While most businesses strive to sell high-ticket merchandise (because it is usually associated with more profit, there can be downsides as well.
One downside, which we’ll be exploring in this article is that high-ticket merchandise can make your business a higher risk in the eyes of payment processors.
As a result, certain business owners have to consider alternative payment processing options such as offshore payment processors.
In this article, we’ll take a closer look at high-ticket merchandise and why payment processors (and many banks) consider it to be high risk.
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Table of Contents
High-Ticket Merchandise 101
As mentioned, when it comes to selling high-ticket merchandise, business owners may face challenges finding payment processors that are willing to serve them.
One of the main reasons for this is that the negative impact of a chargeback on a single order can be considerably higher.
For reference, a chargeback refers to a disputed charge or fraud claim by a credit card provider. The normal chargeback rate is approximately 0.5%.
With this standard rate in mind, a retailer with low-priced merchandise would have a reasonably low value of chargebacks.
For example, a retailer with $10 products at 0.5% will not represent a significant value to the business, payment processor, or credit card company. This reduces the overall risk of chargebacks for all parties involved.
However, with high-ticket merchandise, even a single chargeback can represent a significant amount of money for all parties involved in the transaction, which raises the risks.
As a result, many mainstream payment processors prefer to avoid high-ticket merchandisers altogether. Instead, they opt to serve businesses selling lower-value products where chargebacks will not have an outsized negative impact on the business.
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Frequently Asked Questions
Below are two of the most common questions that we receive from people looking to understand their payment processing options for high-ticket items. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
What Are Considered High-Ticket Items?
High-ticket items cover a wide range of industries and product categories, from luxury items like jewelry and watches to large items like cars and boats.
Of course, high-ticket items also include online purchases, memberships, and other forms of product fulfillment.
In general, most payment processors consider anything over $1,000 to be a high-ticket item. However, most payment processors will have their own policies surrounding specific thresholds.
What Is High-Ticket E-commerce?
High-ticket e-commerce products cover a wide range, typically consisting of products over USD $1,000. That said, every payment processor will have its own thresholds in terms of what they consider high tickets for e-commerce businesses.
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