Online Furniture Sales Merchant Accounts:
Voted the #1 High Risk Merchant Account Provider for the last two years, Soar Payments is laser focused on serving high risk merchants, which includes providing online furniture sales merchant accounts.
Our goal is to be the undisputed best furniture sales merchant services provider. To do that effectively, we have to understand the unique needs and underwriting requirements of merchants in the furniture business, and provide unique products and services to serve them. For business owners in the eCommerce furniture sales vertical, we’ve created the below “furniture sales merchant account cheat sheet”. It’s designed to give online furniture business owners a single place to obtain all the information that you’ll need to obtain a furniture merchant account, and succeed long term when accepting debit and credit cards at your business.
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A Note From Our CEO
Adam CarlsonSoar Payments, CEO
It’s a great time to be in the eCommerce furniture space.
At least that’s what I hear when talking to some furniture online sales merchants. The furniture industry is moving to eCommerce quickly, shipping rates are falling… all good, right? Well, not exactly. There’s also increasing competition, and frequent payments related issues.
In fact, if you have an eCommerce furniture business, there are a few significant credit card processing issues you’ll have to hurdle. Things like…
- Getting approved for an eCommerce account
- Navigating the application process.
- Controlling chargebacks so you don’t get shut down
The good news is, all of these problems are solveable. It took me about 10 hours of research, but I put together the below “furniture merchant account cheat sheet” for entrepreneurs in the eCommerce furniture sales business. So if you have an online furniture business (or a retail business with a significant online presence), I’d encourage you to read this cheat sheet, which has all the info you’ll need to obtain a furniture sales merchant account, and have success accepting debit and credit cards at your business.
It’s my sincere hope that you find this article useful (because I put a lot of work into it)… and if you need online furniture sales credit card processing, I’d love to help you with that, too.
P.S.If you own a furniture sales related business, and want affordable and easy credit card processing we can help you (in fact, furniture sales merchant accounts are one of our specialties). Click here to begin a free online application
August 23, 2016
Online Furniture Industry Profile:
Furniture retailers are moving to online sales at ever greater numbers. Brick and mortar furniture retailers are used to having a traditional low risk merchant account, often available via your local bank. Unfortunately, however, banks categorize online furniture sales as high risk, due to the potential for high chargebacks (due to goods damaged in shipping, fulfillment difficulties, purchaser fraud, or simply dissatisfied customers) on what are generally high ticket size items. As a consequence, most low risk banks do not accept online furniture businesses, and instead eCommerce furniture businesses need a high risk merchant services provider.
- The US home furnishings industry had sales of $163,443M in 2013.
- The online furniture industry revenue reached $9.0 billion, a growth of 10.4% in 2013
- Online furniture sales as a percentage of total furniture sales in the US was 14.6% in 2010, and 14.2% in 2011.(
- Online furniture sales in the US is expected to reach $370 Billion by 2017 according to Forrest Research.
- The online furniture sales industry is expected to grow by a staggering 16.1% annual growth
- There are approximately 16,424 online furniture retailers, according to IbisWorld.
- The US furniture industry is highly concentrated, the 50 largest companies account for about 80% of revenue, however, the online furniture market is far more fractured, due to niche providers having significant success.
Categorization of the Online Furniture Industry:
SIC Code: Businesses in the eCommerce furniture industry almost exclusively fall into the 57 SIC code category, however, within that category there are a number of choices:
- 57: Home Furniture, Furnishings, and Equipment Stores
- 5023: Home Furnishings
- 5099: Durable Goods, not elsewhere classified
- 5712: Furniture Stores
See the entire list of SIC codes here.
NAICS Code:: eCommerce furniture businesses generally use the 442110 NAICS code, but occasionally use the following:
- 442110: Furniture Stores
- 423220: Home Furnishings Merchant Wholesalers
- 442299: All Other Home Furnishings
See the entire list of NAICS codes here.
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Getting a Furniture Merchant Account
In this section we’ll look at everything a business owner needs to know about obtaining a furniture sales merchant account.
