You are a success and have earned your wings in the world of eCom – congratulations – you beat the curve of the thousands of others that tried and failed! It IS an accomplishment to be very proud of.
Now that you are not worried about paying the bills, let’s cover some things you may have not realized when you entered the field that can be an even more positive effect on your business.
Accepting credit cards for payment is nothing more than a relationship with a bank that has provided you an unsecured line of credit to process transactions and be the funnel of dollars to you for that service.
When you signed up for your processing you were approved for an average sale amount, a high sale limit, and a monthly volume limit. All these three pieces of the puzzle are intimately related to your ability to grow. You, and your Merchant Account Agent (I hope you have one) are the key to a smooth growth curve.
Let’s talk about average sale amounts for a moment… You told the bank in your processing agreement that you would have an average sale amount of say… $150 . They approved that average sale amount based on your credit and your business history if you had previously processed elsewhere, as well as the type of items you sell. Banks feel more risk with some item types than others and this is all taken into account when you contract for services. For this exercise let’s also assume that you indicated to the bank on your contract which was approved, that your highest sale would be $500, and your monthly volume limit is $100,000.
We have already established that you are successful, but those limits have not changed and one day you get an order (legitimate) for $2000 and you process the sale only to wait and not see your funds appear in your bank account within the normal time period. Or in a similar case your volume was approved for $100,000 per month and you just did $200,000 in your best month ever!
Then you get a call from the Bank Risk Department…
Risk Department indicates they are holding your funds and that you must provide 10 random invoices plus a copy of the large sale invoice for verification before they will release your funds. Did I mention they are holding ALL your funds? Yes, they are. They also want a copy of your bank records for 3 months.
Ok – you are furious and beyond angry that the @&#!! bank would dare do this and you are screaming at the Risk Rep and threatening to cancel. The Risk Rep does not budge with these demands.
Take a breath for a second and let me tell you how to avoid this in the future.
Limits are limits and there are ways to increase your limits with every processor. When you respond to the request for docs from that Risk Rep be sure to ask him or her for a limit increase form as well to get a higher amount approved for your sales or a larger volume. It would be better to channel all this documentation through your merchant account rep if you have one and get them in the loop as well.
A banks biggest fear is LOSS. The loss that would occur if that large sale turned out to be fraudulent and you did not have enough funds to cover it, or if that huge spike in your volume also caused a huge spike in charge backs that you then might not be able to repay.
That is the reason for the request. They want to see healthy balances in your bank account and that you are not bouncing checks and are delivering your products that you have taken charges for. All that verification goes to form their researched opinion of your ability to process larger amounts or have higher volume limits as well as to learn if you are delivering your items in a timely manner. It is their only mirror to see how well you run your successful business.
You as a Merchant need to keep your account representative in the loop regarding your growth as they often have a large number of merchants and can’t always watch for a large sale that could put you over the tipping point and on the bank Risk Department “radar”.
Be a professional if a request like this should come and don’t berate the Risk Manager. He or she has a hard job as it is and their perception of your attitude does matter. With prompt action your situation can normally be resolved in less than 48 hours and with a good rep they can get same day handling and all your funds released.
Over time and with history, you will be more able to process transactions that might occasionally be over the limit due to your good track record but always be sure to consider your limits and increase them as your growth demands.
Bob Bryant of Fair Commerce, LLC. provides credit card processing and merchant services for some of the most successful online stores through a Wholesale Credit Card Processing Program and acts as an Advocate for Merchants.
Learn more and ask questions at http://www.faircommerce.com – (800) 710-1337 x504