Merchant accounts for insurance and extended warrantee companies
Looking for the best payment gateway for insurance companies? Here we take a look at what to expect when shopping around, why insurance businesses can be deemed high risk and how to find the most suitable payment processing for an insurance or extended warrantee business.
Payment processing for insurance and extended warrantee companies
In recent years, there has been an increase of companies offering additional cover or insurance for high ticket goods. Examples include; boilers, drainage, tech such as TV’s and mobile phones and household white goods. However, sourcing suitable card payment solutions for these companies can be problematic, especially when some are new start-ups. There is no doubt that there is huge profit to be made within the sector, so how do you find suitable processing to accompany the growing industry? Let’s take a look…
High risk merchant accounts for insurance business
Insurance is deemed high risk by many high street banks, so your search for processing is a little more complex and limited options are available. The reason insurance companies struggle to obtain card payment facilities is due to the number of chargebacks historically associated with subscription payments, customers often taking out additional cover for a product without knowingly doing so and therefore raising a chargeback against the merchant.
Another reason for insurance/warrantee companies being considered as high risk by acquiring banks is the amount of fraud carried out within the sector. Therefore, when approaching card processors, it’s important to look at banks who have accepted merchant account applications for insurance companies previously AND have an appetite for this level of risk moving forward.
Cost of high-risk merchant accounts for insurance and warrantee companies
Due to the high-risk nature of these types of accounts, there is no doubt that transaction costs will increase slightly. With limited options to choose from (especially for start-ups) it would be wise to expect to pay an application fee to your bank or broker and higher than average costs per transaction. Often these can be negotiated depending on the volume of payments you expect to accept, with some companies offering reduced costs after a six-month period.
Rolling Reserve for high risk accounts
Banks often counterbalance the risk of onboarding insurance/warrantee companies by attaching a rolling reserve to the account. This means that a proportion of the funds the business takes are held on account and released later than regular payments. This reserve acts as a deposit, meaning the business will receive the funds eventually whist preventing chargebacks and fraud claims in the longer-term.
Served notice by your existing card provider?
It’s common within high risk industries to receive notice of termination from the merchant bank. This is because acquiring banks are constantly trying to balance their risk portfolio, meaning although they were happy to accept applications from insurance companies originally, their criteria have now been adjusted meaning they move away from the industry. Finding alternative card payment solutions, with solid processing history, doesn’t have to be complex. Speak to our advisors today – we’re happy to help.
ENQUIRE HEREHow Merchant Advice Service can help
Merchant Advice Service work closely with banks and brokers who can help find suitable card processing for insurance companies. Together we cover a wide range of products to include, high risk payment gateways for e-commerce, virtual terminals, chip and pin facilities, and MOTO accounts for telephone payments. Our service is free of charge so why not speak to us today?
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