Shipping Services Merchant Accounts. & Shipping Services Credit Card Processing
A shipping service merchant account is a specialized payment processing solution designed for businesses in the logistics, freight, courier, and shipping industry. With the specialized shipping service merchant account, businesses can easily accept credit cards, debit cards, and other forms of online payments from customers for services such as delivery of parcels, forwarding freight, warehousing, and also international shipping. The average transaction value in the shipping industry is very high, and that is why these accounts are generally offered by high-risk merchant acquirers.
Whether you run a local courier company, an international transport company, or a regular moving company, these specialized merchant accounts can be extremely beneficial. Having a reliable shipping services merchant account is vital for these organizations as it helps in optimizing the billing process and improving the cash flow.
The shipping industry is considered high risk because of the risk of chargebacks, complex regulatory and compliance factors. These are the key reasons why most regular payment service providers avoid working with shipping businesses. QuadraPay provides shipping services and credit card processing accounts in association with the finest regulated acquirers that are capable of handling the complex processing needs of shipping businesses.
Our team has created this guide for the benefit of businesses that need this type of payment solution. We have discussed key factors related to the features, application process, the timeline of approval, and the most common frequently asked questions. This guide will definitely help you to understand what our shipping service merchant account is, how it works, and how to get one. Let’s begin.
What makes shipping services merchant accounts high risk?
Before you start applying for a shipping service credit card processing account, it is important for you to understand why sponsor banks consider this industry high risk and why getting one is extremely difficult in today’s scenario.
High Chargeback Rates
In the global shipping industry, delayed delivery is quite common, and this can also result in damaged goods, lost shipments, and excessive customer dissatisfaction. Shipping companies use multiple partners, and the quality of service delivered by the connected partners can vary, and this can impact the overall customer experience. All these factors can result in disputes, chargebacks, and payment reversals.
Long Fulfillment Times
Another factor associated with shipping merchants is the long fulfillment time. Keep in mind this is also a problem for other industries, such as airline booking and travel agencies. The delivery takes time in the shipping industry, sometimes several days, weeks, and even months, depending on the complexity, volume, weather conditions, and geopolitical scenarios. Long fulfillment times can result in chargebacks, and banks hate it.
Cross-Border Transactions
Most of the shipping companies deal with international clients, and such transactions usually happen in international currencies. This increases exchange risk, customs issues, and even the potential of fraud. Cross-border payments are generally more prone to fraud and disputes than domestic payments.
Large Transaction Size
Transportation, freight cargo, and commercial shipment companies generally involve high-value transactions, and these are more appealing to frauds. It is quite easy to come to the conclusion that such transactions can be risky for credit card processors and sponsor banks if chargebacks happen.
Regulatory and Compliance Risks
Shipping companies must follow local and international guidelines from the government for shipping all kinds of products; however, these regulations are stricter when it comes to shipping regulated items such as electronics, medical supplies, CBD, or hazardous items. For banks, being associated with shipping companies can increase the risk of legal exposure. Not being in compliance with international and local shipping laws as well as customs laws can result in lost goods and fines.
Business Model Instability
Although the global shipping trade is worth trillions of dollars, many smaller and new logistics businesses generally operate on very low margins and heavily depend on third-party carriers. This also involves various moving companies and moving brokers. The slim margin and dependence on third-party vendors can significantly affect the quality of service and also increase the risk of business closure. For a bank, seeing its merchant’s business getting closed is not a good sign, as the processed transactions may start getting chargebacks because of non-fulfillment.
Despite the complexity, there are high-risk payment processors that support shipping companies. They do this by using risk mitigation steps, strict underwriting, implementing rolling reserves, and proactively monitoring the account and transactions for any associated risk all the time.
Key Features to Look for in a Shipping Services Merchant Account
High-Risk Friendly Underwriting.
The payment processor that you work with should be high-risk friendly; that means they should have experience in working with other companies in the shipping industry. This way, you are sure that their underwriting team truly understands how to onboard shipping companies. When you work with an experienced payment service provider, then you reduce the risk of chargebacks and international regulatory challenges because of in-depth underwriting and risk evaluation.
