Extended Warranty Merchant Accounts:

Voted the #1 High Risk Merchant Account Provider, Soar Payments is focused on providing comprehensive and affordable extended warranty merchant accounts for our clients in warranty businesses.

Our goal is to be the undisputed best extended warranty merchant account provider for your warranty business, whether that’s for car or other automotive warranties, home, appliances, electronics, travel, vacation or other extended warranty related business.

To achieve that, we have to cater to the unique needs of different extended warranty businesses, and understand their issues. To that end, we’ve created the below “extended warranty credit card processing cheat sheet”. It’s designed to give extended warranty companies a single resource to obtain all of the information they will need to obtain an extended warranty merchant account for retail, phone sales, or eCommerce, and succeed long term when accepting debit and credit card payments.

To Get Your Extended Warranty Merchant Account:Apply Now

Table of Contents

About the Extended Warranty Industry

Getting and Setting Up A Merchant Account

Maintaining Your Extended Warranty Merchant Account:

A Note From Our CEO

Jacob - Extended Warranty Merchant Services Provider

Adam CarlsonSoar Payments, CEO

It’s a great time to be in the extended warranty industry.

With the US economy growing steadily, and increasingly technology oriented consumers, the demand for extended warranties for big ticket purchases is expected to grow steadily over the next 5 years.

And that’s been the experience of a few extended warranty business owners who I’ve spoken with recently. Despite the projected growth of the industry, there are still a lot of hurdles that successful extended warranty businesses must cross, particularly when it comes to credit card processing. Things like:

  1. Getting approved for a merchant account.
  2. Integrating with your CRM.
  3. Managing your chargebacks

The good news is, these problems are all surmountable. It took me about 8 hours of research, but I put together the below “extended warranty merchant account cheat sheet” for entrepreneurs in extended warranty businesses, including auto warranties, electronics warranties, home warranties, appliance warranties, or any other extended warranty related business to help you navigate these issues.

It’s my sincere hope that you find this article useful (because I’ve put a lot of time into it)… and if you need help with extended warranty merchant services for your business, we’d love to help you with that, too.

Adam-Sig, Extended Warranty Merchant Services
P.S.If you own an extended warranty company, and want affordable and reliable credit card processing we can help you (in fact, extended warranty businesses are one of our specialties). Click here to apply online.

September 1, 2016



An extended warranty business completing a credit card processing application will need to designate a specific SIC code and NAICS code for the credit card processor to classify the business. Here is a brief overview of common choices extended warranty companies make.
SIC Code: Businesses in the extended warranty industry would generally fall into one of the following SIC codes:

  • 6351: Surety Insurance Establishments primarily engaged in underwriting financial responsibility insurance.
  • 6399: Other Insurance Carriers (Not Elsewhere Classified Often used by extended warranty merchants across all industries.
  • 7389: Business Services, Not Elsewhere Classified A catch-all for business services that do not neatly fit into another SIC category

The extended warranty industry’s use of SIC codes is fairly consistent, with the exception that some warranty businesses select SIC codes that match the specific industry they service.
See the entire list of SIC codes here.
NAICS Code: Businesses in the extended warranty industry would generally use one of the following NAICS codes:

  • 52413002: Reinsurance Carriers: Primarily for extended warranty and other reinsurance providers, etc.
  • 44131: Automotive Parts and Accessories A catch-all category for a wide range of other car related businesses, including auto extended warranties.
  • 524128: Other Direct Insurance (except Life, Health, and Medical) Carriers For other extended warranty providers.

As with SIC codes, NAICS codes for the extended warranty industry are fairly consistent with the exception of some extended warranty businesses with a narrow industry focus, which choose to select an NAICS code that more closely matches the specific business’ activities within that specific industry.

See the entire list of NAICS codes here.

Getting an Extended Warranty Merchant Account

How do I get a merchant account for extended warranties?

Getting a merchant account for a business in the extended warranty industry, whether it be car warranties, appliances, home warranties, electronics, travel, or vacation, or any other extended warranty related business isn’t as easy as talking to your local bank and their credit card processor. The reason, is that extended warranty businesses are considered ‘high risk’. That means that low risk merchant services providers (like that offered by your local bank) cannot underwrite your business.

Thus, if you want to accept credit card payments as an extended warranty company, you’ll need to apply for a merchant account that is underwritten by a sponsor bank that does support high risk businesses. That is, a high risk merchant account provider (like Soar Payments).

Once you’ve found an extended warranty merchant account provider, the process is relatively easy. You just fill out an online application, submit a few documents (e.g. a copy of the owner’s ID, a voided business check, recent business bank statements) and that’s it. The credit card processor’s underwriting team will then review the submitted application, and normally in a few days you’ll get an approval. If you need equipment (for retail businesses), your merchant account provider will program it and ship it out to you, and if you take payments over the phone or online, the merchant account provider will setup your payment gateway then send you the logins. Then you’re ready to accept debit and credit cards.

Why can’t I just go to PayPal for extended warranty credit card processing?

