National Merchants Association: High Risk, Done Right
National Merchants Association is a global merchant advocate and merchant services leader. We are dedicated to helping our merchants and agent partners grow their businesses by generating sales opportunities and maximizing profits. We work to eliminate the unnecessary and unreasonable fees associated with accepting electronic transactions, and provide products and services to help our partners succeed.
What is a “high risk” account, and why do some banks turn away “high risk” merchants?
“High risk” can have many different definitions depending on who’s defining it. The Card Brands have their list of high risk SIC (Standard Industry Code) codes—which require direct registration—yet the sponsor banks, acquirers, and processors can all have an additional list of SIC codes they deem to be of a higher risk. High risk is ultimately defined by the risk-taking entity and frequently is much greater than the Card Brands’ list of high risk merchants. When making decisions on the type of risk that is acceptable, the processor/acquirer/bank may consider reputational risk, financial risk, or other liability measures to determine what will be acceptable within the credit policy.
Because there is always a greater risk for card fraud, identity theft, and chargebacks when customers make card-not-present transactions, merchants in these categories typically face higher processing rates and are deemed high risk by most processors.
Many banks don’t understand today’s modern businesses, so they tend to lump all high risk businesses together. National Merchants Association is first and foremost a merchant advocacy group and we work hard to not only get merchants of all types approved, but also get them the best processing rates available. We treat every merchant, in every industry, as an individual.
What types of business do you accept?
National Merchants Association has dominated the high risk space for years and the reason is simple… we don’t limit ourselves – we’re constantly building new markets and boarding merchants in verticals like ecommerce, subscription box services, and more.
We also work with brick and mortar merchants. From restaurants and bars to retail establishments, we have always worked to find our merchants the best rates available, helping to reduce the unnecessary fees associated with accepting credit card payments. We work with merchants of all types, providing unmatched service and support.
How long does it take to get approved?
Getting merchants approved and processing payments as quickly as possible is very important to us.
For applications that have been correctly completed and are submitted with the appropriate documentation, agents and merchants can expect a typical turn around time for approval of just a few hours. It’s not uncommon for us to receive incomplete submissions from agents and/or merchants, and this can definitely delay the process. It’s important that merchants work closely with their agents to provide complete and detailed application packets, so we can approve their accounts as quickly as possible!
What is an underwriter looking for when reviewing a merchant account application?
Below are the criteria that the underwriters at National Merchants Association are looking for when reviewing applications: •Business Formation – identification of beneficial ownership cross-referencing with the signor. •Business/product Description – a clear and complete understanding of what products and/or services are being sold. Onsite inspection/verification of business is also required. • MATCH Listing – ensuring the merchant is not listed in the Terminated Merchant File (TMF). • OFAC Listing – ensuring the merchant is not on listed on the Office of Foreign Assets Control listing of target individuals. • Creditworthiness – credit score pulled on all accounts and checked for liabilities and trade lines. • Individual Identity – verifying the merchant’s identity.
The cleaner and more complete an application is, the faster a merchant can start processing payments with National Merchants Association.
What is a chargeback? How can I reduce chargebacks on my merchant account?
In simple terms, a chargeback is the act of reversing a sale, usually due to a dispute from the cardholder.
Sometimes this occurs because the cardholder didn’t purchase the product in question (credit card fraud or identity theft).
Other times, the cardholder initiates a chargeback due to dissatisfaction with the product. To help reduce this type of chargeback, it’s critical that merchants provide detailed product descriptions, and clear refund / return policies. Customer service contact information should be easy to find on a merchant’s website. Likewise, customer service personnel should respond quickly to any refund or exchange requests.
Our proprietary Chargeback Control Platform® (CCP) also helps reduce chargebacks by providing automatic, processor-level refunding of disputed transactions where appropriate. This ensures that any dissatisfied customers are quickly provided with a refund, before their dispute becomes a chargeback.
In addition, many industries suffer from so-called “friendly fraud” where customers intentionally buy a product and then charge it back. Protecting merchants from this type of fraud requires deep expertise in high risk processing, and it’s something our NMA team has specialized in for many years.
Why does a processor care what a merchant’s chargeback ratio is?
Payment processors are always concerned about chargeback ratios. The higher the number, the higher the risk for both the processor and the merchant. There are regulatory and Card Brand rules regarding permissible levels of chargebacks, so merchants exceeding these thresholds can be “terminated” by their processor in order to protect that processor from additional liabilities.
At NMA, we help our merchants keep their chargeback ratios low by taking a personal, proactive approach through education and best practices, as well as thorough due diligence up front. That’s why merchant IDS (MIDS) at NMA typically last over 50% longer than the industry average. Account longevity leads to significantly higher revenues for the merchant and the agent.
What rates can you expect as a high risk merchant?
High risk merchants unfortunately face higher rates due to the greater liability borne by the processor. Depending on a merchant’s business model, the average high risk discount ranges between 3% and 6% with fees ranging between 15 and 25 cents per transaction. By contrast, brick and mortar establishments can range from .10% to 3% and between 5 cents and 15 cents per transaction on average.
Some popular self-service processors, often also known as “aggregators,” have a flat rate model where all businesses pay the same rate for their processing. This may sound nice and simple in principle, but the reality is that these processors have to price in the worst possible level of risk – so essentially every business is being treated as “high risk.”
At National Merchants Association, we know that not all merchants are the same. Our merchants are assured of the lowest rates available, and we review every account on a quarterly basis to ensure that merchant is still getting the best possible pricing.
How do you get a higher processing volume limit?
The higher the processing volume limit, the greater the risk exposure to the processor. So, the key to a higher processing volume limit is for a merchant to prove that they run a high quality business and have a low chargeback ratio. Earning a higher processing volume limit is essentially a reward for operating a business in a responsible manner.
Merchants that require higher processing volumes can make these requests based on their needs. National Merchants Association’s in-house underwriting and risk department examines each request and then makes a judgment based on the merchant’s dispute percentage, refund percentage, and whether that merchant has had at least three months of consistent processing volume.
As high risk specialists with multiple banking solutions, we have greater control and flexibility than other processors, and we pass this value on to our merchants and agents.
Does NMA offer a payment gateway?
NMA offers its own gateway, with exceptionally low pricing for merchants using our processing services. Our gateway provides subscription re-billing, mobile payments, Quickbooks integration, automated invoicing via email, and much more. We also integrate with all popular third-party gateways.