Multi-Currency & Cross-Border Payments.
For your shipping business, you will be accepting business-to-business transactions. These can be via credit cards or other forms of international payments. For this, your payment processor must allow you to accept international currencies such as US dollars, Euros, British pounds, Canadian dollars, and INR. By providing your client the ability to pay locally, you will greatly enhance the overall customer satisfaction and will also increase their confidence in your brand.
Recurring Billing & B2B Invoicing
Sometimes shipping companies require tools that can automate regular payment collection from clients. This is especially important for those businesses that send B2B invoices as per the step-by-step delivery programs. For this, your shipping services credit card processing company must allow you to accept recurring payments. This can be easily done through a virtual terminal.
Chargeback Protection & Alerts
One of the most important features that the processors must offer is chargeback protection and alerts. For this on your gateway, you should have various fraud filters such as 3DS, address verification system, rate limitation, and country blocking. Along with that, the gateway should have the ability to integrate with various chargeback alert services, such as those provided by Ethoca and Verify.
Types of Payment Solutions for Shipping Companies.
Online Merchant Accounts and Payment Gateways For Shipping Companies
Shipping businesses that accept payments online, especially business entities like freight booking services or logistic service providers, require merchant accounts and payment gateways. With the merchant account, these businesses accept credit and debit card payments, while a payment gateway ensures that these transactions are securely encrypted and follow the payment industry protocols to secure transaction data and reduce risk. This type of solution is important for those companies that deal with international clients and freight forwarding agents.
Point-of-Sale (POS) Terminals For Shipping Companies
Shipping companies’ offices, port branches, and container depots handle a lot of walk-in clients, such as customs brokers and transporters. These businesses often use point-of-sale terminals for accepting face-to-face credit card payments. These credit card terminals are intelligently integrated with the inventory management and ERP tools to issue receipts and invoices and manage funds properly. With modern point-of-sale terminals, shipping companies can process QR code payments as well as all types of credit and debit cards.
Most of the shipping companies in the US use credit card terminals of brands like Valor, Dejavoo, Ingenico, and PAX. In the European Union, Castle credit card terminals are popular. These terminals offer great connectivity, mobility, and integration to shipping companies. Let us explore some of the best point-of-sale terminals for shipping companies.
The Valor VL 500 is a good payment terminal for shipping companies, especially for collecting payments at ports, warehouses, and field delivery points. This terminal supports dual SIM, Wi-Fi, and 4G connectivity, which ensures dependable performance even at locations that have unstable internet. The terminal also supports paperless receipts, which means that a receipt can be sent in a digital form and can be retained for a long time for business accounting purposes.
The two payment terminals that we want to highlight, which can be especially beneficial for shipping companies, are the Z11 and QD4. These terminals are highly reliable and have a classic form factor perfect for billing desks or container yards. Both the terminals feature Ethernet and Wi-Fi connectivity for uninterrupted payment processing. The QD4 is an advanced Android smart terminal that comes with a modern touchscreen interface and excellent integration capabilities. Both the terminals support EMV chip cards, NFC tap to pay, and PIN debit transactions.
Cloud reporting tools offered by Dejavoo are excellent add-ons that can help shipping businesses easily reconcile payments across various departments. These terminals are best suited for front offices and warehouse reception desks.
Ingenico Move/5000
The Ingenico Move/5000 is a high-performance mobile credit card processing terminal. We can consider this as a terminal that meets the dynamic demands of European shipping operations as well as those of other countries. The terminal comes with 4G, Wi-Fi, and Bluetooth connectivity, and it’s perfect to be used at warehouses or during on-road delivery across the EU and the US. The device supports EMV, contactless, digital wallets, and PIN-based payments, making it a versatile option for clients from various countries.
Another recommended terminal for shipping companies is the Castles VEGA 3000C. It is a reliable countertop terminal and can be very useful for shipping companies with offices in the EU. This terminal is the countertop point-of-sale system perfect for fixed-location business environments such as freight offices and admin desks. Another recommended terminal for shipping companies is the Castle Saturn 1000, which is the smart Android terminal. It includes features such as 4G, Wi-Fi, and Bluetooth connectivity and is perfect for EU-based couriers and freight agents.
