Finding a dependable payment processor can be challenging for alcohol merchants. Regardless of whether you own a retail bar or manage a wholesale wine store, you may go through some hassle to pinpoint a merchant accounting service that is best suited to serve your company’s needs.
A reliable service provider would partner with merchants to create and implement technologically advanced alcohol payment processing services. They usually have a banking network that eases up the payments to provide low-cost services in the alcohol industry that’s considered a risk by most financial experts.
In most states, there are several restrictions such as age limits, placed on alcohol sales. They also separate laws concerning the sale of alcohol using alternatives to cash-only transactions. As an alcohol merchant, you must learn each state’s requirements to prevent any kind of unpleasant surprise in the future. After getting informed on your local alcohol laws, you can hire the services of a reliable payment processor.
It’s common for payment processors to have some verification process for alcohol merchants. Many financial institutions are usually unwilling to embark on this type of venture as it’s considered high risk.
It’s usually important to go through an underwriting process where the business is registered with the payment card association. Some payment processors can request for you to get a legal review by a third party to make sure that your business complies fully with their regulations. After a hands-on verification of the merchant site, the underwriters will check other requirements to prevent future legal issues.
Many payment processors are not eager to work with alcohol merchants because of government laws in this industry. Even after getting licensed and implement age-verification programs of their platforms, applications from alcohol merchants still get rejected by many processors. Concerns like sales tax also bring a lot of scrutiny to these businesses and their online payment systems. There’s also the issue of the high volume of chargebacks and transaction disputes that are faced by merchants, especially alcohol resellers.
In the case where the merchant lacks sufficient resources to manage a large inventory or process big orders, the payment processor may turn down the application. Large distributors are usually free from these kinds of problems.
While chargebacks can be caused by any of several reasons, it is a crucial responsibility of the merchant to minimize them as much as possible. It could be as a result of a late change in the preference of a buyer who will not ask for a refund. It could also be as a result of problems with the shipping of the alcohol such as delays that motivate buyers to chargeback. And the merchant takes the hit for the extra expenses that would incur. There are several ways to prevent them which combine different programs and techniques.
One relatively easy way for alcohol merchants to prevent chargebacks is to ensure that the terms of sale are made clear to the clients. Your website can even ask the customers to check a box if they have gone through these terms to prevent future problems. Another way is by using ID verification to limit the chargebacks, Anyway, you’re better off partnering with a payment processor that understands the business.