Auto Transport Merchant Accounts:
Voted the #1 High Risk Merchant Account Provider for two year’s running, Soar Payments is focused on providing auto transport merchant accounts for businesses in the broader vehicle transport industry.
Our goal is to be the undisputed best auto transport merchant account provider for car, boat, truck, vans, buses, tractors, airplane, motorcycles and other transport related companies. To achieve that, we have to understand the unique needs of auto transport related businesses, such as the need to accept large mobile or telephone payments, to offer high sale transaction limits, to enable mobile and phone based payments for sales staff, etc. In addition to offering all of those features, we’ve created the below “auto transport credit card processing cheat sheet”. It’s designed to give car transport related business owners a single place to obtain all the information they’ll need to get an auto transport merchant account and have long-term success when accepting credit and debit payments in their company.
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A Note From Our CEO
Adam CarlsonSoar Payments, CEO
It’s a great time to be in the auto transport industry.
At least that’s what some of our auto transport clients have told me personally. With the economy improving, more Americans are buying cars, and moving, meaning a growing need for auto transport services.
OK, there are obviously still problems. After all, there’s still a lot that can go wrong in an auto transport business, especially when it comes to your payments. Things like:
The good news is, these problems are all solve-able. It took me about 8 hours of research, but I put together the below “auto transport credit card processing cheat sheet” for entrepreneurs in the vehicle transport industry to help you avoid these pitfalls.
It’s my sincere hope that you find this article useful (because I’ve got a lot of work in it)… and if you need help with auto transport credit card processing for your business, I’d love to help you with that, too.
P.S.If you own a vehicle transport business, and want affordable and reliable credit card processing we can help you (in fact, auto transport related businesses are one of our specialties). Click here to begin a free online application.
Auto Transport Industry Profile:
- The US vehicle shipping services industry generated: $13 Billion, in annual revenue in 2014.
- There are 40,005 people employed in the vehicle transporting industry, divided among 4,982 vehicle transportation businesses.
- The largest segment of vehicle shipping services is by rail, followed by long-distance trucking transportation, local transportation services, aviation, and finally ship transportation services.
- The vehicle transportation segment includes fleet and individual transporters, those that schedule pickup and delivery services, auto transport brokers, carriers, car haulers, transporters that provide open-air and enclosed transport services, and door-to-door transporters.
- Approximately $651 billion worth of motorized and other vehicles were moved by truck in 2007.
- Of that total, $452,000,000,000 of vehicle cargo was moved via for-hire truck.
Categorization of the Auto Transport Industry:
SIC Code: Businesses in the auto transport industry will generally fall into one of the following SIC codes:
- 4212: Local Trucking, Without Storage (for local vehicle transport services)
- 4214: Local Trucking, With Storage (for local vehicle transport services with storage)
- 4213: Trucking, Except Local: Motor Freight Transportation, Long Distance Trucking, Over the Road Trucking, etc.
See the entire list of SIC codes here.
NAICS Code: car, truck, motorcycle, airplane and other vehicle transport related businesses generally use one of the following NAICS codes:
- 348401: Trucking, Except Local: Motor Freight Transportation, Long Distance Trucking, Over the Road Trucking, etc.
- 484230: Specialized Freight Trucking (typically auto transport companies including brokers and carriers)
- 484121: General Freight Trucking, Long Distance, Truckload
- 484230: Specialized Freight (except Used Goods) Trucking, Long Distance
See the entire list of NAICS codes here.
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Getting an Auto Transport Merchant Account
How do I get a vehicle transport merchant account?
Getting an auto transport merchant account is as simple as applying with a merchant services company that accepts auto transport businesses. If you’re reading this, though, you’re probably aware that the real sticking point is finding a merchant services company that actually accepts auto transport businesses (like us).
The reason you can’t just go to PayPal or your local bank, is because the auto transport industry is considered high risk (we’ll explain why below). But once you’ve found a high risk credit card processor willing to accept your business (ahem, like us) then simply complete the online application, supply the requested documents (like a copy of the owner’s driver’s license, a voided business check, and recent bank statements) and you’ll be approved shortly. If you just plan to accept MoTo payments (that is payments over the phone) then your merchant services provider will set up your payment gateway and you’ll be ready to go. If you plan to accept payments in person, they’ll mail you out your credit card terminal, and if you want to accept eCommerce payments you’ll need to make sure that the car transport merchant account is integrated with your website.
So how do I find an car transport merchant account provider?