An online furniture merchant account is simply a merchant account which will support businesses that sell furniture online. The reason you need a online furniture merchant account is that most low risk credit card processors do not support online furniture sales. This is due, as discussed above, to the high average ticket sales in the furniture industry, combined with the potential for high chargebacks due to shipping damage, order fulfillment problems, dissatisfied customers or customer initiated fraud. In summary, you need an online furniture merchant account, if you want to sell furniture or other home furnishings online, simply because a low risk credit card processor (which will write retail furniture businesses) won’t write yours.
In addition to supporting your business type (eCommerce furniture sales v. retail) is that typically an online furniture merchant account costs slightly more per transaction, and may carry some additional restrictions such as a rolling reserve, funding delay, a transaction size cap, or a monthly volume cap. Most restrictions like this only apply to new furniture sales businesses, and can be removed after a few months of successful credit card processing.
Why does my industry type affect my ability to get a merchant account?
The simple answer is that different industries have different chargeback and fraud risks, and some sponsor banks are only willing to accept those businesses with very low risks, while others take higher risk businesses. The online furniture sales industry, in particular, has a high risk of chargebacks due to characteristics innate to the industry such as relatively long times between the order date and delivery date, the potential for damage during freight / shipping, the potential for fulfillment companies to cause issues, shipping delays, etc. As a consequence, generally, only high risk merchant services providers can offer online furniture businesses credit card processing.
Who Offers Merchant Accounts for Online Furniture Companies?
Typically, online furniture merchant accounts are provided by high risk credit card processors who work with sponsor banks that support higher risk businesses. Some of the differences between low risk and high risk credit card processors, are that high risk credit card processors usually engage in more thorough underwriting and risk analysis of a business, and typically have more restrictions than a low risk credit card processor.
How do I get an Online Furniture Merchant Account?
The short answer is that you need to submit your application to a credit card processor that accepts online furniture sales. The issue, of course is that underwriting guidelines constantly change at banks, and therefore finding the best combination of price, terms, and a sponsor bank that will accept an online furniture business is not as easy as it sounds.Once you do, however, you’ll need to apply, provide them with some supporting documents (such as previous business or personal bank statements, a voided business check, and an ID of the business owner).After you’ve applied, your documents will be forwarded to the credit card processor’s underwriting team who will review your documents, make an analysis of the risk your business poses (in terms of chargebacks, credit and/or fraud risk) and then approve or decline your application (or approve it with some restrictions e.g. a rolling reserve, a funding delay, a change in the pricing terms, a monthly processing cap change, or some combination of the above).Once you’re approved, your merchant account provider will set up your payment gateway and help you integrate your shopping cart, CRM, etc. Then you’re ready to go.
If you need an online furniture merchant account, consider applying with us, Soar Payments.
Does Soar Payments offer online furniture merchant accounts?
Yes. Otherwise creating this big ‘cheat sheet’ to tell you all about them would seem a little silly. Seriously though, yes, we provide online furniture merchant accounts underwritten through a number of sponsor banks. Our online furniture merchant accounts include a payment gateway, chargeback mitigation tools, integration assistance, and almost anything else you need to get you up and running accepting eCommerce furniture payments. To apply, give us a ring or, better yet, just complete our 5 minute free online application. Once you do, we will email you a PDF copy which lists all terms and pricing for your electronic signature, and once approved, you can begin processing. We’ll handle setting up your chargeback management tools, your payment gateway, and generally making the process easy and simple.
Frequently Asked Questions
What is an underwriter looking at when reviewing my application?
A credit card processor’s underwriting team is responsible for reviewing your application and then assessing the risk of chargebacks, fraud, and other losses on your account. For furniture businesses, they want to make sure that your business looks well organized, operating well, will pay its bills on time, will fulfill all of its orders well, etc. In general, they’re trying to gauge whether your business is going to be successful, because if you don’t pay your bills, or you cause a ton of chargebacks, the credit card processor can be liable for those costs. So, generally speaking, if you want to get your online furniture sales merchant account application approved, you’ll want to present your business as the legal, well organized, customer service oriented business that you know it is.
How do I get a higher credit card processing volume limit?
Most online furniture sales startups are likely to have a monthly processing cap when they obtain their first eCommerce merchant account. When you’re selling big ticket items, that cap goes pretty quickly, so in many cases you’ll be looking to accept beyond your cap after a few months of credit card processing. If that’s your situation, there are generally only one viable alternative: to request a higher processing volume from your credit card processor after successfully processing.
