Support Services: Using a Leveraged Payment Processing Plan1 Nov, 2013 By: Curtis Kleinman Response
Attempting to educate my business partners has always been my first goal. Over and over again, I hear complacent marketers and product owners tell me, “I’m all set with my processing needs,” or, “I only have one merchant account and it’s just fine.”
So many merchants are one false move away from losing the ability to process customer payments. Most eventually pay the price for their laziness.
Only 1 Merchant Account Is Risky
If you have only one merchant account, you are rolling the dice. Circumstances beyond your control could result in your account being suspended.
Having multiple merchant accounts doesn’t cost you any more money. Most marketers understand this only once it’s too late and they are in desperate need. Some have chargebacks that are too high and they are unable to process payments at all.
Among the unnecessary risks are:
- Not Having Enough Processing Volume. When your product take sales take off, you need to make sure you have enough processing volume. If not, you could end up refusing to take orders — or holding the orders until the next month starts and your processing volume resets back to zero. You may have to scale back your advertising.
- Fraud Problems. A case of fraud may halt your ability to accept payments immediately and completely.
- Chargeback Trouble. Chargebacks can result having merchant accounts shut down, or having funds held for six months or longer. This creates a cash-flow problem, preventing additional advertising or purchasing inventory to sell.
- Your Bank Frowning On Your Product Type. Banks are constantly changing their product tolerance level. Many nutraceutical marketers know the first-hand experience of being asked to find another bank on short notice.
Many marketers focus so heavily on product design, packaging, TV or radio production, and telemarketing scripts that they slight the most important aspect of their campaigns — getting paid.
Some signs you may be at risk include:
- If you’re only accepting Paypal or having one merchant account to process payments, you are at risk. If you offer trials and/or continuity, this is an even bigger mistake.
- Using the wrong billing descriptor (how your purchase appears on a customer’s credit card statement) is the No. 1 preventable cause of chargebacks.
- An improper refund policy for your product (which includes your product type, the price point and delivery method) can cause trouble.
Using your local bank for E-commerce and direct response payment processing can cost you heavily. Local banks aren’t familiar with spikes in sales during a successful media airing off hours. This raises a red flag of possible fraud, and your merchant account is put on hold pending further investigation.
The End Goal
All merchants must have a backup plan in place. It is essential to keep your revenue stream in place and growing. By leveraging the money in your bank account, you can easily raise your processing volume. At the same time, you reduce your risk of negative consequences. Lowering your risk won’t cost you more money — it just requires a little effort and losing your complacency.
Smart marketers prepare by establishing multiple merchant accounts. The goal is to make sure you don’t have a month or two where all cash flow freezes. When you have multiple accounts and one is halted, you can drive customer traffic to your other active accounts. This is particularly important for marketers who generate high processing volumes in a short period of time. Just a few chargebacks can set off alarm bells with the wrong payment processor.
The best opportunity you have to grow your business is multiple merchant accounts. The best time to open multiple merchant accounts is before you experience high chargebacks and while your account is in good standing. ■