Merchant Processors that Accept High Chargebacks?

18 replies
We run an eCommerce herbal supplement business with a recurring/autoship program. We do over $70k per month in revenue, so we're not exactly a small account. We were originally with First Data for 1.5 years and were kicked off due to high chargeback ratio. We then went with Chase Paymentech and got even lower fees for 1.5 years until they kicked us off yesterday for excessive chargebacks.

Our chargeback ratio is 2.9% including reversals (we win approx 50-60% of chargebacks). It hasn't changed much over time, but I guess as business shifts, the percentage can fluctuate by a couple of ticks up or down.

I'm now looking for a "high-risk" merchant processor or offshore merchant processor. I'm looking at Global Processing, which is offering me even lower rates than Chase (20 basis points plus interchange). But I'm skeptical, because I've been up-front with them about our chargeback ratio and they still quoted me lower than Chase. I've also heard good things about Durango.

I'm trying to find a processor that's going to be totally fine with our 2.9% chargeback ratio, but I don't want to get destroyed by fees. I'm ideally looking for someone domestic or offshore who will give me something around 150 basis points above interchange or less with a good reputation for chargeback acceptance. Does anyone have any suggestions for other companies I should contact?
#accept #chargeback #chargeback ratio #chargebacks #durango #high #merchant #merchant processor #processors
  • Profile picture of the author BradVert2013
    Before worrying about finding a new payment processor, you should find out why you have so many chargebacks to begin with, and fix the problem. No payment processor will keep you on for long with that many chargebacks.
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  • Profile picture of the author joemagaro
    We have a business model that we feel works very well for us. Rather than change the business model, we would prefer to find a merchant who accepts high risk clients. There are a number of very reputable businesses out there deemed high risk: anything travel related, web hosting, anything subscription related. For us, it's the subscription that causes all the chargebacks.

    There are tons of high risk processors out there. I just want to find out if anyone on this forum uses one, and what his/her experience is with that company?
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    • Profile picture of the author LABEShops
      My guess is you are getting chargebacks because people are forgetting it is a recurring charge (or weren't clear on it being one to begin with). You could reclarify that without changing your business model. Be sure to make it clear on their first order and in the order confirmation for example.

      Perhaps you should also set up an autoemailer to remind people x days before the subscription charges that their account will be charged due to their subscription. Give them a chance to cancel before the charge is made or at least remind them before the fact - it might help reduce chargebacks.
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    • Profile picture of the author Iconiplex
      Originally Posted by joemagaro View Post

      We have a business model that we feel works very well for us. Rather than change the business model, we would prefer to find a merchant who accepts high risk clients.
      It doesn't matter if your business practices are good for you. They're clearly not good for your customers. The fact that you just said that shows you clearly do not care about your customers, so I'd say you deserve every damn chargeback you get. You don't need to restructure your entire business, but you do need to get the hell off your ass and fix your chargeback ratio by reaching out to customers to see what the core issue is rather than saying "screw it," accepting your chargebacks, and moving to a new processor.

      The processor takes on your risk for you. You are doing any processor you work with a disservice by knowingly putting a high chargeback count on them and doing absolutely nothing to resolve it. They will throw you to the streets, keep your money, and charge you multi-thousand dollar termination fees in an instant if they feel like it, because they took on your risk and you didn't uphold your merchant responsibilities.

      We work with high-risk merchants all the time and are extremely lenient in various matters, but chargebacks are a pretty universal issue and no processor is going to keep a merchant who flat out says he does not want to resolve his chargeback issue. That's just lazy and shitty business.

      Fix it or you'll deserve your business crashing into the ground when every processor rejects you or terminates you and you can no longer sustain your company.
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  • Profile picture of the author salegurus
    So lets get this straight...
    People buy from you expecting a one off transaction but you keep sending them product until they wake up and realize what you're doing...
    If that's the case it's no wonder nobody wants to do business with you...
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  • Profile picture of the author XponentSYS
    A few years back the charge back ratio for my chiropractic marketing service, which is a monthly re-bill, spiked above what my merchant bank was comfortable with.

    They called me and rather than switch processors, we fixed the problem.

    Turns out that in my case, the clients were not recognizing my descriptor. We added my OFFICE PHONE NUMBER to it and that helped.

    My situation is different than yours, I know. BUT... there's a REASON people chargeback and you need to identify it, like I did.

    The reason could be..

    Your product sucks
    Your customer service sucks
    Your billing practices are not "transparent" enough
    You're not honoring your MBG statement
    Your descriptor is so vague they don't know it's your charge

    You just don't KNOW the reason for the chargebacks until you snoop around and find out. But you need to do that and FIX IT or you'll eventually lose the ability to bill because nobody will accept you. OR.... you'll be "bled out by sharks" because THEY WILL BE THE ONLY ones to take you.

    For the record, I'm not trying to be an ass. I found all this out the hard way over my decade of tenure in this business.

    AND..... those "reasons" I've listed above?

    At one point of another, I've "committed" every single one of those offenses and as a result EARNED chargebacks.

    People like to say they GET chargebacks. In my experience, people actually EARN chargebacks.
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  • Profile picture of the author serryjw
    Don't talk to a rep at any new merchant processors, TALK to RISK management directly before you decide.
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    • Profile picture of the author XponentSYS
      Originally Posted by serryjw View Post

      Don't talk to a rep at any new merchant processors, TALK to RISK management directly before you decide.
      I assume you mean Risk Management of the processor he's with?

      If so, that's sound advice.

