Whether you are new to the moving broker industry or a veteran merchant, it’s smart to stay well-educated in your business sector. There will always be constant developing factors that can greatly impact your company due to changing regulations and economic times. Learning about the obstacles that are common to your industry and how to overcome them will be necessary for your business’s future success. Frequent challenges that moving brokers face include high chargeback rates, fraud risks, and other unsavory difficulties. While these create setbacks, there are many solutions available to you.
Why Are Moving Brokers’ Companies Placed In the High-Risk Industry Category?
Despite providing a valuable service, moving brokers are stuck with many headaches due to the nature of their industry. Here are just a few of the problems you face and how to solve them.
Uncertain Revenue
You might not have a consistent stream of income because of impactful economic variations throughout the year. For example, job availability, inflation, and the high cost of living can influence where people move. Seasons can dictate the time of year for when people decide to hire your services, with most families preferring the summer months. There is also the lack of worker availability that can make it difficult for a moving broker to hire external moving companies while maintaining other transportation logistics. Natural disasters also have a massive effect on the industry, deterring people from relocating. Moving Industry
SOLUTION? Diversify Your Services
Staying adaptive will help your business thrive even in economic uncertainty. One way to do this is by staying in tune with the shifting needs and demands of customers. For example, during the low season, you can recreate your business model to support restaurant industries. Offering catering, transportation, event production, and meal-plan delivery can expand your horizons. Other than working with local suppliers and grocery stores, consider junk removal as well. To stay within the moving industry, moving brokers can also offer supportive moving solutions such as furniture assembly, packing, and unpacking by connecting customers to professionals. Disaster response is also an industry in itself and a great way to pivot during a natural disaster. Moving Industry
No Merchant Account Accessibility
Due to the perceived issues with high-risk industries, many banks and payment processors refuse to offer a merchant account to moving brokers. Even major moving brokers that have years of reputation behind them find difficulty accessing popular payment processing platforms. If they do get accepted for a merchant account, the processing fees are typically exorbitant. To stay in business, moving brokers have to give up a large amount of money in processing fees just to accept customer payments. Moving Industry
SOLUTION? Rapid ACH Payment Processing
There are alternatives to traditional merchant accounts. Even if you can’t qualify for a merchant account, you can use ACH payment processing to replace credit card processing. A high-risk industry financial services company, like eDebit, can offer more competitive rates than most payment processors catering to high-risk industry companies. Moving Industry
High Chargeback Rates
Customers often initiate disputes and demand refunds when dissatisfied with their moving service. This is the root cause of high chargeback rates, resulting in one of the top reasons for merchant account declines on applications. The chargeback rates are typically high because of lost or damaged goods, destroyed items, and other issues. The expense caused by the large loss of goods creates higher chargeback costs in comparison to a typical refund. When the customer demands a refund, the bank or payment processor has to process it. Even though the money would be coming out of your account, it is still an extra expense for the financial institution to perform the transaction. Because of this, payment processors and banks deem moving brokers to be too high risk. Moving Industry
SOLUTION? Enhanced Technology
Incorporating GPS technology into your services can help. Not only does technology help to streamline the customer’s experience, but it also allows you to manage and fine-tune moving logistics. For example, a real-time tracking system similar to Uber or Lyft can help prevent the loss of goods. If that’s too complex, having third-party movers log their movements at different checkpoints or warehouses is an alternative method. International freight brokers use high-level logistics to provide the timely delivery of goods globally. Utilizing tracking software can give you an edge against the competition and also help negate a lot of the issues caused by unreliable moving companies that can misplace or lose goods. Moving Industry
Fraudulent Activities
Chargebacks often occur for unfair reasons. For example, a fraudulent customer can attempt to take advantage of chargebacks by making false claims. They might not want to spend their savings or don’t want to pay for your services. Often, they have insufficient funds, resulting in bounces and unpaid invoices. Service providers that you work with may also be committing fraud. While you are the helpless victim in this situation, banks still won’t be there to help. Moving Industry
Solution? Real-Time Verification
Alternative payment processing companies can offer real-time verification. This means that you can check and verify that the client in question has enough funds to pay for your services. According to consultants at eDebit, this drastically reduces the number of chargebacks you experience. Also, this can prevent future issues after you’ve wasted your effort providing a valuable service for your customer. The same goes for third-party companies that contract with you and are required to pay you. Moving Industry
