Category: PAYMENT PROCESSING

7 Steps to Maximize Holiday Sales and Keep Profits High Post-Holiday
As the holiday season quickly approaches, many online retailers are preparing for the influx of shoppers that will hit their websites. Black Friday and Cyber Monday are two of the biggest shopping days of the year, and retailers are pulling out all the stops to make sure they capitalize on these events. In this article, we’ll discuss some tips to help maximize holiday sales and keep profits high post-holiday.

We recently covered this topic on our podcast, which you can stream here: Apple Podcasts, YouTube, Spotify.

1. Don’t Be Afraid to Spend on Advertising

The economy doesn’t look great, and retailers are feeling the effects. But that doesn’t mean they need to take a break from advertising during this time. With the right strategy, you can get consumers to spend on your products, even if wallets are tightening up.

During a recession, business owners are notoriously stingy with their ad spend. But historically, businesses that have increased their ad spend during this time have seen long-term gains in market share. Don’t be afraid to spend on ads during this time, trust us.

Increase Brand Awareness

Promote brand awareness and create urgency by using big discounts, like discounts of 20% or more. These sorts of discounts make it more likely that consumers will buy because they’re not worried about missing out on the opportunity to save money.

This marketing strategy is geared mostly for first-time and new customers, but don’t forget your existing customer base! If you want year-round sales, you’re not going to get it from only new shoppers.

Focus on Uniqueness

Focus on what you have to offer rather than what other retailers have. If you have something unique to offer your audience, such as a product from a designer label or an exclusive vacation package, then emphasize it in your marketing efforts.

Don’t Skimp on Quality

Make sure that your advertisements are high-quality and well-designed. People won’t spend their hard-earned money on bad products or poor service, and the only way to promote a high-quality product is with a high-quality ad.

2. Offer Bundles During the Holidays

The most successful sales happen when the customer feels like they’re getting their money’s worth. One way to make your customers feel like they’re receiving value is to offer them a package deal.

If you offer a bundle of items, it will help you in two ways:
1. You’ll be able to sell more products.
2. Customers will be able to receive more.
It’s a win-win. The best part? You won’t have to worry about being stuck with excess inventory that may not sell, because bundle packages are usually offered at a discount.

Curate Your Bundles

When creating the limited-time bundles, don’t just put a few products that you need to sell together. Make it a theme.
- Stocking Stuffer Bundle
- Holiday Gifts for Mom
- The Techie Bundle
- The Perfect Christmas Baking Bundle
Give your bundle a purpose. First, redefine the audience for that specific product by narrowing it down. Then, insert products that are sold often along with maybe higher-ticket products that you want to see but don’t get many opportunities to do so.

Again, don’t forget your existing customers. Further the discount even more by combining it with a loyalty program through which shoppers can build up points from last year and use it to save big on new products. Maybe even consider membership-locked bundles that are only accessible after signing up and making at least one purchase. Or adding freebies onto your other bundles for loyal customers.

3. Add Fraud Filters for Large Orders

One strategy that retailers can use to maximize holiday sales is using fraud filters. Fraud filters are software programs designed for online retailers that monitor orders, transactions, and traffic for signs of fraud.

If an order appears to be fraudulent in any way, the fraud filter will automatically cancel it and refund the purchase price back to the holiday shopper. This ensures that your company won’t be left with hundreds or thousands of fake orders that you need to process. Nor will you be stuck with chargebacks.

There are many powerful fraud filters built into your payment gateway as well as 3rd-party software. You can learn more about what’s built into your gateway here and become familiar with the possibilities to minimize fraud and increase profits.

The holiday shopping season is the heaviest time of the year for fraud every single year. Don’t brush this off to the side, take care of it ASAP. Black Friday is coming up fast!

4. Test Your Sales Funnel RIGHT NOW

One way to learn how your sales funnel is working and make sure you’re not taking advantage of customers, is to test it.

You shouldn’t test it yourself. Get a family member, a friend, or pay someone on a service like Fiverr to “make a purchase” on your ecommerce store. This is the only way you’ll get valuable feedback and understand how your funnel operates without bias.

