Extended Warranty Merchant Accounts & High-Risk Payment Processing
Website Payment Pro provides end-to-end financial solutions for extended warranty companies with offerings ranging from home appliances, sporting goods, and travel services to electronics, homes, and automobiles.
Does your company offer extended warranties for your products or services? Have you been denied for a merchant account? If you're already processing, do your rates seem excessively high?
We'll explain why this merchant account category is often regarded as high-risk and how to obtain a credit card merchant account at the lowest possible cost.
Financial institutions, including banks, credit card companies, and merchant providers, categorize business types to best assess the risk of partnering with them for their credit card processing needs. A high-risk label is generally given to extended warranty businesses, even if they have excellent credit, a stellar processing history, operate in an industry with a strong reputation, and meet all other criteria for a low-risk merchant account. It's simply due to the high-risk nature of the extended warranty itself.
Broadly, extended warranty operations are known to work with higher-than-average chargeback ratios. Let's examine a typical scenario. A customer purchases a vacuum with a five-year extended warranty. They're so excited by the terms "extended warranty" that they don't bother to read the fine print detailing the warranty's coverage. The individual accidentally drops the vacuum down the stairs six months after the purchase and is denied a refund because the warranty only covers product defects, not damage arising from user fault. Disgruntled, the customer turns to their card-issuing bank to file a chargeback claim, stating that the product and its warranty were misrepresented. The higher the average ticket size, the more problematic chargebacks become for businesses.
Time frames vary according to the card brand used by the customer, but some allow chargebacks for up to one year after a purchase! So if you end up going out of business and can't afford, or aren't prepared, to pay for a chargeback that comes in months after a sale, the transaction liability falls onto your merchant provider. Ecommerce firms that offer an extended warranty are considered even higher risk because they're potentially not associated with a physical location and become harder to track down in such an event.
Another consideration is that a long warranty firm has to be concerned about handling legitimate customer disputes. If they have a batch of malfunctioning goods or need to redeem a larger than expected number of extended warranties, they might encounter cash flow issues or must rethink their business model if they're losing too much. Start-ups are viewed as doubly high-risk because they don't have a baseline to reference, and an extended warranty, although a great marketing tool, is a challenging product to sustain.
Due to these factors, merchant account providers typically charge higher rates and impose certain caveats, like a rolling reserve and a conservative monthly volume cap, to protect their assets with extended warranty businesses. BankCard USA regularly underwrites merchant accounts for this business type and offers a low rate guarantee—we will beat the rate of any verified provider. We're able to reduce your fees by providing risk-mitigating tools and assistance with our top-value credit card processing products and software. And often, we're able to remove the hold imposed by other processors.
- Insightful online reports that report business performance metrics instantly and help guide sound business decisions
- Chargeback prevention tools backed by an in-house
- Chargeback Team for dedicated assistance
- Expert guidance in areas ranging from warranty verbiage and proper disclosure to marketing and strategies to handle customer care
- PCI Compliance Team to provide thorough walkthroughs of your annual security requirements, including free vulnerability scanning for ecommerce and IP-connected terminal merchants, to ensure your business is up to date with industry best practices
- Built-in Advanced Fraud Detection Suite
- In-depth integration assistance to ensure your payment solution works seamlessly with your shopping cart, CRM solution, customer loyalty software, accounting base, and hundreds of other compatible apps
- Ability to accept credit, debit, gift cards, and ACH payments online, in-store, or over the phone
- Automated recurring invoicing for warranty renewals
- Next-day funding
When we secure your business from every angle, we are equipped to help you manage customer transaction disputes and curb chargebacks. Over time, we are able to further reduce your rates and loosen the terms of your merchant account to reflect strong business performance. We value building long-lasting relationships with our merchants over seeking a quick profit. Start enhancing your business today with a credit card merchant account package designed with your extended warranty model in mind. In a free consultation, we'll show you exactly what you can save with a side-by-side comparison of your current processing statement and our proposal.
Have you found yourself on the Match/TMF List? Do you have a less-than-perfect credit score? Are you just starting up? We have solutions for those scenarios, too.
Contact Website Payment Pro at 1-800-304-0555 to learn more about our payment solutions.
