
The problem with large transactions is a chargeback risk
There are a lot of legitimate businesses that sell very large ticket items. If you process large transactions, the reason why it may be hard to get approved to do that is the payment processor is worried that something may go wrong.
If a merchant is doing meal delivery and it's a $20 or a $50 transaction, and there's a dispute, it's only $50 at risk. However, if a merchant is selling Rolex watches and it's a $20,000 or $30,000 transaction, if there's a dispute, that is a substantial risk. If the merchant is unable to return the funds to the cardholder, it doesn't matter, the payment processor is still on the hook for the money. In this scenario, I'm describing the concept of chargeback risk. I have other content about chargeback risk on the channel and our website. The point being the payment processor is worried about a dispute.
How to get your transaction limit approved
If you need your transaction limit increased for large transactions, you need to provide evidence that there won't be a dispute. First of all, communicate well with your payment processor. Hopefully, you have a payment processor that you have a relationship with. You can speak to the folks at risk whenever there's an issue and they get to know you.
Then what you're going to communicate to the merchant is something like this:
"I have these large ticket value transactions I want to process from a return customer. They've purchased from me several times before. I saw them in person recently and now they're about to buy this Rolex watch. They've decided to go ahead with the purchase and I'm ready to ship it out."
This is just a made-up example, but you can tell what you're supposed to do is explain to the payment processor in plain English, why there won't be a dispute.
You should take these concepts and apply them to your business. Are they return customers? If they're not returning customers, how do you know they're legitimate? You don't want to process a large transaction for multiple thousands of dollars and then get hit with the chargeback.
Preventing Chargebacks
What are you doing to help prevent a chargeback? Are you, for example doing a Google meet every time you're doing a big transaction? Maybe you video call the customer to see the person's face and you're getting them to hold their ID up to the camera.
If you can say to the payment processor, I've done a video interview, they validated their ID for me, we've had three conversations and they're going ahead. That should give the processor some confidence. If you need your transaction limit increased, you can explain to the payment processor what you're doing and why it won't be a problem.
Conclusion
In general, it's not impossible to be approved for large tickets, but you need to have controls in place to protect both your business, and the payment processor. I hope that you now have a plan of action that you will implement to increase your transaction limit. You should communicate with your processor and actively try to prevent fraud. If you have a good payment processor, they should help you. If they won't, I hope you talk to us at Merchant-Accounts.ca. I hope you found this video helpful. Thanks for watching and have a great day. Bye now.
David talks about the most important things for small businesses to keep in mind when setting up credit card processing. This includes staying away from long term contracts, avoiding cancellation fees, putting your best foot forward for approval, getting lower rates, having automatic rate reductions built into your agreement, and addressing technical concerns so everything works smoothly upon launch.
In the latest episode of our merchant education series we tackle the seemingly simple topic of costs. In addition to exploring the discount rate and interchange costs, we outline and provide some metrics for the actual rate you should be willing to pay for your business.
Why do some businesses get lower credit card processing costs than others? In this video David explores the criteria that cause some businesses to get lower rates than others and techniques that you can use to reduce your processing costs.
If you've ever been confused by the difference between a merchant account, a payment gateway and processor you are not alone. In this discussion we break down the role each of those elements play, and how they affect your overall processing costs.
In order to accept credit card payments a business needs a merchant account. In this article we explain what a merchant account is, how to get one for your business, and the costs involved.
There is a lot of confusion when it comes to pricing in the payments industry. The most important cost of all is the discount rate. Learn what the discount rate is and why it's the most important and significant cost when processing credit card transactions.
Making the wrong choice can be costly when choosing a payment processor. David explores 3 of the most common mistakes so you can avoid them when choosing your credit card processor.
The debit system in Canada is called Interac. It's totally different from Visa or MasterCard so it works in its own unique way when it comes to making purchases online.
If you've not accepted credit cards previously you may wonder how long it takes to get your money. In this video David explores the most popular funding schedules for e-commerce and brick-and-mortar merchants.
How to pick a good credit card processor for your business. David gives advice so you can ask the right questions, avoid mistakes, and figure out which payment processors have the potential to be a good solution for your business.
When you work with a payment processor it becomes a long-term partnership. It requires a deep integration if you're doing e-commerce payments, and will have a long-term cost impact on your business. Outages are problems along the way can cause a major issue. In this video David explains when and how to look for references when searching for a payment processor for your business.
An original credit transaction is where a merchant sends money (gives money) to a cardholder. It's a unique service, but merchants should be very careful when using it.
MCC stands for Merchant Classification Category. Every type of business that accepts Visa or Mastercard has a MCC code associated with their business. David explains why the MCC code used for your business can impact the approval rate for your transactions (the wrong MCC code can result in more declined transactions), as well as the costs that you pay when opening your merchant account.
Certain types of businesses are more difficult to administrate from a payment processing perspective than others. In this video David explains what Visa HBR and Mastercard BRAM fees are, how much they cost, and why they apply to some businesses but not others.
Most credit card processors will ask for a copy of the most recent balance sheet and profit and loss statement when you apply to get a merchant account. David explains why payment processors care about company financials, how it can impact your application, and what you can do if the financials for your company are not as good as you'd like.
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My name is David Goodale, CEO at Merchant Accounts.ca. I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.