A lot of people get stuck in the mindset that the only way to learn how their sales funnel is functioning is by waiting for results. The truth is, if you want to optimize your funnel, you need to be constantly testing and tweaking it so that your potential customers are getting what they need. Here are the locations from start to finish you should be testing:
1. Start with the ad. The copy, graphics, and landing page it leads to.
2. Head to the landing page. Check if it works on mobile and desktop.
3. Add the product to the shopping cart. Make sure the price reflects the discount.
4. Test the payment gateway. Place and order and see how quickly it runs and how many steps it takes to get from cart to checkout to order completion.
5. Test the email confirmation that’s received when both an order is success and when it’s failed.
5. Update Your Billing Descriptor

You need to be sure you update your billing descriptor well before Black Friday and Cyber Monday. This will ensure that your customers are receiving the right information about your company, including the name of your company, address, phone number, and email.

You don’t want to get chargebacks because a customer doesn’t recognize your small business on their bank statement.

If, for some reason, your descriptor cannot match your business name, then there’s a solution. In the order confirmation email, make it visually clear what the billing descriptor looks like then and there.

6. Test Your Customer Support Portals

Missed opportunities are what happen when you don’t test your customer support portals. You’re probably still working on the product that launched a few weeks ago, or you’ve just been too busy with other things to deal with customer support. But now, these days are gone. The holidays are almost here, and you need to make sure your customer support is ready to handle any issues that might arise.

So how do you test your customer support? One way is by speaking directly with potential customers online. You can use tools like chatbots or live chat services to get direct feedback from users and see which questions they have about the product.

This will help you figure out where there could be gaps in knowledge about the product, which questions users might ask during their first interactions with it, and what kind of language might be most appropriate for the type of question they may ask during those first interactions.

If you don’t have time for a phone call or want a more real-time interaction, simply create a demo page and offer it as an option for consumers who call in for assistance. If they want more information about your product before purchasing it, this will give them an idea of what to expect once they start using it themselves.

Also test how long it takes for customer support emails to receive a response. There should be no more than 24 hours between submission and response.

7. Assess the Entire Returns Process

Before you start to implement a holiday sale, it’s important to make sure that everything is in order. You need to consider the entire returns process from start to finish, as well as how you will deal with customers who have problems with their product.

Make sure that your employees are knowledgeable about the store’s return policy before the holidays hit so they can help customers. You don’t want any hiccups due to a lack of comprehension.

Again, hire someone to make a purchase and a return from different parts of the world/US. You need to get real-time estimates on return deliveries and the refund process in order to understand customers’ needs. This will help prevent chargebacks, as well, which keeps your profits high come January.

There’s still time to secure your business for the holiday rush and from the post-holiday sales crash!

The holiday season is a time when businesses see huge profits, but if they’re not careful, those profits can disappear in the new year. This article provides tips on how to keep your holiday sales earnings high and prevent chargebacks and other customer service issues.

By keeping these tactics in mind, you can secure your business from any pitfalls related to chargebacks, fraud, and holiday burnout after the pandemic. If you haven’t already, it’s time to start preparing for the holidays so that your business can take advantage of all the spending frenzy has to offer!

Get in touch with the team here at DirectPayNet to get set up with a payment processor that can handle the spike in sales volume this month.
November 28, 2022
Stripe Fees Increase, Avoid Paying More This Black Friday
Black Friday is right around the corner and Stripe, the world’s largest payment service provider, has increased transaction fees for MKE (manual keyed entry) payments.

MKE is used by every category of merchants, sometimes as a backup solution and others as the primary method of payment. By increasing the fee for this type of transaction, businesses are stuck between paying even more money to an already stringent Stripe pricing structure or losing the sale altogether.

Follow our guide below on understanding what manually entered payments are and how you can avoid paying the price this holiday season (and beyond).

Stripe increases MKE fees by 0.5%.

The increase means instead of paying 2.9% + $0.30, you will now pay 3.4% + $0.30.

While a seemingly insignificant percentage increase, think about how much goes to Stripe at the end of the month when you check your Stripe billing statement. 2.9% is on the higher end of the processing fee spectrum (especially considering this is flat rate pricing). Increasing it to 3.4% pushes it into the offshore processing range, which is typically between 3% and 5% depending on your provider.

The additional cost is unnecessary and we believe you shouldn’t have to pay it.

Please note, this does not apply to all payment methods, only MKE via Stripe’s virtual terminal.

The price hike is due to higher fraud rates.

Fraud is always a risk for merchants and customers, alike. Merchants generally see fraud as a chargeback. Customers see it as a stolen card and unrecognized transactions.

Chargebacks occur when a customer disputes a charge they see on their bank account directly with the bank to receive a refund without requesting a refund from you first.

So, why is there suddenly more risk of fraud than yesterday?

There are two things we can think of: interest rates and holiday shopping.

