How to keep your PayPal High Risk Merchant Account in good standing

Establishing and maintaining a PayPal high risk merchant account requires awareness and discipline within your operational parameters. PayPal identifies high risk businesses because of high chargeback ratios, regulatory issues, or volatile industries. If your business gets labeled "high risk," your account is more closely watched; compliance, therefore, is imperative to being able to process payments.

Keep Track of Your Chargeback / Dispute Ratios

PayPal keeps a close eye on chargeback ratios for high risk accounts. To keep your account from getting limited by PayPal, keep your chargeback ratio to less than 1% of total transactions. Deal directly with chargebacks and disputes; utilize effective fraud prevention tools such as Address Verification Systems (AVS), CVV checks, and IP geolocation. Respond quickly to disputes within the time required by PayPal (which is usually 10 days) with written proof documents such as shipping verification confirmations, email communications to/from the customer, tracking numbers, or information from a delivery service, etc.

Establish clear refund policies with your customers and carry them out promptly to prevent disputes escalating into chargebacks. Make it part of employee training for customer service staff to identify issues and handle them efficiently, so customers do not eventually have to contact their bank or credit card company and attempt a chargeback for any issues. Consider offering a partial refund or store credit for an unsatisfied customer instead of allowing them to request a full chargeback.

Keep Accurate Records of Transactions

When selling in high risk industries, documentation is vital. You should have complete records of all transactions, including customer information, the item purchased, shipping address, tracking number, and any communication notes. Documents, receipts, invoices, and delivery confirmations should be kept for a minimum of two years. These records can help in responding to disputes or showing PayPal that you are legitimately conducting a business.

Your business should also have a proper inventory management system. Overselling products will only lead to unhappy customers. Be clear and precise with your customers about product availability, shipping times, and if, for any reason, an order is delayed, it can frustrate buyers and lead to disputes.

Comply with PayPal’s Acceptable Use Policy Strictly

PayPal has a strict acceptable use policy for high risk merchants. Always remain up to date with the policy, as PayPal mechant services frequently alters it, especially for high risk merchants. Do not violate, for example, selling prohibited products, processing payments on behalf of other businesses without their consent, or deceptive marketing practices.

Your website should make it clear what your terms of service are, your privacy policy, returns policy, and contact information. PayPal wants you to be fully transparent, especially when you are a high risk merchant. Avoid misleading product descriptions, hidden fees, or utilizing flimsy billing processes that potentially lead to consumer complaints.

Provide Outstanding Customer Service 

Outstanding customer service is your best way to prevent account limitations. Use as many different lines of communication as possible. For example: phone support, email support, live chat, etc. Respond to your customers within 24 hours and resolve their issues quickly. Train your employees to de-escalate situations and come to a win-win solution. 

Create thorough FAQ sections for common product, shipping, return, and billing questions. Notify customers about the status of their orders personally and in a timely manner. Let customers know there is a shipping delay, if your product is not available, etc., or you can inadvertently cause a misunderstanding about your communication, which leads to a dispute.

Have Transparent Business Operations 

PayPal scrutinizes high risk merchants for unusual behaviour and patterns. They like to see a consistent operation with predictable and regular transaction volumes and patterns. Prepare them for anything that may trigger an account review for unusual behaviour in your sales volume or type. If you expect a significant increase in sales due to marketing campaigns or any seasonal change, let PayPal know before your sales hit so they can better monitor the activity of your business. 

Keep your business PayPal and personal PayPal accounts completely separate. Do not intermix or commingle accounts or funds, and do not use your personal account for business activity. Keep current any business registration that you have; if you change your business structure or ownership, or change how your business operates, notify PayPal immediately.

Account Monitoring & Compliance

You should establish a daily routine of logging into PayPal and looking for notifications, policy changes, and requests for information. When you get compliant requests from customers (followed by requests for documentation), it's important that you respond promptly. PayPal will often request an updated business license, the most recent financial statements, or updated operational information.

Be sure to set alerts on your account (if not already a default) for unusual activities and watch your transactional patterns for anything suspicious that resembles a fraud attempt. In addition to alerts, you can set up additional security up, such as two-factor authentication and change your password regularly. You may also wish to consult with a payment processing consultant who works specifically with high-risk industries, to establish measures that would help you always be compliant while improving your account functionality.

The more proactive you are, the more you can gild the lily with your PayPal and merchant account, Trinity Consultings improve your account standing, and limit the risk of limitations or even account closures that can interrupt your business.