- More Volume From Existing Processor: This option is generally only available to you if you’ve been successfully processing for 6 months. In some cases, after 3 months the underwriting risk team will reevaluate and approve you for additional volume. To request an increased volume cap, you simply need to ask your existing online furniture credit card processor to review your account anew and tell them how much additional volume you’d like to request. If you have been processing with low chargeback rates, you have a healthy business bank account balance, your average transaction size is in line with what they expected, etc. your request is likely to be successful.
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Question? Ask Away. We’re Ready to Help.
If you’ve got a question about a CRM, payment gateway, chargeback tool, eCommerce furniture merchant account or anything else related to accepting payments in an online furniture business, and want some advice, email me your question directly: AdamCarlson@soarpay.com.
Ready to Get Started?
Ready to start accepting payments at your company, Click here to begin a free online application.
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Everything an Online Furniture Business Needs to Know About Chargebacks
Businesses selling furniture online have some of the most significant issues with chargebacks as exists in the merchant services industry. The reason, is that there are so many things that can go wrong in the furniture ordering and delivery process, and that because the underlying costs to the furniture sold is so large, online furniture businesses are not able to easily absorb a flurry of chargebacks as well as, for example, a high margin service business is. A flurry of chargebacks stemming from a significant shipping delay by a fulfillment company, a defect in a line of products, a glitch in the ordering process, or customer fraud, can literally destroy an otherwise thriving furniture business in a matter of weeks. Because of the risks, it’s important for online furniture retailers to understand the basics of chargebacks and how they apply and can be properly managed in the context of online furniture sales.
What is a Chargeback?
Put simply, a chargeback is when one of your customers calls the phone number on the back of their credit card (their issuing bank) to dispute a recent purchase. Their dispute is assigned a reason code, based on the customer’s complaint. These can range from the customer claiming that they never made the purchase, that the purchase wasn’t delivered as ordered, that the merchant didn’t adhere to the stated refund policy, they were billed twice, etc.
No matter the reason, once the customer has initiated the chargeback process, the credit card issuing bank (e.g. Wells Fargo if the customer has a Wells Fargo issued credit card) contacts your credit card processor. Your credit card processor is then required to freeze the funds in question and move them to escrow until the dispute is resolved. Shortly thereafter, you’ll receive a request to provide supplementary information proving that the transaction was legitimate and addressing the customer’s stated concerns. The customer will do the same. If you win the dispute, the funds in question are released to you, if not, they go back to the customer. This process can take anywhere from 30 to 120 days.
The chargeback process seems fair, why do I need to worry about it?
If the above doesn’t sound scary to you as an online furniture retailer then its because it glosses over most of the details. The reality, is that the system is heavily weighed in favor of the customer, and the response requirements are very onerous on the business owner. Specifically, you’re often provided with a very short time window in which to respond, and the format in which you respond must comply with the very specific and very technical requirements of the Card Brands (down to the correct font and paper size). Moreover, as an online furniture retailer you may not just be fighting legitimate disagreements between you and the retailer, but rather you may be targeted by scammers and fraudsters who use the chargeback system in an attempt to obtain free furniture. This is particularly true of small or new furniture retailers who scammers particularly deem vulnerable. Finally, it’s important to know that if you lose a chargeback, in most cases not only do you lose the funds that the customer paid but you also lose the underlying cost of the furniture, shipping costs incurred, your staffs labor costs, time fighting the chargeback, etc. In sum, it’s incredibly expensive and emotionally and professionally taxing. Add to all of that, that if you get too many chargebacks, regardless of whether they are legitimate or illegitimate, your credit card processor will terminate your merchant account, at which point it will be very difficult for you to obtain another merchant account to sell online furniture.
How to Calculate a Chargeback Ratio?
Now that you know that if you get too many chargebacks your online furniture sales merchant account may be terminated, the obvious question is, ‘How many chargebacks until my merchant account is terminated?’. Typically, the answer is a ratio. At a low risk credit card processor the ratio is usually 1%, whereas a high risk credit card processor typically permits ratios in the 2-3% range. And finally, an offshore merchant account can permit still higher chargeback ratios.
