Extended Warranty Merchant Account

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Extended Warranty Merchant Account – An Overview

In today’s competitive world manufacturers are continuously losing the margin of profit. This is because of the massive competition manufacturers are facing. Manufacturers usually attain good cash flow through the sales of products, but they generally generate profits through services and sales of spares and accessories. Apart from making money from services and accessories sales, manufacturers and other companies also make profits by offering extended warranty. Extended warranty merchant accounts help these businesses in accepting payment by credit debit cards.

Some payment service providers also offer ACH and echeck payment processing to companies providing extended warranty services. Extended warranty services are available for different products and industries. One of the most famous extended warranty product is the car warranty. Some companies also offer an extended warranty for

  • Home appliances
  • Mobile phones
  • Computer
  • Other digital products.

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Why are Extended Warranty Merchant Accounts considered high risk?

Extended warranty merchant accounts are considered high risk because they attract substantially high chargeback ratio. When a customer signs up for an extended warranty program, then the customer agrees to an agreement. Most of the times customers do not go through all the clauses mentioned in the agreement. At the time of availing the warranty customers may realize that there are few deductibles or few types of services are not covered. In some cases for few specific services, the customer may have to take the car or the product to a different location altogether. This is because extended warranty companies collaborate with various other organizations that provide services. This can be very cumbersome and sometimes this can create a sense of dissatisfaction in the minds of the customer. In cases like these customers may raise a dispute or chargeback.

Payment service providers or merchant account acquirers that offer Credit Card processing solution to low-risk Industries do not prefer to work with Industries that attract substantially high chargeback ratio. If you are a merchant selling extended warranty and you’re looking forward to getting merchant account or Credit Card processing solution for your business, then you must apply with the processor that is comfortable in onboarding merchants from high risk industries. If your company is legal and follows all the government guidelines and is recognized, then there is a high possibility that the payment processing institution may say yes.

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What is needed to get an Extended Warranty Merchant Account?

To get an extended warranty merchant account, the applicant is supposed to send the filled merchant account application to the payment service provider. This is usually a two to three-page document that collects vital information about the merchants business and the business model. Details like

  • Companies legal name
  • DBA
  • Business Address
  • Details about the owners and the promoters of the company
  • What kind of payment mode is required Moto/VT/API.
  • What currency does the merchant want to accept?
  • Merchants are also expected to let the processor know about the preferences of the credit card brands that they wish to receive.

Most of the times on the last page of the application form will have a list of website compliance and KYC documents. The website compliance list clearly mentions all the requirements for the website. This Includes

  • Products and Services to be clearly displayed on the business website.
  • Customer care number, email and the business address of the company must be mentioned on the contact us page.
  • Policies and terms and condition should be clearly mentioned.
  • The refund policy should be simple and easy to understand
  • The pricing structure and the delivery time frame of the service should also be clearly mentioned on the merchant’s extended warranty website.

Now that we have discussed the website compliance.

Let’s talk about KYC documents. KYC or KYM both mean the same. KYC stands for know your customer and KYM stand for know your Merchant. When a merchant applies for an extended warranty merchant account, he submits an application form and along with application form is also required to submit the copies of the KYC documents. The most common KYC documents include

  • Business license of the company
  • National ID and Address proof of the directors and the major shareholders of the company.
  • The payment processing institution will also ask for the cancel cheque or the letter of good standing from the business bank.
  • The merchant is also supposed to share the business plan and existing processing history if available.

Apart from these documents, the merchant account processor or acquiring institution may ask for additional documents to speed up the underwriting process.

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Retail Credit Card Processing for Extended Warranty Merchants

Some extended warranty merchants also have retail stores. These kinds of merchants usually prefer to use a credit card swiping machine or credit card terminal. Customers can handover the card to the merchants and the merchant can swipe the card over the credit card terminal. This kind of transaction is also called as card present transaction. To get a card terminal or point of sales terminal merchants can easily request their bankers. Most of the times if the merchant has got an existing relationship with the bank then the possibility of getting a retail credit card terminal increases.

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Online Credit Card Processing Merchant Accounts for Extended Warranty Companies.

