It is a well-known fact that, some industries have higher prices than other, when it comes to the ticket value of their products or services. There is nothing new about this. To put it in simple terms, an organisation that sells clothes will end up having smaller individual order charges than an organisation that deals with high end products e.g, white goods, electronics and the likes.
These high end dealers may have lower individual transactions than someone who deals with clothes or items of smaller value. Obviously, the logic seems quite simple. But this is not the same logic that a credit card company uses to approve an application for a merchant account from a business dealer.
The rule of thumb that payment processors use is, be wary of business houses that deal with high average transaction charges. What seems like a highly profitable business transaction to a lay man, to the credit processing company, these imply high risk.
Are you wondering why this is the case? Well, for starters, if the customer happens to get unhappy about the product or service, the chances are less likely that he will take action when the cost of the product is not high. This may not be the case when the customer has purchased something really expensive.
Then, of course, payment processors have to always keep in mind the dangers posed by fraudsters.
Online Merchants
Any authorised net payment gateway account, will allow you to accept credit card payments from websites and the funds get automatically deposited into the merchant bank account.
These payment processing gateways typically accept payments made by major credit card companies like:
Visa; MasterCard; American Express; Diners Club; JCB
Signature Debit Cards
Digital Payment Solutions like Apple Pay; PayPal; Visa Checkout
Online Merchants assist in the entire compliance requirements by storing sensitive and confidential customer data on their secure servers.
Customers also feel much safer with regard to their data being secure.
This apart, online merchants support mobile applications that allow for customers to make payments while they are on the move. They provide free virtual terminals that facilitate payment information to be manually entered.
These apart, the online merchants also tend to offer
Online support.
Toll free phone assistance.
On line chat
Web from email.
Faced with the scenario that your merchant account application got denied or rejected? Not to worry. This is quite a common situation.
One reason for denial could be that, probably your merchant service provider has higher underwriting standards than others. Always keep in mind, that obtaining high risk merchant accounts will come with restrictions/ limitations on the volume that you can process, and, in some cases a reserve fund may also be created that hold back a certain percentage of every sale to cover for any potential chargebacks.
Some of the other reasons for your merchant account application getting denied or shutoff can be categorised as under:
Bad Credit – Probably the most common reason for denial.
Age of the organisation – The newer you are, the higher the chances of being shutoff. Your credibility will be questioned.
Type of Company – Certain types of organisations are at a higher risk for being rejected. These include:
Websites handling pornography
Websites dealing in arms and ammunition.
Online gambling
Multi-level marketing organisations
Group buying websites
Discount Memberships
Gym Memberships
Membership clubs
Nutritional Supplements
Do keep in mind, that on your merchant account application, be modest and alwaysask for minimum processing value. Once your volume picks up, you can always ask for an increase at that time. The essence is to build up trust.
It always works to your benefit, if you are a start- up firm and accept credit card payments from customers. More so, if your new venture is a website or an e-commerce business platform, your need for a merchant account is very crucial.
But getting your merchant account application approved, especially if you are astart-up firm can prove to be tricky. This can be either due to the fact that you do not have any prior credit card processing history; or you do not have a really great credit score or simply because of the fact that you do not have the best financials.
You will face additional challenges, in the event that your enterprise is categorised as high risk and you need a high risk merchant account. This may lead many newly established companies to take to third party processing. But, this can turn out to be more expensive, complex and can tie up cash flows.
Very often cash flows become a trouble spot, if your new enterprise needs a point of sale(POS) equipment or a credit card terminal, as these instruments are quite heavy on your pocket.
An offshore merchant account is quite much similar to a regular merchant account. The only difference being, it is set up with a bank outside your home base. An offshore merchant account does not require your enterprise to be located in the same geographical location, as the merchant account itself. These offshore accounts work well for high risk industries such as
Multi- level marketing
Financial Services
Tech Support and many others.
Entrepreneurs who require offshore merchant accounts can be broadly categorized as under:
When the organisation deals with online sales of products that are declared to be illegal in a particular country.
The registered address of the enterprise or business is located in an offshore location.
A low ranking credit history.
High volume of sales.
Higher refund frequency.
A domestic merchant account implies that a bank in your own geographical location provides settlement services for all your business transactions. The advantages of this type of an account are:
Easy to use.
Quick Funding time – Typically varies between 24 to 72 hours
Fees for a domestic merchant account is considerably lower than an offshore account.
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