High-ticket merchants face unique hurdles in operating their business, especially when it comes to running the business online. Providing high-ticket goods and services online requires a High-Ticket Merchant Account and the ability to process credit card payments. Unfortunately, just as consumers are attracted to luxury goods and services, so are criminals. One fraudulent sale or return of a product or service that costs hundreds or thousands of dollars could be a significant problem for a merchant and their payment processor.
What is a high-ticket merchant?
High-ticket merchants are businesses in all kinds of industries. Some sell B2B, and others sell B2C. These types of businesses specialize in offering expensive, luxury products or services to their client base.
Why are high-ticket merchants considered high risk?
- Inconsistent revenue cycles. Many high-ticket businesses typically accept a large number of credit card payments related to a single upcoming event, workshop, or seminar. These businesses don’t process payments on a daily basis. They process a significant volume of payments before an event and may process a low amount of payments at the event. This irregular processing pattern raises red flags for banks and payment processors.
- Larger transactions size. High-ticket businesses typically have a large single transaction size or price. Hefty single fees (those above $500) present more significant financial risk for credit card processors. Big transactions are more likely to be charged back by customers when they are dissatisfied with the product or not able to attend events, seminars, workshops, or business training programs that they have paid to attend.
- High chargeback rates. People purchase a high-ticket item with the expectation that they will be getting something that will significantly impact their professional or personal life. Customers could easily misinterpret what they are getting. Unrealistic expectations or feelings that the product or service failed to deliver what they thought was promised could lead to unhappy consumers, who are more likely to initiate chargebacks. One $1,000 chargeback is more of a setback to a merchant than five $20 chargebacks. Therefore, high-ticket merchants carry a higher risk for the merchant account provider who will be liable for the transaction should the merchant be unable to reimburse a chargeback.
- Higher risk of fraud. Cyber-criminals using stolen credit cards tend to focus on companies that sell luxury goods like high-end designer clothing or electronics. They order items that are then shipped and delivered before the cardholder realizes the problem and moves to contact their bank to request a cancellation. Merchants are left having to come out of pocket for the merchandise and sale amount.
- Friendly fraud. When a customer receives a product from a seller and claims it never arrived, or was damaged, or did not meet expectations – involves using charge disputes as a smokescreen. The risk is all on the merchant side while the customer receives a product or service for free.
What are some types of high-ticket merchants?
Examples of sellers of high-ticket goods and services are:
- Business consulting
- Corporate events
- Credit repair
- Designer clothing, shoes, or accessories
- Educational conferences or seminars
- High-end electronics
- Luxury goods and services
- Premium beauty, health, and fitness products
- Precious metals
- Travel tours, booking sites, or clubs
Why most banks decline or close high-ticket merchant accounts:
A merchant account is like an unsecured line of credit provided by the bank or payment processor. When a customer spends $100 at your business, you get that $100 within 24 to 48 hours instead of waiting for the customer to receive their credit card statement and pay for the purchase over time.
If a fraudulent charge is made at your business, the cardholder can initiate a chargeback dispute and, if they win, require the merchant to refund the amount of the transaction. If the merchant processor tries to deduct the amount from the merchant’s bank account and the funds are not there, then the merchant processor would be responsible for paying for the refunded transaction.
High-ticket merchant accounts have a higher risk of chargebacks than other types of merchants. Many banks prefer not to take this type of risk.
What are the adverse effects of a merchant account being closed?
A bank or payment processor usually has language in their contract stating they can place a hold on your account or close your account if:
- Suspicious processing behavior of fraud is detected.
- You break the terms of the merchant agreement.
- Excessive chargebacks occur.
If your merchant account is closed, it is the same as closing your business down.
- You would not have access to your account.
- You would not be able to accept any new credit card transactions.
- You will lose customers.
- New customers will be wary of doing business with you.
Blue Wave Merchant Solutions is the leading payment processor for High-Risk Merchants.
We offer many services tailored to your specific business and specific industry, no matter what size business you have or in what industry you operate. Our services are specifically designed for businesses that have trouble being accepted by traditional banks or merchant processing companies.
There are no setup or application fees. We offer competitive rates and can process your application quickly. Our approval rate is 95%.
What to expect when accepting credit cards with Blue Wave:
We offer decades of experience in the merchant processing industry and a strong reputation for providing reliable high-risk merchant services.
We act as your business partner, offering chargeback prevention and fraud protection tools, and secure payment gateways to help your company process profitable transactions with the highest level of security available.
What documents you should have in order:
- Valid official government ID such as driver’s license, state ID card or passport
- Bank account verification letter or voided check
- Credit processing statements (if applicable)
- Bank account statements
- Social Security number or EIN
- Information on the business
Business practices to consider:
Merchants lose money on chargebacks, and excessive chargebacks can cause problems with your payment processing company. Blue Wave’s chargeback retention service monitors chargeback requests and enables real-time merchant alerts starting from the initial dispute.
In addition to credit card payments, your business may benefit from the lower risk and processing costs of taking advantage of echeck or ACH processing instead of paper check processing.
Shouldn’t you be working with Blue Wave Merchant Solutions?