Online retailers should review their monthly processing limit, average ticket size, and high ticket limit before busy shopping holidays. Doing so could protect them from holds on their accounts.
In 2019, Cyber Monday generated more than $ 9 billion in sales, according to Adobe Analytics. This year it is expected to attract even more online shoppers as the COVID-19 pandemic keeps many stores closed and consumers glued to their computers and smartphones.
This influx of shoppers can seem like a boon for online merchants. However, it could be costly for retailers who do not factor in the potential boom in demand in their business account business plans.
Here are two questions that e-commerce businesses must answer as accurately as possible or they risk serious consequences.
Question 1: What is your expected monthly credit card processing volume?
Processing volume is the dollar amount of monthly credit and debit card transactions that merchants expect to process through their e-commerce merchant account per month. Payment processors set limits to prevent fraud and minimize liability. They set limits based on the type of business you have. If a merchant exceeds the agreed monthly limit, the payment processor could see this as an increased risk of chargebacks.
While some processors may allow merchants to continue processing even though they have exceeded their monthly processing limit, others may not. That could bring an entire company to a halt. Therefore, merchants should think carefully about this question when completing their merchant account application and take into account any anomalies that may significantly increase the volume of transactions, i.e. Black Friday and Cyber Monday.
Also, once a processor approves a merchant account for a set monthly volume limit, the merchant may have to work hard to increase the monthly limit. The existing processor may request the following information when a merchant requests a raise:
-
Three months of the most recent bank statements.
-
Three to five years of previously filed business tax returns.
-
A solid and valid reason why the company needs an increase in monthly processing volume.
Unfortunately, these requests cost merchants another essential resource: time. After a retailer submits the information, it can take up to two to three weeks for the payment processor to respond. This situation could cause serious problems if the merchant is near their monthly limit, especially with the holiday shopping season starting earlier than ever due to the pandemic.
Question 2: What are the average ticket and high ticket limits that are placed on your merchant account?
The average ticket is the standard transaction amount that the customer pays for a merchant’s goods or services. For example, does the customer typically buy one item at $ 99, or do they typically purchase three items at $ 99 for a total of $ 297?
Average ticket size is essential because some merchant accounts will place a low dollar limit for transactions on your account and a high dollar limit to help with risk checks. These limits also ensure that prices align with the products and services that the processor approved during the underwriting process.
If merchants try to process transactions that are not aligned with your approved average ticket amount, the processor can place a hold on your account, bringing business to a standstill. Similarly, if a retailer attempts to process transactions that exceed the approved high ticket limit, the processor will likely reject the transaction. Rejecting the transaction causes the merchant to miss a potentially large sale. Retailers can avoid both scenarios, which become more likely during the high-traffic holiday shopping season, through proper planning and communication with the merchant’s payment processor.
How to avoid surprises
Online businesses should review their monthly processing limit, average ticket size, and high ticket limit before busy shopping holidays. Doing so will protect retailers from various problems, including suffering from holds on their business accounts, causing potential sales to be lost. Today’s customers crave frictionless payment experiences, so any setback will take their business elsewhere in the future.
However, not all bad news. Some processors only impose flexible limits on merchant accounts, so it is important to look for a payment partner that offers this kind of flexibility. Such processors come with a flexible and dedicated risk team that will quickly check the merchant’s account for anomalies. They will also work collaboratively with merchants to ensure that your e-commerce business can continue to grow and operate without interruption during the busiest time of year.