Bank Wire Transfers (SWIFT/IBAN/Virtual IBANs) For Shipping Companies
Bank transfers are currently the backbone of international shipping payments. These solutions are preferred for high-value B2B transactions for collecting payment for charter fees, container deposits, or handling customer-related expenses. Shipping companies prefer to use this type of payment method because of high trust, transparency, traceability, global acceptance, and quick processing. The role of virtual IBANs cannot be ignored, as they allow shipping companies to accept payment in multiple currencies without the need to set up individual business bank accounts in each country. Virtual IBANs are considered a powerful tool for freight companies because of their handling of multicurrency billing and reconciliation.
ACH Payments For Shipping Business (US-Based)
Automated clearing house payments are extremely popular in the United States for domestic shipping transactions. For US-based shipping companies or their clients, ACH is definitely a low-cost and highly dependable payment solution. ACH is normally used for collecting payments for monthly warehousing charges, lease payments for containers, or regular transport agreements. This payment method is especially important for those companies that operate on a retailer or invoice cycle basis, as it allows direct bank-to-bank transfer at a fraction of the cost in comparison with credit card processing.
Escrow Services Services For Shipping Business
Escrow services are highly relevant for shipping companies, including related businesses such as freight brokerage, vessel charter, and large-volume spot transactions. By using escrow services, the shipping company and the customer involve a third-party neutral entity that holds the buyer’s payments and releases them to the shipping company only after certain delivery conditions are met, such as a bill of lading (BOL). Escrow companies are beneficial for both parties as they protect them from fraud and contract breaches.
Application Process for Shipping Merchant Accounts
The application process for shipping services credit card processing accounts starts with the initial consultation with the payment service provider or the ISO. In this step you discuss your payment processing needs with the service provider, and then the service provider suggests to you the best option. We recommend you at least discuss with 3 payment service providers before choosing the best one. This will help you to carefully analyze the rates and features to make the best decision.
With the processor, make sure that you discuss your business model and what kind of shipping services you handle, such as domestic or international. You should also discuss the type of transaction that you accept, such as in-person, phone, online, or recurring billing. Discussing your average ticket size, monthly volume and your target market can help you to find the right solution.
Documentation Collection
Once you have found the right payment service provider for your shipping company, then you will have to submit an application form with some business and personal documents for the underwriting process.
These documents generally include a business license, incorporation certificate, and valid government-issued photo ID. To verify the bank account where you wish to accept payment, you will have to submit a letter from the bank or a voided check.
As you will be accepting high-value transactions, the payment processor will definitely ask you to submit the last 6 months of business bank account statements and processing history, if applicable.
Shipping companies that apply for an online payment solution must have an active website. Other documents that the payment processor will ask for include shipping contracts, invoices, and delivery policies.
Underwriting Review
The underwriters will carefully evaluate your business documents and address profile to understand the total exposure. They will look into your processing history for chargebacks and fraud, identify the most appropriate stable processing volume that they may allocate to you, and also check your clean banking history. Shipping industry-specific risk evaluation includes checking shipping delays, customs issues, and global delivery.
Approval & Setup
If the account is approved, then you will receive your merchant ID, also called a MID, which you can set up on your payment terminal or online payment gateway. The payment processor will give you access to the online merchant portal. If you have applied for a retail credit card terminal, then the device will be shipped to your location, and a team will guide you about how to use it. In the training session, we advise you to include the team members that will use the POS terminal.
Go Live & Start Processing
Once everything is set up, you can start accepting credit and debit card payments via the credit card terminal, link-based invoices, or the website.
Important tip: When you apply for a payment solution, make sure you disclose your shipping routes and partners, such as FedEx or DHL, etc. Also mention to the payment service provider that you would wish to use AVS and 3D Secure to keep the account safer for a long time. Ensure that you offer clear refund and dispute resolution terms at the time of application.