To quote the official Stripe support article, “This price increase reflects the cost of higher fraud rates associated with collecting customer card details by phone or other unencrypted sources.” Because of the recent increase in interest rates, it’s more expensive for Stripe to handle these fraud cases. In order to combat the increased Stripe cost, they will charge customers more (whether that customer suffers from a higher chargeback ratio and has a history of fraudulent transactions or not).

The second reason is holiday shopping. Black Friday, Cyber Monday, and the holiday shopping season, in general, is right around the corner. We’re already seeing pre-Black Friday sales happening. This shopping frenzy directly correlates with increased fraud in Q4. Most businesses won’t see the consequences until January when chargebacks start rolling in. How is Stripe combatting this? By increasing the transaction fee.

Which merchants are affected most by the Stripe processing fee increase?

All types of business are affected, but there are a couple of industries in particular that will end up paying significantly more if they stick to using Stripe as their processor. MOTO merchants (mail order and phone order) use MKE for all transactions, meaning this category will suffer the most.

Manual keyed entry transactions are often used as the backup for in-store purchases. When a chip or magnetic strip isn’t working properly, or the customer doesn’t use a digital wallet, MKE is the go-to solution.

Even online merchants use MKE when customers need to change their payment type without canceling an order or if they have issues with checkout and attempt to make a purchase through customer support. MKE is much more common than most merchants realize.

During the holidays, MOTO transactions increase as customers often call in to secure their orders. Or when online shopping overwhelms the payment gateway, a common solution is to manually enter the payment details.

Understanding the MKE payment process to avoid paying the extra fee.

In order to completely avoid the new 0.5% increase, you need to understand how the payment process works for MKE transactions.

What does MKE mean and when is it used?

Manual keyed entry, usually phrased as manually entered transactions, is when a business owner or associate physically enters the credit card details of a customer.

When you hand over your card to a cashier in person for them to type in the numbers because it doesn’t swipe, that’s MKE. When you speak your credit card details out loud over the phone, that’s MKE.

MKE transactions in Stripe require the merchant to go into their Stripe account dashboard and type in the payment details.

Is every card-not-present transaction a manual key entry transaction?

You’d be right in thinking so, but the answer is no. MKE transactions are CNP transactions, but not all CNP transactions are MKE.

Online payments rely on CNP transactions. At checkout, the customer always types in their credit card details unless they used a pre-saved card. These are technically manual key entry transactions because the customer typed in their details as opposed to swiping their card—but there’s a catch.

MKE is unique to merchants typing in customer card details into a virtual terminal. So when customers enter their details into a secure payment gateway, the transaction is not considered MKE. But it is considered CNP.

What’s the difference between a virtual terminal and a payment gateway?

Payment gateways are what customers interact with at checkout and are required for e-commerce businesses. Virtual terminals are software that allows merchants to process credit card transactions. You don’t need a payment gateway to use a virtual terminal, it’s more of a backend feature that generally comes alongside your PSP.

For example, the Stripe payment gateway is used when customers make a payment after shopping on your site. When merchants log into their Stripe Dashboard, they will see a virtual terminal that allows them to manually enter payment details on behalf of the customer. Both transactions go through Stripe, but the virtual terminal bypasses the security measures implemented by the gateway.

Virtual terminals are not the same as a POS system (point of sale), either. A POS is used for in-person payments and credit card processing where the customer swipes or taps. Your POS may include a virtual terminal within.

Here’s how you can avoid paying the extra fee Stripe charges this holiday shopping season.

The shopping craze is just around the corner. Here’s how you can avoid Stripe’s increased transaction fees and pocket the profits.

Have a Backup Processor and Gateway

If your payment gateway isn’t working, as in an error comes up after the customer attempts to make a payment, notify the customer that something went wrong and refresh the checkout page with a new gateway.

Merchants can have as many processors and gateways as they want. It’s such a good idea to have at least one backup in case your primary payment gateway glitches. This will help you combat declines and errors.

Stripe is convenient, we know. It’s often used by startups and small businesses. But you can use other gateways and processors that accept:
- Apple Pay
- Google Pay
- Debit Cards
- Credit Cards
- American Express
- ACH and Direct Debit
- Wire Transfers
- International Cards
Credit card payments may be the most popular, but it’s not the only type. If you are in an industry like MOTO, then a processor that accepts ACH over-the-phone would be highly beneficial to you.

