The Way that Credit Card Processors Monitor Risk

This is an honour and privilege to have a Guest Post by Michael Guerin, a recognised expert in two industries that help business owners.  The Search Engine Optimization/ Online Marketing Industry and in the US Payment Processing Industry.

Michael Guerin is President of Automated Merchant Processing, LLC and Success Marketing, LLC.

The purpose of Automated Merchant Processing, LLC is to help business owners cost effectively and efficiently accept credit cards for payment to increase cash flow and profitability.

Success Marketing, LLC was formed with two goals in mind. First, to help “brick and mortar” business owners leverage the power of the internet to generate more leads and more sales from their websites. Secondly, to promote financial independence by providing online educational resources on a variety of topics.

To learn more, check out www.bestwebpresence.com and www.ampyourcashflow.com.

___________________________________________________________________

The Way that Credit Card Processors Monitor Risk & 3 Tips on How You Can Protect Yourself

If you remember when you signed up for an account, you’re asked what the expected monthly volume will be.  For businesses with an established track record, this isn’t such a tough question to answer.

But for my clients just starting out, or those with uneven cashflows, it’s sometimes a real challenge to come up with a realistic number that fits their business needs.

The reason this question gets asked is because of the point I made above — namely, that risk is monitored remotely by checking out your “typical” monthly volume and sales.

So what do you do if you’re business is experiencing rapid growth?

Or if your business experiences dramatic peaks and valleys?

Well, for my clients it’s not such a big problem.

(You’ll see what I mean later on)

OK, here are a few ways to deal with monthly volume restrictions:

1.  Accept AMEX:

I know, I know, I hear it all the time.  They charge more than Visa and MasterCard.  But they also don’t deal with monthly limits, because they “underwrite” their own risk.

Meaning, you could run a million dollars through your merchant account without a hitch, as long as the million dollars (for our example) all came through on AMEX cards.

2.  Use Payment Plans:

I’m actually planning to put together a short report on this one strategy.  This has been, in my humble opinion, the number one reason why QVC became such a dominant force in “stay at home” shopping.

Which sounds more expensive to you:  $2000, or 3 payments of $700?  Most people are NOT going to pull out their calculator and figure this one out.

Now, spreading out payments over 3 months evens out your cashflow (a good thing) and helps break up a large charge into smaller “bits” with respect to your monthly volume restrictions.

Not to mention, it might lead to more sales, since it lowers the “price barrier” in the minds of your potential customers.  A total win-win-win.

3.  Let Them Know It’s Coming: (ok, I said 2 tips, but I thought you deserved a BONUS for reading this far)

Nothing freaks out the “back office” risk department more than a surprise.

They really hate them.  I’m not kidding here.

See, if a huge charge comes through your merchant account, they don’t think “wow, good for him/her.  Their business must really be booming now.”

Instead, they think “uh oh, some fraudulent charge just came through.  Now I have to deal with this.”

For real.  Chalk it up to occupational habit.

So, if a large charge is coming through, and your customer or client really wants to pay you in one lump sum without AMEX or a payment plan, just give me a call or send an email and I’ll alert the risk department personally.

(By the way, that’s the difference I mentioned earlier).

When the risk department knows a large charge is coming through they don’t freak out.  They figure you’re being all responsible and proactive (behaviors they like) and the charge usually goes through without a hitch.

But if a large charge comes sailing through and no one lets them in on it — BAM, they get all nervous, hold the funds (only if the charge exceeds your limit) and start calling and emailing to verify the transaction.

So, bottom line, if you’re worried about monthly limits on your merchant account, these 3 tips should help you out.

US

Leave a comment