Why is the VoIP and Telecommunications Industry High Risk?

The rise of remote communication allows the VoIP and telecommunications industry to thrive. VoIP and other online communication services are used by individuals and large companies alike. The growth of the industry will give VoIP and telecommunication providers the chance to expand like never before.

Growing industries, especially those that operate remotely, do face challenges in finding the right merchant services. VoIP businesses do best by working with providers that can work with their unique obstacles. These merchants benefit the most from working with high-risk merchant services since the nature of their business qualifies them as high-risk.

What Does it Mean to be High Risk?

High-risk merchants are those with a higher chance of incurring chargebacks. Chargebacks result from unresolved or lost customer disputes. Too many of them cost a business, their merchant services provider, and bank time and money.

Banks and payment processors assess businesses’ risk levels before working with them to protect themselves.

VoIP and telecommunication businesses can work under a niche or specific product. There is a wide range of possibilities in terms of providing telecommunications services such as:

• Cellular and wireless communications/Mobile VoIP services
• Wired telecommunication carriers
• Telecommunication reselling
• Device-based VoIP services
• Software-based VoIP services
• Business VoIP services

These categories can narrow down a VoIP provider’s clientele, but being able to sell to those demographics are not guaranteed. A few other reasons make VoIP and telecommunications high risk as well.

Why is the VoIP and Telecommunications Industry High Risk?

A Remote Service

Not all VoIP products are digital as they can come in hardware form as well. However, the majority of telecommunication services operate through the internet with users using their own devices.

VoIP services are digital download products. Anything that is held digitally is at a higher risk for chargebacks than physical products. The quality of the VoIP service can be affected by users’ devices, giving a different customer experience across clientele. Customers may not feel like expectations were met.

Additionally, any service or product that processes payments over-the-phone or online puts the business at risk for chargebacks. These card-not-present transactions are more likely to be compromised by fraudsters.

Subscription Services

Many VoIP businesses embrace subscription services to serve their clients without interruption. Recurring payments can be convenient for both the merchant and customer. However, monthly or annual payments can be missed by paying clients.

Often, customers will find charges from a recurring service that they thought they had canceled or had forgotten about. If they hadn’t used the service or product, they may request a refund. Refund amounts can be hefty when recurring charges build up over time. This can back businesses into a dispute, then a chargeback.

High-Ticket

Business VoIP services can cost more than the average purchase and qualify as a high-ticket product. Any high-priced transaction is more at risk for a chargeback than a regular transaction. It would result in an expensive chargeback that costs the merchant more than the original amount.

High-Risk Merchant Accounts for VoIP and Telecommunication Businesses

VoIP and telecommunication businesses do best with merchant services that cater to their unique needs. Revitpay is a high-risk merchant services and accounts provider with a goal to lower chargeback rates. Contact us today to see how we can help your business.

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