Extended Warranty Merchant Accounts
Whether you are in the business of selling electronics, appliances, homes, cars, or other extended warranty businesses, it’s not easy to get approved for a merchant account. This is because businesses that offer extended warranty services are considered high risk by payment processors and banks. And even if you find a merchant account provider that is willing to work with you, you can expect a very high setup and processing fee.
Why Are Extended Warranty Businesses Considered High-Risk?
There are three primary reasons why extend warranty businesses are considered high risk:
1 – Many extended warranty businesses sell their services and process transactions over the phone or over the internet using virtual terminals. Virtual terminal/internet sales often require an e-Commerce Merchant Account and considered a high risk within the merchant services industry because the cardholder and the card are not present during the transaction.
2 – Many extended warranty providers have a high chargeback ratio because of the nature of consumers sometimes being unsatisfied and unhappy when claims are not approved. This group should consider Chargeback Alerts to mitigate their total chargeback ratio.
3 – A few ‘bad apples’ within the extended warranty services sector have made the industry riskier (in terms of merchant services) for payment processors and banks. Fraudulent warranty providers have led to fewer processors and banks willing to work with these businesses.
How to Obtain an Extended Warranty Merchant Account?
Finding a merchant account for an extended warranty business is not as easy as talking to your credit card processor or the local bank. Since this industry is considered high risk because of the reasons listed above, standard merchant account providers cannot underwrite your business type. So, you will need to find a high-risk payment processor and apply for a high-risk extended warranty merchant account. Once you have found one, the process to obtain a merchant account is quite easy.
You will need to perform the following steps:
1 – Complete the online merchant account application process.
2 – Digitally sign the application and upload the required documents. Your application will be sent for review. The payment processor will review it and determine a processing limit. During that process, you will receive updates via email as well as requests for additional documents (if needed).
3 – Once your application is approved, you will receive your extended warranty merchant account credentials via email. Your payment gateway will be activated and you will be able to start accepting payments from your customers.
The time it takes to complete the application and approval process varies from one payment processor to another. Generally, it takes about 3-5 business days.
Documents Required for Extended Warranty Merchant Account:
Following are the key documents that you will need to submit for your high risk extended warranty merchant account:
A – Personal address proof, e.g. bank statement, telephone bills, power bill, etc.
B – Personal KYC, e.g. TAX ID, national ID, driver’s license, etc.
C – Company details, e.g. licenses, GST, tax registration, etc.
D – Company address proof, e.g. rental agreement, sample invoice, cancel check, bank statement, power bill, etc.
E – Business website URL.
F – Proof of domain ownership, e.g. domain dashboard screenshot or domain purchase receipt.
G – Business plan and processing statement for 3-6 months (optional).
When looking for an extended warranty merchant account provider, it is highly recommended that you find the most efficient and reliable payment processor as it will help keep your business cash flow uninterrupted.
Merchant Services For Extended Warranties
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About The Author
Mark Sands, co-founder of High Risk Merchant Account LLC, an authoritative expert in the high-risk merchant account space. Mark has decades of experience in the payment industry & enjoys writing on entrepreneurial related topics.