Merchant account for dropshipping businesses
Building your own dropshiping website can be a great way to generate an additional income stream. However, doing so takes time and effort. You need to understand the business model and what is takes to be a successful dropshipper.
One of the biggest challenges new dropshipping businesses face is securing reliable credit card processing. The risk of fraudulent charges and high chargeback rates make using traditional payment processors a challenge, but a dropshipping merchant account can help. Here, we’ll review everything you need to know about dropshipping merchant accounts to help make your business a success.
The benefits of owning a dropshipping business
There are plenty of businesses you could start to earn some additional income. So, what benefits make dropshipping such a popular choice? Why choose dropshipping over another business model? Let’s take a look at the benefits:
- Dropshippers don’t manage inventory- Traditionally, merchants had to stock and manage inventory. This adds cost and complexity to operating a business. Managing supply chains and ensuring your inventory levels are optimized is no small task. As a dropshipper, you decide which products to sell on your eCommerce site and keep a percentage of each sale.
- Dropshippers aren’t responsible for shipping- In addition to offloading the responsibility of inventory management to someone else, as a dropshipper you won’t have to worry about shipping either. The manufacturers and warehouses you partner with will take care of shipping and tracking each order your customers make.
- Dropshippers can automate most workflows– Once you’ve established your brand, most workflows related to your dropshipping business can be automated. Automation can help with everything from sales reporting to email marketing to scaling your website. This is because the parts of the business you are responsible for exist online where automation is becoming the norm. As a result, you can focus on expanding your business and coming up with new ideas.
ⓘ The takeaway: the dropshipping model avoids the complexity of inventory management and shipping. It also allows you to automate most of your operations. This means lower startup and operating costs and the potential for passive income in the long run.
Dropshipping payment processing & the downsides of owning a dropshipping business
Of course, there is no such thing as a risk-free business. Owning and operating a dropshipping business comes with several risks and downsides. A few of the well-known downsides include lack of control over the supply chain, relatively low-profit margins, and competition that can make it hard to build a brand.
Given the upsides of dropshipping, those downsides make sense. The pros and the cons are just tradeoffs a business owner needs to consider. If you’re starting a dropshipping business, you should account for those tradeoffs in your business plan.
However, one of the lesser-known risks to dropshipping businesses can do the most damage. That risk is having a traditional payment processor (like PayPal, Braintree, or Stripe) not approve – or approve and later terminate – your dropshipping merchant account. Two of the most common reasons this occurs are:
- Fraudulent charges– Too many charges flagged as fraudulent or other fraud reports will make your business seem high risk by payment processors.
- Chargebacks– Payment processors are also likely to label your business high-risk if you are in an industry with a chargeback rate of more than 1%. Often, this greater than 1% chargeback rate applies to the dropshipping industry because of suboptimal customer service and poor refund policies.
If a payment processor views your dropshipping merchant account as too risky, you won’t be approved or you’ll be dropped. If that happens, you’ll be unable to process card payments and keep your customers happy.
ⓘ The takeaway: the risks of the dropshipping industry make it difficult to stay compliant with traditional payment processors’ policies. This puts your dropshipping business at risk of not being able to process payments.
Protect your dropshipping business with a high-risk merchant account
How can you help ensure your dropshipping merchant account is reliable way for you to process payments?
By using a high-risk merchant account.
Providers of high-risk merchant accounts – like TailoredPay – are experienced in mitigating the risks associated with high-risk businesses in the dropshipping industry. TailoredPay has the industry knowledge and solutions to address the risks associated with dropshipping payment processing. For example, we offer chargeback prevention tools and gateways to reduce exposure to chargebacks as well as a suite of merchant services fraud tools to mitigate the risk of fraud.
Additionally, a high-risk merchant account offers these benefits:
- Fast payments and deposits- Payments are processed quicker when you use a high-risk merchant account
- Integrated and secure payment gateway- An easy-to-use payment gateway enables you to accept a wide-range of credit and debit cards online.
- Industry expertise- High-risk merchant account providers have relationships with multiple high-risk merchant banks and years of industry expertise. By partnering with the right provider, you’re benefitting from those relationships and adding a payment processing subject matter expert to your team.
ⓘ The takeaway: a high-risk payment provider can give your business a reliable dropshipping merchant account. As a result, your customers will benefit from a seamless payment processing experience.
Contact TailoredPay to secure your dropshipping payment processing today!
At TailoredPay, we specialize in high-risk payment processing. We know the ins-and-outs of security, compliance, and underwriting in the industry better than anyone. That means we have the expertise and relationships to best serve your dropshipping business. Whether you’ve been rejected before or have a traditionally high-risk business sales model that involves recurring credit card payment processing, our team of experts is uniquely capable of helping you find a solution that delivers the best value for your unique circumstances.
We’ve recognized the shortcomings of many other high-risk payment processors and built our business to address those issues.
For example, many high-risk payment processing vendors have processing limits that can prevent your business from growing. At TailoredPay, we offer flexible limits (soft caps) that enable your business to seamlessly scale as customer demand grows.
Additionally, when issues arise – such as high-chargeback rates or fraud – most payment processors are quick to terminate accounts and leave a business without a way to process orders. Our team understands that business can be unpredictable and will first trying to help the merchant before terminating an account. Our team of experts are here to help you succeed and have tools in place to help mitigate the risk of chargebacks and fraud.
Finally, we know price matters. After all, with a dropshipping business, you need to keep as much margin as possible. That’s why we offer these account terms:
- Rates as low as 2.6%
- Daily settlements
- No setup or application fees
- No reserve
ⓘ The takeaway: TailoredPay offers the best combination of features, flexibility, service, industry expertise, and price in the high-risk payment processing industry.
To get started with your own high-risk payment processing account, contact us at 1-888-599-6482 or by filling out this simple online form!