Many extended warranty companies offer their products and services online that means customers search on various search engines like Google, Bing, Yahoo, MSN and try to find out reliable extended warranty service providers. These customers land on the website of these companies and then make the selection. These customers can quickly make credit card payments or debit card payments by visiting the E-Commerce driven site of extended warranty companies. The extended warranty company also sends information and details about how the customer can use the services.

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ACH payment processing for Extended Warranty Companies

Apart from credit and debit card merchant accounts, companies in the extended warranty Industries can also use ACH payment processing as an alternative mode of transaction. Across United States of America merchants from various Industries have been using echeck and ACH for business requirements. Many customers in the United States still do not have access to well-known credit cards. For most of these kinds of customers, ACH can play a crucial role. Extended warranty companies can get ACH payment processing with a virtual terminal. With the virtual terminal or moto panel that comes with ACH payment processing solution, extended warranty companies can easily accept ACH transactions.

Many companies also offer check verification feature, that verifies if the account number, the routing number is correct or not. Advanced ACH processing solutions also include the facility of validating if the customer’s bank account has got sufficient fund to clear the transaction. These kinds of features help automotive and electronic warranty merchants in reducing refund and check disputes.

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Check 22 or echeck payment processing for the Extended Warranty.

If the extended warranty merchant wants to get the check in PDF form within 5 minutes of the transaction then the best solution would be echeck or substitute check. Check 22 offers a reliable solution where the merchant can get the PDF copy of the digitally verified check within 5 minutes. The best thing about the solution is that it comes with account verification as well as check authentication. The built-in velocity check also helps merchants in reducing the possibility of fraud transaction. Merchants can also request the buyers to upload a copy of the regular check.

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Chargebacks and Extended Warranty Merchant Accounts

One of the biggest problems that are encountered by extended warranty merchant across United States, UK, Canada, Australia and many other Nations is the risk of chargebacks. No individual involved in the payment processing industry like to hear the word chargeback. We all consider this terminology to be a taboo and all the people involved in the payment processing industry try to reduce the chargeback risk. As a responsible merchant, you can also try to minimize the chargeback ratio by using various services that include chargeback alerts and notifications. Many companies are offering similar services that can help you in reducing the occurrence of disputes and chargebacks. In most of the cases, a merchant gets 24 hours window to resolve the dispute with the customer if that merchant is using a chargeback alert and notification service.

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Website compliance for extended warranty merchant account

When you apply for a high risk merchant account for your extended warranty business, you must ensure that your website is complete. Sometimes if your website is not complete but you have already submitted all the KYC documents and the application form still your application may be rejected just because of your website. You need to ensure that your website has got all the details of the products that you are offering. Make sure that the terms and condition, refund policy and the privacy policy are listed on your business website. In today’s world, your website must be SSL protected. Most of the payment processing companies will only offer the solution if your website has got SSL certificate. There should be a clear display of your customer service phone number, email address and your business address for the convenience of your customers. Your website should clearly be similar to the industry in which you are operating in.

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Rates and payout schedule for Extended Warranty Merchant Account

As we already know that extended warranty merchants are considered high risk, then we can certainly imagine that the rates will be higher than low risk Merchant. Most of the times extended warranty merchant account transaction rate or MDR is between 5 % to 12% depending upon the profile of the Merchant. If the Merchant attracts higher risk, then the rate of the transaction can be higher. If the payment processor is a domestic acquirer then the payouts schedule can be faster but in case if the processor is located in a different country or if the processors is an Offshore payment service provider then the merchant may have to wait for few days to few weeks for the first payout. Along with that sometimes the payment service providers can also place the merchant on a fixed reserve or a rolling reserve. Payment service provider or merchant account acquiring Institutions implement rolling reserve to reduce the risk of chargebacks and fraud.

If you want to get an extended warranty merchant account for your business, then feel free to send a send email at [email protected]. Our team will quickly look at your website and will also evaluate the possibility of suggesting you a reliable credit card payment processing solution for your extended warranty business. Our team works with multiple payment processing companies across the globe. Many of these companies are comfortable in onboarding merchants from few high-risk Industries. If your organization is legal and if you are not the part of a prohibited industry, the chances are that you may get a merchant account and ACH payment processing solutions for your business. For extended warranty merchant account we may help you to find better transaction fees for ACH payment processing as well.

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