The quickest way is either to Google a phrase specific to your business, (e.g. “Car Transport Service Merchant Account”), or ask another business owner in your industry who they’re using for credit card processing. In either case, it’s usually a good idea to call a few providers because, given that you have a high risk business, you’ll want a merchant services company who is specialized in working with vehicle transport businesses, so that they can ensure that everything goes smoothly.
Does Soar Payments offer car transport merchant accounts?
Yes, Soar Payments offers vehicle transport merchant accounts for all types of vehicle transport businesses, ranging from brokers, to carriers, to web entrepreneurs, and everything in between.
Soar Payments supports a wide variety of debit and credit card transaction types including, retail, mobile (aka in the field), phone or mailed in, keyed in, eCommerce / online, and recurring billing. Soar Payments provides businesses, ranging from startups to companies processing millions of dollars per month, with reliable comprehensive debit and credit card processing, and all other related products and services. Getting started is easy, just apply online.
How do I get a sufficient high ticket volume limit?
For vehicle transport businesses, it’s important that you be able to accept individual customer credit card payments well into the thousands of dollars, if not tens of thousands of dollars. Unfortunately, the larger a single transaction, the more financial risk to the credit card processor, so if you are a new business your credit card processor will likely want to put a lower single high transaction cap on your merchant account then you’d like. To ensure that you receive a transaction limit cap that is sufficient for your business to not lose out on a large customer, it’s important to make it clear to the salesperson exactly how much your largest ticket will be, and ensure that your account is approved with that much cap.
What is an underwriter looking for when reviewing my auto transport merchant account application?
A merchant account application is in some ways like an application for a loan with a bank. The credit card processor’s underwriting team will look at the merchant account application and weigh the potential risks to the credit card processor against the potential gain in terms of profit. As to what specifically they’re concerned about, there are a few things:
- Runaway Chargebacks: If one of your customers initiates a chargeback against your business (let’s say because a car was damaged during transport) then your business is responsible for addressing that chargeback. And if you lose (or don’t fight) that chargeback dispute you are responsible for compensating the unhappy customer. If, however, you don’t have the funds to compensate the customer, or you are unwilling to, ultimately the credit card processor becomes liable for the financial losses. Thus, a credit card processor’s underwriting team is looking closely at the likelihood that your business will incur a large number of chargebacks, and whether you have the financial stability to pay for those you do incur.
- Illegally Operating Transporters: Auto transport brokers and carriers in the USA are subject to government regulation. Specifically, they must obtain an operating authority number from the FMCSA, and required to maintain a BMC-84 Freight Broker Bond of $75,000 or more. A credit card processor and their sponsor bank do not want to sponsor or provide credit card processing for businesses that are not operating in full compliance of government regulations. Therefore, an underwriter examining your merchant account application will be looking for evidence such as a copy of your Operating Authority Number that your business is operating legally and responsibly.
In general, the more your business appears responsibly and legally run, the more likely your vehicle transport merchant services application is to be approved, and with fewer restrictions (for example, a rolling reserve, a volume cap, a lower single transaction limit, funding delay, etc.).
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Question? Ask Away. We’re Ready to Help.
If you’ve got a question about a payment gateway, chargeback management tool, merchant account or anything else related to auto transport credit card processing, shoot me your question directly: AdamCarlson@soarpay.com.
Ready to Get Started?
Ready to start accepting payments at your transport business, Click Here to Apply Online.
Everything a Vehicle Transport Business Needs to Know About Chargebacks
Auto transport business owners need to manage their chargebacks and chargeback ratio. That’s because for this industry in particular, chargebacks can be incredibly expensive when incurred and potentially devastating for the business. Moreover, excessive large chargebacks are the #1 reason that vehicle transport merchant accounts are terminated by credit card processors.
What is a Chargeback?
A chargeback is when a credit card holder who has been charged by your business contacts their credit card issuer and disputes the charge. The credit card holder might dispute the charge because they believe their card was stolen, because they believe they were charged the wrong amount, they claim they never received the service, or the service wasn’t as described, etc. No matter why the card holder initiates the dispute, once it is started, the funds in question are immediately taken by your credit card processor and held in escrow until the dispute is resolved. As the business owner, you then have to provide evidence that the charge was legitimate, and if you win, you get the funds returned to you. If you lose, the funds will be given to the customer who initiated the dispute.
With respect to car and other vehicle transport businesses, the chargeback reason code is usually that the service wasn’t as described (which is another way of saying that the customer is dissatisfied with the service). So, your job is to prove that the customer understood the scope of what was to be provided, clearly understood the risks of the service provided, understood the costs and refund policy, etc. And finally, prove that the service provided met what was promised in those terms.