A backup processor is also a great idea if you sell different types of products, like subscriptions as well as one-time purchase products. You can configure each API to automatically be used for the type of product you want. This also applies to currency conversion and getting the best rate possible for your foreign customers.

Obtain Level 3 Processing

You can save big if you can set up your payment and fulfillment processes to meet the level 3 processing requirement.

It’s not difficult to obtain, but it will take some rearranging and serious organization on your part. Read how to get it here.

Get a Merchant Account

Stripe is not a merchant account nor is it a payment processor. While it’s convenient and has a place in your payments ecosystem, it’s not the be-all solution that you want. The same goes for PayPal and Square.

A real merchant account, one that matches your business model and accepts merchant category, will provide incomparable processing rates and negotiable fees with a real payment processor that backs your business.

Even if you are a MOTO merchant where MKE and CNP fraud is highest, a real merchant account will help you avoid the additional fees and even prevent fraud/chargebacks.

Secure your business for the holidays and avoid Stripe’s fees.

DirectPayNet is a merchant account provider for e-commerce, MOTO, and most other high-risk merchants. Our experts can set you up with a processor that provides heightened fraud protection with no monthly fees and secure payouts as well as a PCI-compliant gateway or card reader.

Get in touch with us right now for a real merchant account and avoid Stripe’s increase before the holiday rush.
November 11, 2022
Payment Gateway vs. Payment Processor vs. Payment Aggregator — Breakdown
How you accept online payments is vital to the success of your online business. There are two ways to process transactions: payment aggregators and payment processors. Each connect with a payment gateway to accept payments.

You can open multiple accounts, like having one aggregator and one merchant account (which connects you with a payment processor). Or multiple merchant accounts. Or multiple payment aggregator accounts.

Understanding which one works best for your business or as a backup will help you stay organized, compliant, and ready to profit.

What is a payment processor?

A payment processor is the mediator between a merchant and acquiring bank that authorizes a credit card transaction and facilitates the transfer of funds.

If the customer’s card is the starting line and your merchant bank is the finish line, the payment processor is the path that connects the two.

What is a payment gateway?

Finally, a payment gateway is what reads a customer’s credit card (Visa, MasterCard) information and submits that information to be processed. It transmits the transaction amount from the issuing bank (the cardholder’s bank account linked to the card they’re using) to the acquiring bank. Payment gateways can be digital, like what you see at an online checkout when it asks for card details, or a physical POS (point of sale) device where customers can swipe their cards.

The Difference Between a Gateway and a Processor

Payment gateways and payment processors are two different things. While they both help merchants process credit card payments, they do so in different ways.

A payment processor is a company that processes payments for merchants, whereas a gateway is a software that allows your website to communicate with financial institutions.

The gateway needs to use the pathway forged by the processor in order to transmit data from cardholder to merchant.

What is a merchant account?

A merchant account is a contract between the merchant (you), an acquiring bank, and a payment gateway that allows you to accept debit card and credit card payments.

Merchant account providers like DirectPayNet use their connections with banks to give you merchant account options that suit your needs best, as not all merchant accounts are the same:
- High-risk merchant accounts – for high-risk businesses (e.g., e-commerce, digital goods, dropshipping, supplements)
- Low-risk merchant accounts – for low-risk businesses (e.g., brick-and-mortar stores, card-present transactions)
- Free merchant accounts – pass the processing fees onto the customer
What is a payment aggregator?

A payment aggregator is a 3rd-party payment service provider (PSP) that allows merchants to process payments without having a merchant account.

It works by using one umbrella merchant account that allows every merchant to open as a sub-account underneath it. Popular 3rd-party merchant aggregators include:
- PayPal
- Stripe
- Shopify Payments
- Square
The Difference Between a Merchant Account and an Aggregator

Merchants who obtain a merchant account have their own contract with their own merchant account.

Merchants using a payment aggregator work under a joint merchant account, sharing it with every other merchant who uses that PSP.

Payment Aggregator Pros

Signing up is FAST. You can get an account in minutes, which means you can open a store almost instantly. There’s no talk, no negotiating, no immediate background checks. 3rd-party PSPs want to get your account ready as soon as possible so you can start processing transactions and they can start making money from you.

Payment aggregators are licensed with the PCI-DSS, which makes using them safe for both you and the customer. They also have predictable settlements, which is a comfort to most merchants.

Many people are familiar with the payment gateway used by 3rd-party PSPs, like PayPal. So in this light, familiarity can lead to higher sales and better customer satisfaction.

