Consumers receive their credit and debit cards from banks known as “issuing banks”. These banks provide their customers a form of protection by allowing the
cardholder to file a complaint against fraudulent transactions. This is known as a reversal or a chargeback. Once the consumer files a dispute with their bank,
the bank makes an investigation into the complaint. If the complaint is proven to be fraudulent, the issuing bank will forcibly take the amount from the merchant’s
account to refund to the cardholder. Often times, the bank sponsoring the merchant’s account will take their own fees as well. If, however, the consumer’s
complaint is proven to be untrue, no refund is requested from the merchant although additional processing fees may still be charged.
Although accepting credit and debit cards is extremely beneficial to your business, there can be major drawbacks caused by chargebacks. The process can be rather complicated and can cost you unnecessary fees. The collection agency industry also has an industry standard of an amount of chargebacks a collection agency is expected to operate under. Currently, the industry standard is to maintain a chargeback ratio of below one percent on monthly statements. Having a higher ratio on your overall monthly processing statements can lead to a closure of their merchant account.
Many of the merchants who contact us have never created a collection agency before and have little idea of how to start accepting debit card payments online. We've created this guide to help inform you of the steps you'll face to get your agency up and running with online credit card payments!
Many high risk merchant accounts may experience a rolling reserve as an addendum as a condition to their approval. Do you know what a rolling reserve is and how it may affect your business? Make sure you know all the facts of what to expect from your high risk merchant account.
Credit and debit card processing fees may be complicated and difficult to understand, especially when so many are in small print. Because fees can affect your business so much, we think it's important that you understand the ins and outs of credit card processing fees.