The easy answer is that PayPal, Square, Stripe (which are called payment aggregators) or Wells Fargo or TransFirst (which are examples of low risk credit card processors) simply don’t want your business. They are built to serve their specific types of merchants, which, unfortunately don’t include high risk merchants. In large part that’s because they don’t have the underwriting or risk management procedures in place that high risk credit card processors do, in order to mitigate the risk of loss.

The annoying thing, however, is that the sales people at low risk credit card processors and the auto-approvals at payment aggregators don’t tell you that they can’t approve your business. And in some cases, they approve your business, and then drop you within a few weeks of when you actually start processing. That’s because these low risk processors and aggregators perform their underwriting after you’ve started accepting payments, not on the front end like a high risk credit card processor. And because the process is easier and usually cheaper going through an aggregator or low risk processor, tons of extended warranty businesses initially fall into the trap of applying with a low risk provider first.

In any case, if you want to save yourself the time and hassle of applying and promptly getting dropped, apply with a high risk merchant account provider that accepts extended warranty businesses (like Soar Payments).

Why are extended warranty merchant accounts considered high risk?

I know what you’re thinking… I run a legit business, frankly a pretty good one, and I pay my bills on time, so why am I considered high risk.

The answer is that “you” aren’t considered high risk, the extended warranty industry is. The reason, is that historically, the extended warranty industry has a high risk of loss exposure for the sponsor bank and credit card processor. Let me explain…

When you sell an extended warranty via a credit card, the customer has 6 months to dispute the charge. As you know, your extended warranty doesn’t cover literally everything, so when a customer has purchased a warranty only to find out it doesn’t cover his specific situation, he is often annoyed and resorts to a chargeback. As the extended warranty business owner, it’s your job to respond to that chargeback and win it. If you don’t, and you don’t have enough money in your bank account to cover the funds getting pulled out, then ultimately your credit card processor and their sponsor bank has to pay the refund. If there’s a lot of those (e.g. an extended warranty business goes out of business, and all of their customers when trying to redeem their extended warranty end up filing chargebacks) that can mean a ton of financial risk for the extended warranty companies credit card processor. And that, is why extended warranty businesses are considered high risk.

How do I know who accepts my specific type of extended warranty business?

Not every high risk merchant service provider accepts extended warranty businesses. But generally, if you’re operating a legal, well organized extended warranty business a high risk merchant services provider that works with extended warranty businesses will accept yours. That’s regardless of whether you sell auto or car extended warranties, electronics, appliances, travel, vacation, or any other type of extended warranty.

Return to Table of Contents

Question? Ask Away. We’re Ready to Help.

Jacob, Extended Warranty Merchant Account Provider

Adam CarlsonSoar Payments, CEO

If you’ve got a question about a payment gateway, chargeback management tool, extended warranty merchant account or anything related to accepting payments, and want some advice, shoot me your question directly: AdamCarlson@soarpay.com.

Ready to Get Started?

Ready to start accepting payments at your extended warranty business, Click to begin a free online application.

Extended Warranty Platform Integrations

Most extended warranty business owners have a particular shopping cart they want to use, and that’s equally true for CRMs for extended warranty businesses that accept phone or mail credit card payments.

If you’ve got a specific shopping cart, CRM or other software you’d like to use, you need to make sure that you work with a high risk credit card processor that offers a payment gateway which integrates with your specific software.

To find out which CRMs, shopping carts, payment gateway or other software a particular extended warranty credit card processor integrates with, it’s easiest to simply ask them. At Soar Payments, we keep a list of all of our shopping cart integrations, and integrated plugins on our FAQ Page. But given how many different software platforms and CRMs exist, it’s generally best to just speak with a salesperson directly.

Return to Table of Contents

To Get Your Merchant Account for Extended Warranty Sales:Apply Now

Everything an Extended Warranty Business Needs to Know About Chargebacks

The difference between an extended warranty business that can accept credit cards consistently for years, and one that loses their merchant account after 6 months is how seriously they work to minimize and manage chargebacks. Because the extended warranty industry is dominated by relatively small companies, many do not appreciate this fact until it is too late, and thus their merchant account cannot be saved leaving them unable to accept credit cards in the future.

Why do extended warranty businesses get a lot of chargebacks?

Extended warranty companies unfortunately are among the highest risk businesses in terms of chargebacks, because they get attacked by and are susceptible to ‘friendly chargebacks’.

Friendly Chargebacks: The term ‘Friendly chargebacks’ is a misnomer, but it refers to situations in which the customer has legitimately used their own credit card to make a purchase, but then decided for whatever reason to dispute the charge. Typically, in the context of extended warranties, this is because the customer was dissatisfied with the service provided or believes that a claim should have been covered but was not.

In the extended warranty industry, the risk of ‘cascading friendly chargebacks’ is a particularly large threat because of the nature of the business. For example, an extended warranty business might offer annual plans in a specific geographic area. A natural disaster in that area might cause hundreds of their customers to submit legitimate claims at the same time. That might bankrupt the extended warranty provider, and they might be unable to service all of the claims. That might lead to a cascading effect in which dozens or hundreds of other customers begin to initiate chargebacks, ultimately bankrupting the business and leaving the credit card processor liable for the losses.