Payment Aggregator Cons

There’s a processing volume limit that, if reached, can freeze your funds and possibly result in account termination. Aggregators are playing the safe game and want low-risk merchants with low-risk transactions. When a merchant is processing too much in a given month, it can be a red flag for fraud or incoming chargebacks.

Payment aggregators use a fixed fee structure and pricing, which isn’t inherently bad. However, those fixed rates are usually pretty high and there’s nothing you can do about it.

Thirdly, 3rd-party PSPs will not allow high-risk merchants to process transactions. It is stated in the terms and conditions, but most merchants usually don’t find that out until their store is getting shut down. While the instant sign-up process is great, it can lead to trouble if you don’t fit into their accepted merchant categories.

As a bonus disadvantage, payment aggregators eventually do ask for personal info and business info that’s required for a merchant account. Basically, you go through the merchant account registration process without getting the benefits of a merchant account.

Who should use a payment aggregator?

While the list of pros might seem short in comparison to the cons, payment aggregators aren’t all bad. In fact, they’re a great way to get started immediately, no matter your e-commerce business model.

Aggregators are perfect for small business owners who need to start processing fast, startups with no prior processing history, and low-risk merchants who just want to get set up and ignore the rest.

Payment Processor Pros

Merchants can have their own, dedicated merchant account. You’ll operate independently with your own MID, not as a sub-merchant account. Rates, processing fees, and monthly fees for merchant account processing are negotiable, as well, so you can craft the contract to your needs.

Merchant accounts are available to all types of merchants, not restricted to low-risk sellers. Providers like DirectPayNet specialize in high-risk merchant accounts, and there are others available like us. What we’re getting at is that with a merchant account, you have options that work for your business.

Processing limits can be much higher when using a merchant account, which is perfect for sellers of high-ticket items or direct response merchants.

Possibly the best part of using a payment processor instead of an aggregator is the ability for the processor to scale with your business. If you’re starting out as a small business and you want to grow into an enterprise, the merchant terms you start with won’t necessarily apply as you reach the next stage of growth. With merchant accounts, those terms can be adjusted accordingly, whether you’re growing or shrinking.

Payment Processor Cons

The application process is lengthy. It takes about a week to apply for a merchant account, not including the time it takes to gather all of the necessary documentation. It takes even longer when negotiating terms. Suffice it to say, you won’t be processing transactions instantly as you would with an aggregator.

Some acquiring banks and payment processors might not work with you depending on your business type, so shopping around for the right provider can be a pain. Though working with us is a surefire way to get the merchant account you need. If you’re a higher risk merchant, then you might be subjected to harsher terms like higher rates or processing caps or rolling reserves.

Who should use a payment processor?

Ideally, every merchant should get their own merchant account and negotiate their own terms with payment processors. There are merchant accounts for every type of business, and while they take time to finalize, it’s worth it in the long run. Merchant accounts are the one true solution for any business who wants to grow. Having that contract with a payment provider who understands your business is invaluable to those who process large transaction volumes.

Understanding the Payment Process

Here’s the breakdown:
1. The issuing bank provides a card for the customer to use when they want to buy something—a bank card or credit card.
2. The customer takes that card and enters the information into a payment gateway at checkout.
3. The information travels through your payment processor, which provides credit card processing from issuing bank to acquiring bank for approval.
4. Funds are taken from the cardholder’s bank and deposited into your merchant account (or payment aggregator account).
The issuing bank is Point A. The credit card is the traveler. The card goes through the payment gateway like passport control. The payment processor is the vehicle that carries it to Point B, the acquiring bank.

The journey cannot happen without an existing infrastructure, which is your merchant account or aggregator account.

The Verdict

The choice is still yours. Aggregators have their place for those who want immediate processing and fixed terms. Processors are great for those who want to grow and negotiate, whether you need a high-risk or traditional merchant account.

Both accept a wide range of payment methods, especially from the major card networks like Visa and MasterCard, and even bank transfers.

Accepting payments from customers is essential for any online business, and both options provide the means to do so. However, payment processors provide more flexibility.

You’ll need a merchant account to get started with payment processing catered to your business. Contact DirectPayNet’s team of merchant service experts to get started.
November 7, 2022
Save Money & Qualify for Level 3 Credit Card Processing Rates
Level 3 processing offers lower interchange fees and helps businesses better navigate their data to increase profit and decrease costs. So why isn’t anyone talking about it?

Find out what it takes to qualify for Level 3 processing, what additional information you’ll need to provide, how it compares to the other levels of data processing, and the required fields for each. Level 3 is a powerful and inexpensive way to save costs while keeping your business more organized and ready for the future of commerce.

