Auto Warranty Merchant Accounts driving you to the edge?
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Auto Warranty Merchant Account
An auto warranty merchant account is classified as high risk. This makes it difficult to find a reliable payment processing partner. Luckily PayKings specializes in working with high risk merchants. We have multiple acquiring banking partners that offer auto warranty merchant accounts, making us the leading experts in getting your auto warranties merchant account up and running and set your business up to accept payments sooner.
Finding a merchant account for a business in the extended warranty industry isn’t as easy as talking to the local bank and their credit card processor. The reason, is that extended or auto warranty merchant accounts are considered high risk, meaning that these risk merchant service providers (like that offered by your regional lender) cannot underwrite your enterprise.
Therefore, if you would like to accept credit card payments within an extended auto warranty provider, you ought to apply for a merchant account that is underwritten by a sponsor bank, or pre underwritten in house (like PayKings does) to help encourage high risk businesses that payment processing is possible – that is, with a high risk merchant account provider like PayKings.
Here’s a Common Scenario
Let’s say that when you start out setting up your eCommerce platform, you choose a company like PayPal for your credit card processing – but this option doesn’t quite work out for you.
Why is that? The simple answer is that PayPal, Square, and Stripe (also called payment aggregators) as well as institutions like Wells Fargo or even TransFirst (who are examples of low or no risk credit card processors) simply do not want your business.
They are developed to serve very specific kinds of retailers, which, unfortunately do not consist of high risk merchants. In large part that is because they do not have the underwriting or risk management processes in place that high risk credit card processors like PayKings do, as to mitigate the probability of loss.
The annoying thing, however, is that the sales folks at low risk credit card processors and the auto-approvals at payment aggregators do not inform you they can not approve your business. And in some instances, they approve your small business and then drop you in just a few weeks – right when you really start processing.
That’s because those very low risk processors and aggregators perform their underwriting once you have started accepting payments, not on the front end like with high risk credit card payment processors. And while the procedure is easier and usually cheaper going through an aggregator or very low risk processor, plenty of extended auto warranty businesses originally fall into the trap of applying using a low risk provider.
How Does Being High Risk Affect Your Chances of Getting an Auto Warranty Merchant Account?
I know what you are thinking… I conduct a legit organization, frankly a pretty good one, and that I pay my bills when they’re due, so why am I considered high risk.
The answer is that”you” aren’t considered high risk, the auto warranty industry is. The reason for this is that historically, the extended auto warranty business has a higher risk of loss exposure for your sponsor bank and credit card processor. Let me clarify…
If you sell an auto warranty by means of a credit card, the client has 6 weeks to dispute the charge. As you know, your extended warranty does not cover literally everything, so when a client has purchased a warranty simply to learn it does not cover his particular problem, he’s likely going to get annoyed and resorts to filing a chargeback.
As the extended warranty company owner, it’s your job to respond to that chargeback and acquire it. If you do not, and you do not have sufficient money in your bank account to pay to avoid the funds being pulled out, then it comes to your credit card processor and their sponsor bank having to cover the refund.
When there’s a good deal of those kinds of chargebacks that can mean a great deal of financial risk for the auto warranty company’s credit card processor. And that, is why auto warranty businesses are considered to be high risk.
To learn more about chargebacks, click here.
Why Does this Matter and How Can PayKings Help with my Auto Warranty Merchant Account?
The difference between an auto warranty company that can accept credit cards regularly for years, and one that loses their auto warranty merchant account after 6 weeks, depends heavily on how seriously they operate to minimize and manage chargebacks.
Because the auto warranty industry is dominated by relatively small companies, many don’t acknowledge this fact until it’s too late, and thus their merchant accounts cannot be saved, leaving them unable to accept credit card payments in the future.
Auto warranty companies, sadly enough, are one of the biggest high risk businesses in terms of chargebacks, because they get attacked by and are susceptible to what’s called a ‘friendly chargeback’.
What is a friendly chargeback? Well, it pertains to situations in which the consumer has officially used their particular credit card to make a purchase, but then decided for whatever reason to dispute the charge. Normally, in the context of auto warranties, this is because the client was dissatisfied with the service provided or considers that a claim should have been covered, but was not.
The auto warranty merchant account has a danger of cascading friendly chargebacks, which is an especially big threat because of the character of the business.
By way of instance, an extended warranty business might provide annual plans in a particular geographic area. A natural disaster in that region might cause hundreds of the clients to submit legitimate claims at precisely the exact same moment. That might bankrupt the auto warranty provider, and they might be unable to support everyone the claims.
This might lead to a cascading effect where dozens or hundreds of other clients begin to initiate chargebacks, ultimately bankrupting the company and leaving the credit card processor liable for your losses.
In any case, if you want to save yourself the time and hassle of applying and then promptly getting dropped, or being set up to accept credit card payments and then shut down due to excessive chargebacks – you need to first apply with a high risk merchant account supplier that accepts auto warranty merchant accounts, a reputable and reliable company, like PayKings.
PayKings understands the unique needs of the different auto warranty related businesses and has established 24+ acquiring banking relationships to become experts in getting auto warranty merchant accounts set up quickly and on to accepting online payments.
Auto Warranties Merchant Account Experts
- 20+ Proven Bank Relationships
- Medium/High Risk Accounts
- Fast Auto Warranty Account Approval
- Large Merchant Case Studies
- E-Commerce and Retail Options
- B2B Vendors Supported
Multiple Payment Solutions
- Multiple E-Commerce Gateway
- Chargeback Prevention
- Credit Cards
- B2B-Level II/III Data Discounts
- 3D Secure Frictionless Checkout
- Mobile Payment
- EMV Readers
Intuitive Compatibility & Support
- Gateway Recurring Billing
- E-Commerce Cart Plugins
- Developer API / Docs
- International Merchant Accounts
- Dedicated Account Managers