That chargeback ratio, unfortunately, is calculated slightly differently with each credit card processor. Some use transaction count, which simply means that if you have 2 chargebacks per 100 sales you have a 2% chargeback ratio. But most high risk credit card processors use dollar based ratios. That is, if you have $100 in chargebacked transactions per $1,000 in total sales, you have a 10% chargeback ratio, regardless of the breakdown in the quantity of sales. As a consequence, it’s important to know which method your particular credit card processor is using, as well as to understand the particular time period in which they analyze this data (that is, do they calculate your chargeback ratio monthly, weekly, quarterly, etc.).
Note: A cardholder can initiate a chargeback anytime within 6 months of the delivery of the product (not the date of the purchase). So, if you get an order for custom furniture in January, delivery in March, you’re not outside of the chargeback window until August. Most chargebacks occur within the first 60 days after an order is made, but just be aware that they can come in at any point within the window.
Why does my credit card processor care what my chargeback ratio is?
A credit card processor cares about your chargeback ratio for a variety of reasons, but they generally boil down to two: regulatory and financial. First, regulatory. Your credit card processor must stay within the guidelines set forth by the Card Brands (Visa, MasterCard, AmEx, Discover, etc.) which state that they can only continue to process credit card transactions for merchants that maintain an acceptable chargeback ratio, otherwise they will face fines and fees. Second, your credit card processor uses chargebacks as a leading indicator of potential issues with your business. And because they are ultimately financially responsible if you fail to pay your bills, they are sensitive to these issues. In sum, these are just the tip of the iceberg in terms of why your online furniture sales credit card processor will care about your chargeback ratio. But the ultimate point is, you need to monitor your chargeback ratio and take steps to properly manage your chargebacks.
How do I keep my chargeback ratio low?
There are a few answers here:
- Communicate Everything Clearly:
Many new online furniture businesses don’t have robust product descriptions, a clearly defined refund policy, clear shipping windows, etc. Any deviation between what the customer expects and what they actually receive is a point of potential spikes in chargebacks. So take the time to make sure you explain literally everything on the website in clear language.
- Send confirmation and customer satisfaction emails:
If you ordered something at Amazon and didn’t receive an online receipt with a shipping confirmation you’d suspect that something went wrong with the transaction. That’s with a company with a reputation as strong as Amazon. You aren’t Amazon, so you need to go even further to assure the customer that the order has been successfully processed, the amount of the transaction is clearly listed, the shipping tracking link is functional, your customer service phone number and email is clearly listed, a transaction ID is provided, a link to your refund policy is in the receipt, etc. And then, follow that receipt up with a customer satisfaction email. The goal here is to identify dissatisfied customers proactively, which provides you with the opportunity to reach out to them and try to resolve the situation before the customer gets angry enough to initiate a chargeback or complain about your company online.
- Integrate Chargeback Alerts:
One of the easiest things you can do to reduce your chargeback ratio by 30-40% is to integrate chargeback alerts. Chargeback alerts are simply alerts that you’ll receive that let you know (in approximately 30-40% of situations) that a customer has initiated a dispute. At that point, you’ll have 24-72 hours to refund the customer’s money and if you do, the chargeback goes away completely. Now, that’s obviously not very useful in a situation in which you’ve already shipped the furniture and the customer has a very minor complaint, or in situations where the customer is initiating chargeback fraud. But in situations where you haven’t yet shipped the goods (e.g. the chargeback is due to a fulfillment delay) then simply issuing the refund and not shipping the goods is a great way to end the problem and not have to deal with the consequences of the chargeback.At Soar Payments, we have integrated chargeback alerts into the high risk payment gateway, so unless you don’t want to receive them, you’ll get them automatically (which of course is highly recommended for online furniture merchant accounts).
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Need Furniture Merchant Services?
We’ve Got You Covered.
Soar Payments provides all inclusive high risk furniture credit card processing services to eCommerce furniture businesses ranging from startups to businesses processing millions of dollars a month. So when you’re ready, we’re ready.
Furniture Sales Merchant Services
E-commerce has opened many doors for new and emerging home furniture and business furnishing merchants. Furniture sales can now easily be made online, with pick-up in-store services, or special delivery services. Regardless of what types of services your furniture business provides, Soar Payments can help you find seamless credit card processing options for your company. At Soar Payments, we can assist your home and office furniture store set up a merchant account with e-Commerce capabilities, and have you processing in as little as 48 hours.
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