What is level 3 data for credit cards?

Level 3 data is the credit card data that you won’t see when you use your credit card at a store. This includes the BIN, card type and expiration date. Level III or L3 is also used to refer to this information in general. The name comes from how it’s divided into levels: Level 1 being the consumer-facing information on a receipt and Level 2 including more detailed information about an individual purchase (like a total amount).

Level 3 data is the most detailed of the three levels, and includes information like a cardholder’s name, address and phone number. It also includes the credit card number itself. This information can be used for fraud prevention or to help identify a customer’s preferences. It may also be used for marketing purposes.

What does Level III data include?

Level III data is the most detailed level of credit card data. It includes:
- Name of the cardholder
- Last 4 digits of the card number
- Card verification value (CVV) or security code, which can be found on the back or bottom edge of your credit card. You may also see it referred to as CID (card identification).
- Expiration date for the credit card.
- Service code for the Visa or MasterCard account, which helps differentiate between different cards within the merchant account from one another (e.g., if you have multiple ecommerce businesses that all use a single merchant account). This allows your merchant services provider to process transactions more efficiently and accurately without having to contact you every time they’re not sure which business it belongs to.
All of this information is on top of Level 1 and Level 2 data. As you can see, there’s a lot of potential once you activate L3 data.

What is the difference between L3 and L2 data?

Let’s break down what each data level of processing includes.

Level 1 Data

Level 1 data includes basic information about the transaction, such as:
- The amount charged and currency (e.g., $10 USD)
- Merchant ID number (MID)
- Card type (e.g., Visa or Mastercard)
Level 2 Data

Level 2 data includes the above information, plus:
- The location of the transaction (e.g., United States)
- The date and time of the transaction
Level 3 Data

Level 3 data includes the above information, plus:
- Customer ID number (e.g., 1234567890123456)
- Merchant name and address
- The type of business (e.g., restaurant, retail store)
- A description of the transaction (e.g., food purchase)
How does Level 3 processing work?

Level 3 processing works by using a data processor to extract all of the information from each transaction. The processor then sends this data over to a business intelligence platform, where it can be analyzed and used for decision-making purposes. If you’re currently only using Level 1 and Level 2 data, this move will help you gain insight into what’s happening with your sales, costs and profits.

The first step is to figure out what kind of data you want to collect. You’ll want to decide whether you need a specific type of information or if it’s more important to capture the movement itself. For example, if you’re looking at customer lifetime value, then it makes sense to track their purchases over time.

If you’re more concerned with the customer’s average purchase size and frequency, then you should be tracking things like their average spend or the number of orders they place over a set period. The second step is to decide how you want to collect this data. If your company already has an existing CRM system in place, then it might make sense to use that as your starting point. However, there are many other options available today that can help automate this process for you.

Who can use Level III processing?

Level III processing is best suited for businesses who have a large volume of transactions and want to optimize their revenue by increasing the average spend of each customer.

This can be especially useful if you have a subscription-based business model where customers are paying on a recurring basis. It also makes sense if your company has a wide variety of products or services that need to be sold together in order for them to be effective.

How does Level 3 credit card processing save you money?

The biggest benefit is a lower interchange rate by more than 1% on certain types of cards, like corporate business cards or commercial cards.

1% doesn’t sound like much, but keep in mind that it’s per transaction and credit card processing fees can go as high as 5%. Since the discount applies mostly to corporate cards, it makes sense for merchants selling to corporations or SMBs working with large corporations. However, there are benefits to anyone who uses it.

Level 3 data includes much more detail than L1 or L2, which allows you to adjust your marketing and sales to increase profits and customer order value.

Other features of Level 3 credit card processing.

Level 3 credit card processing is a great choice for business owners who want to integrate their point of sale software with accounting software. Level 3 offers built-in B2B fields that allow you to send data directly from your POS system to your accounting software. You can also use the Level 3 integration tools to send reports and track sales or inventory inside your accounting package.

Qualifying for Level 3 processing rates.

To qualify for L3 processing, here’s what you need:
- Level 1 data: merchant name, transaction amount, date, and billing zip code.
- Level 2 data: sales tax amount, customer code, merchant postal code and tax ID, invoice number, and order number
- Product/item description (SKU)
- Commodity code and product code
- Unit price, extended price, discount amount, per line discount, and line item detail total
- Quantity and unit of measure
- Debit/credit indicator
- Shipping/freight amount and duty amount
After ensuring you have all of the proper information, you need to ensure that your processor supports Level 3 data as well as your payment gateway or virtual terminal. It also depends on the credit card network.

