merchant stronghold HIGH-RISK MERCHANT ACCOUNT SERVICE PROVIDER
Merchant Underwritten Important For A Merchant The merchant account is basically a line of credit. In case of chargebacks, the amount is cut from the merchant’s account. But, if there are not enough funds in the bank to pay for chargeback then the provider pays that amount right away to the customer. So the essential part of underwriting is to evaluate the risk level of merchant’s business. Following are the things that provider review:
What Providers Check Industry Type: Risk is in every kind of business but the level of risk varies from business to business. Few businesses are less likely to fraud and chargebacks as compare to others. Higher the level of risk, higher the amount of documentation. Return Policy: Businesses that indulge in shipping products are risky because there are chances of non-delivery of product, wrongly delivery or delivery of broken Business History: If you are not new in the market and have applied for a merchant account, underwriting will involve reviewing of your credit history as well as chargeback history (to know chargeback ratio) before approving or rejecting your application. the product that might result in chargebacks. Card Acceptance Method: Provider will like to know about merchant terminated file if your business has been or still is on it. Most of them will evaluate current statement to get a fair idea of volume and acceptance methods. In case an application gets approval, business accepting telephonic orders or online orders is into account for more features and more security measures.
After Effects of Poor Merchant Underwriting Your high-risk business may suffer from one or the other reason even without in-depth analysis and these are: Incorrect Limit: You should set limits for your business as per requirement. It should not be too high or too low, as both will put your business at risk. Limits lower than required will hinder the regular processing of transactions. As a result, it may constrict the flow of cash or timely payments from the customer. If a limit is too high, this may lead to unexpected fraudulent charges. Hidden Fee: An additional fee is there if the volume exceeds the limit. However, even if you have set your limit, some providers let it exceed without notification. And they also charge you with a penalty. Downgrades: Once your high risk merchant account is set, you are inclined to transaction downgrades if certain required features and security measures are not set along with the account. Although, setting up these features will cost you more. But it will help you in long run and enable smooth processing of transactions.
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