What is a Remotely Created Check or a RRC?

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Many payment methods are available today, and among them are remotely created checks, or RCCs. They’re a convenient way to take payments from customers, and for more than two decades, they were a dominant way for customers to pay bills or merchants. That, however, may change in the near future.

A Bit of History

RCCs aren’t created by the account holder’s bank, and they don’t include the signature. Instead, they include the account holder’s printed name, and the merchant takes the customer’s bank and routing number through the web (or over the phone), then prints a check with that information and processes it just like they normally would.

RCCs came from Check 21 legislation. Created in 2004, the checks were not subject to ACH rules. The goal was to create a way for customers to easily use checks to make purchases over the phone or online. The legislation also made remote deposit a possibility.

The Problems with RCCs

The biggest problem for most who deal with RCCs is that there is a pretty high risk of fraud involved. It’s easy to debit a customer’s account without consent, and the method is used today by online scammers on a regular basis.

The other frustration for many is that it’s hard to detect and control any fraud in this arena, which means there’s a higher rate of return on these checks. One study found that rate of return as high as 70%, which is as frustrating for payment  processors as it is for merchants.

Lawmakers are currently taking a closer look at RCCs to decide whether they will continue to authorize their use. It is possible that at some point in the near future, RCCs will no longer be legal tender for businesses.

Are They All Bad?

RCCs can be a really good solution for high-risk merchants, especially if they want to be able to take electronic check payments. Because many cannot qualify for ACH processing, RCCs give them more possibilities than ever. As with other payment methods today, though, they are not without their potential problems.

The Difference Between Chargebacks and Refunds

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Various types of high risk merchants need to be aware of the difference between chargebacks and refunds. The best high risk processors will offer high risk merchant accounts that acknowledge these kinds of risks but still treat them fairly. First, let’s start from refunds. Chances are you already have a good idea of how refunds work, since most of us have had to ask for one from a business at some point in our lives:

Refund – A refund occurs when a customer asks for funds to be returned to the customer’s credit card and the merchant agrees. This usually occurs when the customer returns goods, or the merchant fails to provide goods or services for which the customer has paid.

Partial refunds typically occur when a customer has been provided goods or services, but is unhappy with them, or a particular element was never provided.

Chargeback – A chargeback happens as a result of a dispute. Typically, the cardholder disputes a charge on their credit card statement with the bank that issues the card. This can happen as a result of:

  1. Fraud: The card was used without the customer’s authorization.
  2. Failed Refund: The customer attempted a refund through the merchant, but the merchant either failed to respond or refused to provide the refund.
  3. Inaccuracy: The goods or services that were provided were misrepresented to the customer.

What are High Risk Merchants?

Many types of high risk merchants must pay particular attention to these elements because they can reduce the number of processors willing to give you a good deal on your payment processing.

Businesses that see a high number of refunds and especially a high number of chargebacks can very quickly be labeled high risk by payment processors. This is because chargebacks serve as a red flag that a business is either failing to provide refunds or is misrepresenting their goods or services.

There are many high risk merchant accounts, but they’ll often charge you much higher rates and fees than you should be charged. The best high risk processors will reduce these rates as much as possible, and will specialize in these types of accounts.

With more than thirty years of payment processing experience, Y2Payments can help you save some of that money from your current statements and have it go directly to your bottom line! Contact us today to learn more.

What Are Common High Risk Merchant Industries

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Ever been denied the opportunity to work with a credit card processor because you’ve been deemed a high risk business? You’re not alone. Many companies deal with the same label every single day, and often it’s a label that comes with very high fees and frustration. Wondering why you’re considered a high risk merchant account? There could be a number of different reasons, but in some cases, it’s the industry in which you work. There are a number of high risk merchant industries.

What Are High Risk Merchants?

Generally credit card processors consider industries high risk if their services or products have a history of excessive charge backs. Similarly, industries with services or products that have longer chargeback liability periods, like annual memberships, end up with that same high risk label. Sometimes, it’s just the reputation of the industry. Take a look at a few types of high risk merchant industries:

• Nutraceuticals
• Timeshare and Travel
• Gambling
• Firearms and ammunition
• Adult Products
• E-cigarettes

There are other risk factors as well. If you do business outside the United States routinely, for example, you may end up with a high risk label. If you’re not in a high risk industry, but you work with high risk clients, that could also mean a similar label. Bankruptcy attorneys, for example, often end up with a high risk label, as do bail bondsmen.

You Can’t Change Industries, So Now What?

If you love what you do, and you don’t want to change industries, you’re not out of luck just yet. There are still a few things you can do to get great rates. The single best first step you can take, though, is to contact us. Y2Payments offers processing services to companies in a variety of industries, even those deemed high risk by so many other companies.

To learn more about what we can do to help, give us a call at 888-693-1850.

Fighting the High Risk Merchant Account Label

High Risk Merchant Account Y2Payments

It’s happened to many businesses.  Don’t worry – it’s not just you. You’ve applied with a few credit card processing companies, and time after time, you’ve been turned down.  Endlessly, the label “High Risk Merchant Account” has been thrown around in the paperwork.  How can you dump that label for good and begin processing your customers’ credit cards?  It’s easier than you think.

Understanding the Label

A high risk merchant account is one that the processing company doesn’t trust.  There could be a number of reasons for a label like this one.  It’s possible the processing company is just a bit risk averse.  It could also be the industry you serve.  Non-traditional sales and marketing tactics can make a company concerned about your ability to do business.

Working within an industry that has a high instance of chargebacks may be the key behind the label too.  Adult entertainment companies, for instance, are often labeled that way.  Gaming companies are too. And collection agencies.   One other reason you may have gotten that label is your own personal credit profile.  If you’ve worked with a processor in the past and gotten a high number of chargebacks or you simply have bad credit, a traditional processing company may not be willing to work with you.

Start Doing Business Now!

Fortunately, the label doesn’t have to stay with you for very long.  Even if you’ve been turned down by several companies, it is possible to move forward and begin processing your customers’ cards right away.  Y2Payments specializes in working with customers who have been previously labeled as high risk by other processors.

The Future

To avoid a label like “high risk” in the future, there are some steps you can take. Working with Y2Payments is a good step forward, but another one is to ensure that you avoid chargebacks if it’s possible.  You lose profit.  You lose merchandise, and you’re responsible for the chargeback fee.  it really is a lose-lose situation, and ensuring that it doesn’t happen to you is a must in the world of credit card processing.  And Y2Payments has an exclusive chargeback handling algorithm that can eliminate them.

To learn more about how we can help, no matter what your industry or current risk profile, contact us today.