Industry Reputation
Even when your business is working at 110%, you still may suffer from a poor reputation. There is a higher likelihood of complaints and negative reviews by customers. While this can be due to undependable third-party companies, your company will still take the blame. Third-party moving companies and service providers are considered to be the face of your company when they are dealing with customers. Because of this, customers will directly associate you with the third-party company. If they are a failure, then you are considered one too, by a customer’s understanding. This also increases the risk assessment by merchant account providers. Issues with operational dependencies are the main driver behind your company’s reputation. Moving Industry
Solution? Screen and Source Third-Party Companies
Reduce operational dependencies on unreliable companies by creating a successful network of trustworthy third-party organizations. Create a dream team of outsourced companies and service providers by building strong relationships with them. Make sure expectations are on the same level and that their quality of services matches yours. If they are a cheaper, unreliable company, you will have to negotiate with the customer, letting them know that the less they pay, the lower the quality. This will help prevent customers from complaining if they acknowledge that they won’t get white glove services for an extremely low quote. Otherwise, you’re better off declining customers who don’t pay well and focusing on customers who will pay fairly for quality results. Moving Industry
Unpredictable Customers
The moving industry can be unpredictable, as customers’ needs can fluctuate overnight. The customer might cancel services, change plans, start contractual disputes, or disagree with charges. The terms of the contract might be an issue between customers and sometimes even service providers. Legal issues and financial losses are often the result of a contractual battle. Because moving brokers have to plan for big moves, these issues can crop up unexpectedly at any point during the transaction. You have to always expect the worst-case scenario when dealing with a fickle customer or uptight third-party company. Moving Industry
Solution? Pre-emptive Agreements and Fees
You can introduce a cancellation fee or partially refundable downpayment at the very beginning to prevent customers from being flaky. For example, if a customer cancels within a day, the cancellation fee can be smaller or the downpayment 100% refundable. However, if a customer cancels a month in advance or on the day of the move, you can add a stipulation that there is a large cancellation fee. Also, you can maintain that there is a partially to non-refundable deposit. While the rest of the amount may result in a refund or chargeback, at least you were compensated for your time and losses with these protective rules. Moving Industry
Also, make sure that contracts are deeply understood by all parties. Have everyone reading the contract verbally agree to the initial parts of the contract as it is being read over. This means that they have read and understood the terms by initialing each segment. This can prevent legal battles and additional issues much later on in the process. Moving Industry
Regulatory Compliance
The moving industry has a plethora of state and federal regulations that moving brokers must comply with. This can create issues with various jurisdictions across multiple regions. Staying on top of all these regulations can be troublesome, especially when concerning licensing, insurance agreements, and contracts. Data protection and privacy laws also differ across states. Equipment and vehicle standards also fall under different regulations by state. For example, a customer who is moving from one state to another may be under a different jurisdiction from the state where your moving brokerage is located. Moving Industry
Solution? Keep in Touch With a Good Lawyer or Policy Advisor
You can often receive free advice from an attorney who specializes in transportation legal issues since they see you as a potential client. They will especially be helpful if you do wind up in legal trouble, and with in-depth knowledge of your situation, can best represent your case. Also, you can consider reaching out to the Federal Motor Carrier Safety Administration directly to get direction on state and federal policies to prevent non-compliance. They have an information line that allows you to ask questions on any relevant topic. Moving Industry
Read Also:
Efficient Payment Solutions for the Moving Services Industry
So You Were Just Denied A Merchant Account. What To Do?
Moving brokers are often plagued with obstacles that prevent them from accessing traditional merchant accounts, where it is near impossible to find an instant approval merchant account with a 99% approval rate. edebit Direct will accept high-risk payments for your high-risk merchant account. We are one of the top alternative payment methods for a moving broker merchant account. Some of the biggest moving brokers in the industry work with us. So, if you think you don’t qualify for a merchant account, think again. We provide ACH payment processing to businesses in high-risk industries. Moving Industry
For more information on how to eliminate chargebacks and overcome other operational issues, schedule a free consultation with our industry expert. Sign up to join the series on Moving Broker Business Success, which includes topics on regulatory compliance, reputation building, and contractual disputes. Until next time, stay forever lucrative.