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Need help with the merchant account solution.

Discussion in 'Payment Processing' started by matthewgray0282, May 2, 2016.

  1. #1
    Hello everybody!
    I am new to the Ecommerce industry and have a few questions about it.
    1. Who among the Merchant Account Providers or Agents ISOs is lenient and tolerant towards the chargebacks (~10%).
    2. Websites selling which types of products statistically are having the most and the least of the chargebacks? I'm not talking about high-risk products, of course, so no gambling, adult, supplements, payday loans etc. No, just regular type of products: books, home tools, sports equipment etc.
    3. In terms of amount of chargebacks what is better to sell- services (like software development services, for example) or physical goods?

    Thank you so much for your future replies!
     
    matthewgray0282, May 2, 2016 IP
  2. jestep

    jestep Prominent Member

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    #2
    1. If you are doing any legitimate volume, nobody will allow anywhere close to 10%. Technically, the actual limit per V/MC regs is 1% based on either volume or the number of transactions. The monitoring programs don't actually kick in until you have both greater than a 1% chargeback rate and 100 per month, but processors aren't going to allow anything close to 10% on a regular basis. If you only have 10 orders in a month, and get 1 chargeback, it's not likely to cause problems as long as you cover it, but if it's routine I've seen them shut down low volume accounts for very few chargebacks.

    2. It's hard to say this for certain, but electronics, furniture, and custom products are going to have the highest chargeback rates as far as normal products go, but for different reasons. Electronics are easily sold, so they are the most common target for people using stolen credit cards. Furniture and custom products just have a lot of customers who change their mind or the product isn't exactly what the customer thought it would be. After those, I would guess the ones with the highest and easiest resaleability. Both tools and sporting equipment would probably be much higher than say: book, or home goods.

    3. Physical goods, especially where a customer can swipe their card through a terminal, or use a chip reader are going to have a substantially lower chargeback rate than most anything service based.
     
    jestep, May 3, 2016 IP
  3. Merchant Mike

    Merchant Mike Peon

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    #3
    E- Commerce is usually considered High-Risk in the merchant industry. As for a 10% chargeback allowance, that is not going to happen. At any point if you do exceed the 1% or 3% allowance per Visa/MC, the processor will begin occurring fines. If you are going to go into a certain product, you need to make sure that your fulfillment is on point and you have the ability to abide by the Terms & Conditions lined with your merchant processor regulations. Physical-Durable Goods are always easier to deal with considering the consumer is able to hold the product and you're able to prove shipment. Online good or Downloadable content are usually different depending on jurisdiction. Whatever you end up doing, just make sure you have the proper fulfillment practices in place along with outstanding customer service.
     
    Merchant Mike, Jun 13, 2016 IP
  4. fionix

    fionix Well-Known Member

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    #4
    10% in CB ratio forget about it no serious payment processor will take on your business unless you are using Verified by Visa and MC and even then they will have to mix your transactions with something else to not get penalized.
     
    fionix, Jun 14, 2016 IP
  5. habangnet

    habangnet Member

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    #5
    Are you intend to sell digital stuff?
     
    habangnet, Jun 14, 2016 IP
  6. PerformanceCard

    PerformanceCard Peon

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    #6
    Agree with the above, 10% CB's is going to get your account shut down very quickly and your reserve / settlement will be held for up to 6 months. There is also a chance it will never returned depending on how many more CB's roll in after suspension. In general, low risk product stores incur the lowest CB ratios. Services can be higher as there is just a higher chance that for instance a web design team doesn't meet your needs. With a book purchase, you can just return for a refund but you can't for most services. There are plenty of ecommerce businesses that are not high risk and can acquire a normal low risk merchant account from one of the big providers (First Data, Chase, etc.. ). Keep in mind you will need a clean website, good credit, and a fulfillment agreement with your supplier - skipping any of these can start pushing you into the higher risk realm.
     
    PerformanceCard, Jun 14, 2016 IP
  7. BoRZZ

    BoRZZ Peon

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    #7
    I am using the services of MerchACT they provide good service and only charge in a decent way. regarding the chargebacks digital or other E-goods/fashion or apparel industries face more chargebacks compared to other online services, Form my personal experience fast consuming goods face minimum chargebacks especially food and beverage. right now I am associated with restaurant field.
    To minimize chargebacks always offer quality products and provide correct and enough details regarding the product. Sometimes technical errors associated with the transactions may lead to chargebacks. I faced this error and was unaware about this for two years(yes! I lost a big amount ). Now swithced to MerchACT and happy with it.

    Hope you read the above comment "Keep in mind you will need a clean website, good credit, and a fulfillment agreement with your supplier - skipping any of these can start pushing you into the higher risk realm" this one is very important. Always keep your side clean.
    :)
     
    BoRZZ, Jul 13, 2016 IP
  8. PainlessProcessor

    PainlessProcessor Member

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    #8
    I don't know of any merchant service provider that will accept 5% chargebacks let alone 10%. If you have 10% chargebacks there is either something seriously wrong with your business model or billing model that needs to be addressed. There is no reason to ever have a ratio that high. If you're not sure what the problem is you can discuss it with one or several merchant service providers and see if you can get some advice as to how to fix the problem you're having or you can hire a third party that will handle chargebacks for you. It generally doesn't matter what type of good or service you sell. What really matters is that you deliver on whatever it is you promise, run your business responsibly, and do everything you can to satisfy the consumer, and have all the proper documentation to support any potential chargeback case brought against you. So whether you sell goods or services it really shouldn't matter unless what you're selling isn't what the consumer or business is getting.
     
    PainlessProcessor, Jul 20, 2016 IP