      Years ago, I had to deal with a chargeback issue like his. My merchant banks RM guy actually beat me to it - he called ME.

      I can't say the situation was pleasant because chargebacks NEVER ARE.

      But.... HE was pleasant and the two of us spent, over the span of a week several hours combing through every aspect of my business looking for things that I may be doing to CAUSE the chargebacks.

      We found a few things I could try doing slightly differently and iAds the adjustments.

      What happened next?

      My chargebacks tapered off and a couple months later my bank and I were very happy - not to mention my customers.

      It may seem scary to deal with it, especially RM but it's really not a big deal. They're there to HELP.... it's within their best interest.
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      • Profile picture of the author serryjw
        I assume you mean Risk Management of the processor he's with?
        Close...I actually meant he should TT RM BEFORE he decides which merchant processor to switch to...
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  • Profile picture of the author Jarrett
    Banned
    Hey Joe! 2.9% chargeback rate is brutal. No merchant processor is going to want to take that much risk on.

    you can google High Risk merchant account and see who'se out there (Alliance Processing is good)

    but honestly..

    Anything over 1% chargeback ratio is a ticking time bomb. So you've got to reduce that.
    Especially if you're in supplements.. The supplement vertical is already considered high risk to most merchant processors.. so that coupled with a high chargeback rate is bad news.

    Are you using a company like DirectOutbound - Direct-Outbound.com
    or Performtel to handle customer support and help reduce chargebacks? If not.. you should seriously consider it..

    chargeback 911 does chargeback mitigation - Chargebacks911 | Responsive Chargeback Management Services
    This can help you out

    Also.. find ways to improve your customer service.. Is it easy for people to cancel the subscription? Make it easier.. Will they recognize the company name on their credit card receipt? Make sure it's congruent. When you deliver the products.. do you send papers that state the terms and how to cancel? you may want to.

    And also.. are you loadbalancing?
    Many guys in supplement space are running several merchant accounts that automatically get rotated.. in order to help reduce the chargeback ratio.. If you're running everything through one single merchant account.. that may be your problem. You may want to try getting several.
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  • Profile picture of the author rts2271
    You will eventually get flagged and placed on the match list. You will never run a credit card again after that until you are removed from the match list. There are some vendors that never get off the match list.
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  • Profile picture of the author bobby_shahzad
    Honouring the refund requests would save you from chargebacks at first place. If you are getting high charge backs it means your refund policy is not flexible. You should give people refund on first request , that is only solution.
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  • Profile picture of the author GetSomeDollar
    Wanted to Bump this thread - Anyone have any actual recommendations?
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    • Profile picture of the author agmccall
      Originally Posted by GetSomeDollar View Post

      Wanted to Bump this thread - Anyone have any actual recommendations?
      There really aren't any. While some Merchant Accounts are for high risk, they are more for the people that do not have the best credit but want/need a merchant account, and with those they would actually want an even lower chargeback rate, so you are more apt to lose that account quicker But if you insist then take a look at ccbill

      al
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      • Profile picture of the author GodOfCPA
        Best thing to do is invest more in telephone service and have a free number listed on the CC bills. If you can get customers to call, and you have trained people on the phones, you can easily reduce chargebacks to 1% by offering partial refunds/convincing them the product works. These days, that's the only way to run a continuous billing business if you don't want to cycle through processors with shell companies and all that trouble.
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    • Profile picture of the author joseph7384
      Originally Posted by GetSomeDollar View Post

      Wanted to Bump this thread - Anyone have any actual recommendations?

      Have you gone through the replies with your eyes closed, as there is plenty of great suggestions in this thread especially Jarrett's reply below.


      Originally Posted by Jarrett View Post

      Hey Joe! 2.9% chargeback rate is brutal. No merchant processor is going to want to take that much risk on.

      you can google High Risk merchant account and see who'se out there (Alliance Processing is good)

      but honestly..

      Anything over 1% chargeback ratio is a ticking time bomb. So you've got to reduce that.
      Especially if you're in supplements.. The supplement vertical is already considered high risk to most merchant processors.. so that coupled with a high chargeback rate is bad news.

      Are you using a company like DirectOutbound - Direct-Outbound.com
      or Performtel to handle customer support and help reduce chargebacks? If not.. you should seriously consider it..

      chargeback 911 does chargeback mitigation - Chargebacks911 | Responsive Chargeback Management Services
      This can help you out

      Also.. find ways to improve your customer service.. Is it easy for people to cancel the subscription? Make it easier.. Will they recognize the company name on their credit card receipt? Make sure it's congruent. When you deliver the products.. do you send papers that state the terms and how to cancel? you may want to.

      And also.. are you loadbalancing?
      Many guys in supplement space are running several merchant accounts that automatically get rotated.. in order to help reduce the chargeback ratio.. If you're running everything through one single merchant account.. that may be your problem. You may want to try getting several.
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      • Profile picture of the author mvincent
        Hi I guess you should use etransact.net which is by far one of the best payment processor we have used for our Tech Support company in the Philippines. They provide faster settlements too. Great service and outstanding merchant support.

        Vincent.
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  • Profile picture of the author FormerWageSlave
    Spent years in high risk online sales and the advice you're getting here is sound. You're not going to find someone who will take on that much risk for a long time. Mainly because they still need to answer to Visa/MC themselves.

    Get more than one high risk merchant account (good for cascading billing too) and rotate to spread yourself out a bit. I've worked with CCBill, NetBilling, MaxPayments to name a few. All great. But we were always asked to keep our CB rate down. And there was a rough spot when Visa came after us directly when we didn't.
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    grrr...

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