Correlation between Sales Volume and Merchant Account Approval
The monthly sales are defined as the value in dollars of the sales that have happened in Visa and MasterCard credit cards, in a month. Let’s read more about monthly sales and their relation to merchant accounts.
- Getting Approval
A merchant account approval can be compared to getting approval for a loan that is not secure. Every penny that gets processed could go and convert and into a charge back, in the worst case scenario. As obvious if the merchant is unable to pay the chargeback, the banks will be liable to pay them on his behalf.
- Low Volumes versus High Volumes
A merchant with a low volume figure stands a greater chance of getting approved for a merchant account than one with an expected high volume. The possibility of charge backs makes banks a little cautious and reluctant to approve.
- High Sales Volumes
In some cases it might not be the chargebacks, but the high sales volumes that makes the bank tread cautiously. Large amounts of money translate in larger stakes and hence higher the risk in processing of credit cards.
- Business Model Specification
Models that involve recurring bills, payments in installments and are classified as high risk are often the last ones to get approved by the banks. Certain businesses start off with a bang but lack the infrastructure to provide superior service to their customers.
- Credit card processing for high volumes
Merchants that process high volumes run the risks of inability to clear chargebacks and sometime complete failure of the system. High volumes are sometimes sought by investing in high marketing that leave very little spare to handle chargebacks and other revenue related problems.