Why does a processor care what my chargeback ratio is?
A vehicle transporter’s credit card processor cares a great deal about your chargeback ratio. They care for a few reasons. The first, is that the credit card processor needs to maintain a good relationship with their sponsor bank, Visa, MasterCard, AmEx, etc. each of whom places limits on the number and percentage of chargebacks that a merchant can incur before being terminated. The second, is that chargebacks are potentially a sign that the business is not being well run or has problems with its customers that will eventually pose a financial risk to the credit card processor. Thus, the key for any auto transporting business, is to make sure that your chargeback ratio stays below 2%.
Why do auto transport businesses get lots of chargebacks?
Auto transport industry businesses are particularly prone to high chargeback rates for a few reasons:
- eCommerce / MoTo transactions, are not in person transactions. Therefore, it is harder to prove that the customer actually agreed to the charge. There are higher rates of the customer forgetting that they made the charge, as well as higher incidence of customers attempting to get out of paying for these types of charges by falsely claiming fraud (aka friendly fraud).
- In the highly sensitive world of vehicle transport, customers whose cars, boats, planes, motorcycles or other vehicle incur even minor shipping damage or whose end product does not perfectly match their expectations will more frequently resort to a chargeback.
- Many brokers and transport entrepreneurs are small businesses, which do not have the name recognition or procedures in place to limit or avoid chargebacks.
- Many transport business owners do not send out detailed electronic receipts when a credit card is run, along with detailed service information. This causes some customers to believe they were overcharged, or feel concerned that the have been the victim of fraud, and therefore preemptively initiate a chargeback.
- Vehicle transport services are usually a relatively large item on a customer’s credit card bill. Customers who are looking to avoid paying for something, either because they are in a personal cashflow crunch or because they are fraudsters, will typically go after large ticket items on their credit card statement.
How do I keep my chargeback ratio low?
Auto transport businesses can face chargebacks both due to stolen cards and, more commonly, due to so-called friendly fraud. So, as a responsible business owner you have to take a multi-pronged attack to avoiding and fighting illegitimate chargebacks. These include:
- Send confirmation and customer satisfaction emails: When a customer purchases transportation services from you via credit card, make sure that they receive a detailed receipt that explains the breakdown of charges, the service date, terms and conditions, refund policy, etc. That way you eliminate chargebacks initiated due to confusion over billing, and win any chargebacks due to customers claiming they were misled.
- Use Clear Payment Descriptors: A payment descriptor is the line that a customer sees next to the charge on their monthly credit card statement. A lot of small businesses with use their corporate name, leading to many customers not recognizing the charge. Rather, this should be a recognizable charge that immediately reminds the customer what they purchased, (e.g. “ABC Car Transport Svcs” is a lot clearer than “ABC Corporation”). Additionally, make sure that your customer service phone number is listed in the descriptor so that a confused customer can immediately call you to clear up any confusion, as opposed to preemptively initiating a chargeback dispute.
- Integrate Customer Dispute Alerts: When a customer initiates a chargeback, the money is frozen and held in escrow for 60 days regardless of whether the chargeback was legitimate or not. In addition, a chargeback usually brings with it additional fines by your credit card processor. You can avoid all of that, by having customer dispute alerts (aka chargeback alerts) enabled on your auto transport merchant account. Chargeback alerts provide you with a notification that one of your customers has initiated a chargeback, and gives you a 72 hour window to issue them a full refund and walk away from the sale. The reason this is useful, is that if you see that a chargeback has been initiated before vehicle transport services have been provided, you can simply issue the refund and walk away from the sale entirely, saving you time, chargeback fees, and hassle.
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Auto Transport Broker Laws and Regulations
Vehicle transport is a highly regulated industry in which federal, state and local laws govern the activities of brokers, carriers, and other industry participants. Below is a non-exhaustive list of some of the laws and regulations applicable to the vehicle transport industry in the US.
- The Federal Motor Carrier Safety Administration regulates the trucking industry in the United States. There are a whole host of regulations applicable to carriers, however, brokers must also be properly licensed.
- The Moving Ahead for Progress in the 21st Century Act introduced a number of new regulations for auto transport brokers, including raising the minimum broker bond from $10k to $75,000, a relevant experience and certified training requirement, and customer disclosure requirements.
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Need Auto Transport Merchant Services?
We’ll Get You Moving.
Soar Payments provides ACH, debit and credit card processing services to auto transport businesses, ranging from brokers, to carriers, to technology businesses. So when you’re ready, we’re ready.