What is a Chargeback?

A chargeback is when a credit card holder calls their credit card provider (aka their issuing bank) and disputes a charge. They can dispute the charge for a number of reasons, ranging from claims that the card was stolen or they didn’t make the purchase, to that they were double billed, or they were dissatisfied with the service.

Once the charge is disputed, the issuing bank then notifies the card brand (Visa, MasterCard, etc.) who then notifies your business’ credit card processor, who then immediately debits the money in question from your account. Then the dispute process begins, and you are required to prove that the charge was legitimate. If you do this successfully, you get the funds returned to you, if you don’t you lose them forever.

My business is legit, so I don’t need to worry about chargebacks, right?

Unfortunately, this is the approach many extended warranty businesses take, and it’s almost always the wrong approach.

You don’t avoid chargebacks just because your business is illegitimate. Rather, as an extended warranty business you’re almost guaranteed to get chargebacks no matter what. The question is, how many, and how well will you manage them.

The downsides to not addressing chargebacks are very serious. First, you’ll lose revenue because you’ll lose all chargebacks that you don’t fight. Second, you’ll potentially have your extended warranty merchant account terminated by the credit card processor if your chargeback ratio exceeds their threshold. And finally, once you’ve had an extended warranty merchant account terminated, it will be more difficult to obtain another one, meaning that you may never be able to accept credit cards again.

How to Calculate my Chargeback Ratio?

A high risk extended warranty merchant account, like any merchant account, has a certain chargeback threshold above which the credit card processor may review and terminate the account. For a low risk credit card processor, the chargeback ratio threshold might be 1%. Whereas for a high risk credit card processor it’s usually 2-3%. And for an offshore merchant account, it’s typically higher still. In any case, it’s important for you, as an extended warranty business owner, to understand how that ratio is calculated for your merchant account.

Unfortunately, not every business calculates chargeback ratios in the same way. Some credit card processors, for example, count all chargebacks regardless of whether won or lost. Others, count only those that are lost. Some use transaction count to determine a chargeback ratio (e.g. 3 of your 100 sales were chargebacks = 3% chargeback ratio), whereas others use a dollar amount calculation (e.g. $100 of your $10,000 in monthly sales were chargebacks = 1% chargeback ratio).

Because of these dramatic differences in the way chargeback ratios are calculated, it’s important to speak with your extended warranty credit card processor to find out how your chargeback ratio will be determined, and track this number closely.

How do I keep my chargeback ratio low?

The difference in chargeback ratio between an extended warranty business that conscientiously deals with chargebacks and one that ignores the issue, is staggering. And while every business is unique, here are some best practices that almost every extended warranty business should follow:

  1. Disclose Exclusions:
    One of the biggest points of dispute is whether a particular type of claim should be covered or not. To avoid chargebacks altogether, make sure the customer is very clear on what is covered and what isn’t. And to win those chargeback disputes that do occur make sure that every eventuality is clearly detailed in the policy, so that the customer can’t claim you’re not delivering on what was promised.

  2. Send Clear Order Receipts:
    Another common source of chargebacks is situations in which the customer doesn’t recognize the charge on their credit card statement. This is particularly an issue if you accept recurring credit card payments. The key here is to not only have a clear payment descriptor that clearly states “extended warranty” and provides your customer service phone number, but also to send a detailed payment receipt every time a payment is run.
  3. Integrate Chargeback Alerts:
    A chargeback alert is a way of stopping 30-40% of chargeback disputes before they get started. If you enroll in chargeback alerts, and your customer’s issuing bank is also enrolled (generally 30-40% are enrolled) then you’ll receive a 24-72 hour window of opportunity to issue a refund to the customer, and avoid the chargeback process altogether. That obviously isn’t a perfect solution, because you’re having to give the customer a full refund, but it prevents you from having to undergo the time and expense of responding to a chargeback, incurring chargeback fees from your credit card processor, and having the chargeback count against your merchant account’s chargeback ratio.
  4. Teach customer service personnel to refund:
    For most small businesses, particularly those that regularly deal with disgruntled customers like extended warranty businesses, refunds are not something that business owners encourage. That’s because the business owner knows how hard they worked for the sale, and how unreasonable customers can sometimes be. Unfortunately, what he or she is failing to factor in, is the long term cost of having to respond to and fight a chargeback, the fees associated with chargebacks, and the long term risk to his or her ability to accept credit card payments for extended warranty services at all. Thus, it’s smart to encourage your customer service personnel to be overzealous in issuing refunds.

Return to Table of Contents

Need Extended Warranty Merchant Services?

We’ve Got You Covered.

Soar Payments provides ACH, debit and credit card processing services to extended warranty businesses including auto and car warranties, electronics, appliances, travel, vacation or other extended warranty related business. So when you’re ready, we’re ready.
Apply Now

Apply Now