To qualify for Visa or Mastercard Level 3 processing, you need to process at least 20k transactions annually. There are also a couple of forms to fill out and a quarterly network scan required.

American Express and Discover do not offer Level 3 processing.

Level 3 credit card processing makes it possible for businesses to process large B2B transactions out-of-the-box, using built-in B2B fields and integrations with accounting software.

Level 3 credit card processing is ideal for high-volume business-to-business merchants looking to streamline their business processes. The solution is designed to help businesses process large-scale credit card transactions with ease. It includes a built-in B2B module that supports invoice and purchase order processing, level 2/3 data encryption, full business reporting and unlimited users.

Processing Level 3 credit cards has become an essential tool for businesses that operate at a large scale. By taking advantage of these features, level 3 credit card processing allows companies to save money on credit card payment processing fees and use powerful data to improve sales and revenue.

Looking to add Level 3 processing to your business? Speak with the experts here at DirectPayNet. We’ll help you qualify with the right processor.
October 31, 2022
Stripe for Dropshipping? Solutions and Alternatives
The most common way to accept payment online is through credit cards. Stripe is one of the most popular credit card gateways to use at checkout, but is it good for dropshipping?

Recently, we got an email from someone distraught about their new dropshipping business they set up with Stripe.

We don’t recommend using Stripe for your dropshipping business for several reasons, of which we’ll get into below. But it is possible to use it and probably your best bet when just getting started.

Find out all you need to know about using Stripe for dropshipping and it’s better alternatives.

Can I use Stripe for dropshipping?

Yes! And no.

Stripe can be used for essentially any online business and offers a powerful, user-friendly payment gateway that gets customers through your sales funnel in a snap. But there’s a caveat: Stripe only supports low-risk ecommerce business.

Dropshipping is considered a high-risk business model. Because you have no inventory and essentially act as a middleman between supplier and customer, there’s a lot that credit card companies and payment processor will say is “up in the air”. There’s just too much at stake and not enough in your control for your business to be consider safe.

For new businesses, Stripe is great to get started. You can rack up some processing history before anything bad happens. And in the meantime, you should be applying for a real merchant account that does support dropshipping.

To answer the question: yes, you can use Stripe for dropshipping, but you need to have a backup option that supports your business.

Stripe is great for businesses of any kind that process LESS THAN $25K/MONTH. If you approach that limit or see your business scaling quickly, open an alternative account ASAP. There are alternatives to Stripe that do work well with dropshipping merchants.

Why does Stripe flag low-volume dropshipping accounts?

Stripe can choose any reason they want once they see which category your business falls under. In the case of the business owner in this email, there’s something a bit more complex going on.

If you operate a store in one country (even if it’s incorporated there), but you’re logging into your Stripe account from another country, they will see that your IP doesn’t match your business location and flag your account.

It does seem inappropriate given the connected state of the world and business, but that’s how Stripe operates.

What is better Stripe or PayPal?

If we had to choose, PayPal would be better for new businesses.

Both Stripe and PayPal are terrible for dropshipping stores, though. They should only be used to either:
- Build processing history (low sales volume only), or
- As a backup payment gateway
Stripe is popular and familiar to all, so it is easily misconstrued as a good option. PayPal is super simple and a consumer favorite. But neither support your business, both will shut you down and freeze your funds, and customers don’t really care that much in the end.

What can I do if my Stripe account is frozen?

Many people get in touch with us directly because Stripe or PayPal shut down their store. When we received the email we mentioned at the beginning, the entrepreneur had their ACCOUNT FROZEN AFTER JUST 4 TRANSACTIONS.

That’s insane. In fact, Stripe is usually not that fast to shut down a business unless the ticket size is too high. the specifics don’t really matter here because in the end, you just want two things:
- How to get your funds out of your frozen Stripe account
- How to accept credit cards again on your online store
Getting Your Funds Back

This is tricky and takes some time. First, you need to send a physical letter to the head of Stripe’s risk department. Send it with tracking and require a signature upon arrival. There is no phone number to call, so don’t hold your breath for speaking with someone directly.

This is the only way to speak with a human at Stripe. The Stripe support team is notoriously impossible to get in contact with.

You won’t be able to ask for all of your money back right now, but you can ask for about 50%. Stripe needs to keep some of it in case chargebacks come through and they need to refund the transaction.

