Posted by NationalACH on Jul 02, 2020
Extended Warranty Merchant Accounts

Payment processing for extended warranty companies. Accept credit cards, debit cards, ACH and echecks quickly and easily with high volume extended warranty merchant accounts.. 

What are Extended Warranty Merchants?

An extended warranty is also known as an extended service or maintenance agreement.  Extended warranties are sold to consumers who want to extend the standard warranty on a new product. Terms and conditions on an extended warranty may vary from standard warranty terms

An extended warranty merchant account provides companies that sell extended warranties proven methods to take payments from customers.  Accept one-time or recurring payments.  Or offer customers the convenience of affordable recurring billing plans.  Customizable recurring billing options are included with all accounts. 

Extended warranties are sold to cover service on a wide variety of products.   The most common extended warranties are for vehicles, electronics, homes, appliances, and electronics. 

Reasons Extended Warranty Merchants are High Risk

Extended Warranty Merchant Accounts
Extended Warranty Merchant Accounts

There are two primary reasons extended warranties are classified as high risk by payment processors.

Extended warranties, by their very nature, are sold far in advance of a consumer needs the product.  Many extended warranties kick in only after standard product warranties expire.  Advanced sales are considered high risk by acquiring banks.

The second reason for the high-risk classification is chargebacks.  Extended warranty merchants are prone to excessive chargebacks.  Customers may think the warranty covers the repairs that are needed.  Then discover the work may not be covered by the warranty.  Which creates a perfect storm for a chargeback.

Additionally, extended warranty merchants are frequently targeted for “friendly” chargebacks.  In this case, a consumer disputes a charge with their card issuing bank saying that the promised service was not delivered, was not what they expected, or a wide variety of other reasons, in order to attempt to avoid paying for the service.

Card Payments for Extended Warranty Merchants

Both credit and debit card merchant accounts are available for extended warranty merchants.  Due to excessive risk of chargebacks associated with extended warranty merchants, accepting credit cards exposes you to the most risk.

Credit cards are easy to chargeback.  Consumers simply call their card issuing bank to dispute the transaction.  Banks often side with their customers since the banks make a lot of money from unpaid balances on credit cards.  They are motivated to rule in favor of the customer over the merchant.  In this way, the consumer continues to use the credit card for other purchases.  And the bank protects its cash flow from interest paid on the credit card..

If you do want to accept cards, debit cards are a better choice.  It is much harder to dispute a debit card transaction with a bank because the payment is made directly from a bank account rather than using a line of credit from the bank.  Therefore, the banks have little motivation to side with the consumer over a merchant.

High Chargebacks?  Echecks are the Answer

Card processors require chargebacks to be under 1%.  ACH payment processors require chargebacks to be less than 0.5%.  Many extended warranty merchants have a challenging time maintaining these low ratios, which can put card & ACH merchant accounts at risk. 

There is a unique method of processing echecks that lets you have significantly higher chargebacks than permitted by the card brands or the ACH network.  The processor assumes liability for chargebacks.  Cleared funds settle to your business bank account, like the way card or ACH transactions settle.

Because the items are processed outside of the ACH or card networks, you have much greater latitude for higher chargebacks.  Giving auto warranty merchants the ability to accept more payments without worrying about jeopardizing card and ACH merchant accounts. 

More Benefits of Accepting Echecks

Card and ACH merchant account providers impose monthly caps on volume, limiting the dollar amount that can be processed and stifling growth.  Echecks have no limitations on processing volume.  Once your account is approved, you can process as much volume as you want. 

Ten financial institutions are connected to the echeck payment processing platform.  Giving you serious benefits.

Multiple banks mean that you always have processing backup.  If a single bank decides to exit the auto warranty payment processing arena, payments continue seamlessly through the other banks. 

Extended warranty merchants also find echecks are exceptionally effective for recurring payments. 

The greatest risk for chargebacks occurs on the first few payments.  Use echecks for the initial payments.  Once the customer demonstrates there will be no chargebacks, the customer can be switched to ACH or debit card processing merchant accounts.


The more payment methods you accept, the more money you make.  Extended warranty merchants now have proven effective methods to accept one-time and recurring payments.  Ensuring that you have the processing power needed to manage and grow your business.

Want more information?  Happy to hear from you!  Contact  Or call 877-ACH-7600 today.