Every month, ask for another 50% from the customer support contact you’re in touch with. Stripe can only hold your funds for a total of 180 days. This method will get you as much money back as possible before that 180-day mark.

Accept Major Credit Cards Again

The second thing you want is to immediately start processing payments again. You can’t leave your customers out in the cold, or else they won’t come back to buy from you again.

What you want to focus on here is the basics: accept Visa and Mastercard payment methods first. Credit card payments (and debit cards) are the most popular forms on online payment. If possible, add American Express as well as ACH.

First thing’s first, set up yet another payment gateway. You can choose Stripe, if you want. There’s also PayPal and Authorize.net.

Yes, there’s the risk that your account will be shut down again. But this is only a temporary option.

While you’re operating with either payment processor, keep ticket sizes low and make sure you’re not approaching a sales volume of $25k/month. You should be fine if you can stay clear of that threshold.

After you set that up on your site, immediately start applying to a real merchant account (i.e., through DirectPayNet). This is the only way to secure your business without the risk of your fund being frozen or account shut down.

What are some alternatives to Stripe as a dropshipper?

The only real alternative service provider to Stripe is a real high-risk merchant account.

Stripe, PayPal, and WooCommerce (on WordPress) work so quickly because they don’t give you a merchant account. They set you up with a gateway and allow you to process transactions within their own merchant account…up to a certain volume.

Once you reach $25k, that’s when they start looking into your business and provide you with a real merchant account. Many people complain about this process because things work wonderfully for a few weeks or a couple months, and then one day they get hit with a bunch of due diligence stuff.

If you’re a high-risk merchant (which you are if you’re a dropshipper) then Stripe won’t approve your application. Instead, they’ll freeze your account until all of the pending transactions go through and the refund/return window closes. 180 days.

Some popular alternatives are us here at DirectPayNet, authorize.net, and 2checkout.

Don’t use Shopify Payments. It’s Stripe with a different name. We understand the Shopify dropshipping ecommerce platform is very popular, but we also know they don’t realize Shopify Payments isn’t required. You can use virtually any online payment provider with Shopify. Just check their API for compatibility and you’re Shopify store will be set for success.

Dropshipping outside of your own country?

If you’re sending products to other countries (e.g., your business is in the US but you’re selling to non-US residents) and accepting payments from those countries, then you MUST get a local merchant account.

You can hold several merchant accounts for the same business. You’re not limited to just one account. Use that to your advantage. Open a couple backups, just in case. Set some up that have better rates for certain card types. And definitely open one up for international transactions.

Conversion Rates on Stripe and PayPal Suck

It’s a fact. These rates are abysmal. You’ll make far less by using either of these for international transactions.

If you don’t yet have a local payment processor or merchant account, then you should turn on dynamic currency conversion on your current gateway. This allows foreign customers to at least view and buy products in their local currency, which is then converted in the backend upon purchase.

If you have been approved for a local merchant account, then you can set stipulations within the gateway. Tell both your site and your gateway to show amounts in the local currency (euros, pounds, etc.) if being viewed by someone in that location.

You can also play around with the pricing in other currencies. Maybe customers are willing to pay a bit more!

Then, if you’re worried about being paid in that other currency, you can open an account with Wise (formerly TransferWise) or Payoneer. They allow online businesses to transfer payouts in other currencies with solid conversion rates.

How can I build a good relationship with my processor?

Your first 60 days are crucial to the success of your account and relationship with your payment processing provider. Here are some tips to keep your account in good standing, no matter who you’re processing with.

After 60 days, your processor will have a bit more flexibility with you. That will increase as time goes on and you remain in control of your business.

Fulfill Every Order

Don’t leave anyone behind. If you’re low on stock, tell the customer and find a solution. Don’t keep them waiting. No order should be left unfulfilled for more than 24 hours (48 on the weekends is acceptable).

Provide Tracking

You want to minimize any possibility of a chargeback. Therefore, you need to provide tracking information for your sake. It’s not just for your customer’s convenience, it’s for your records as proof of delivery.

Offer Refunds

If a customer doesn’t want their product anymore, accept the return and offer a refund. It’s better than having them dispute the transaction within their bank account and creating a chargeback instead.

Where can I open a dropshipping merchant account?

The team here at DirectPayNet is more than happy to help you with your business goals by providing you with a high-risk dropshipping merchant account—we even give you a human to talk to when you need!

Open an account today and start dropshipping like a pro.
October 7, 2022