The Best High Risk Merchant Account
A merchant account is an essential part of any business, both online and offline. Companies need to accept payments and the most popular method of paying for products and services is by debit and credit cards. Some businesses will apply for a merchant account with the bank they opened their business bank account with while others will want lower rates and fees. For a business to be approved and setup with a merchant account it is a fairly simple process. Merchants will submit an application along with supporting documentation and within a couple days they will receive an account approval; couldn’t be any easier. However, complications arise for companies when their business is considered high risk.
What Is High Risk?
Companies are categorized as high risk for a number of reasons. Most of the time it is the merchant’s industry however; sometimes it is the business itself. The most popular high risk industries include; nutraceutical, pharmaceutical, credit repair, PC support, forex, online tobacco and ecigarettes. No matter where your company operates in the USA, these industries are always considered medium or high risk and require a specialized payment processor.
Specific businesses will find themselves considered high risk by banks and payment processors in a handful of different situations. These situations are fully controllable by the merchant (even if they do not agree) and normally poor business and financial decisions lead to this labeling. They include; bad personal credit, a previously terminated merchant account, bad reviews, high chargebacks and high risk sales models. Merchant accounts are available to companies based domestically and offshore; no matter why they are categorized as being high risk.
Historically, businesses considered high risk by their industry only are usually approved easier than individual businesses with poor history. These more sought after high risk industry businesses that operate with low chargebacks and minimal negative reviews make the approval and boarding process much easier and are considered a better risk for the payment processor and bank.
High Risk Merchant Services Customer Support Call Center
The Global Pay LTD call center provides; merchant and customer support via; telephone, email ticketing and online chat services, 24 hours a day and 7 days a week in several languages. Merchants are able to outsource all or portions of their support center needs with a fully customizable payment processing support solution. Our support centers are affordable and scalable to help increase performance and boost growth.
Support solutions include:
• Customer inquiries
• Disputes and chargeback management
• Fraud detection and investigation
• Back office support
• After hours support (24/7 support)
Global Pay’s High Risk Merchant Accounts
Global Pay LTD will assist your company and guide you through the complete process. The initial consultation takes less than 30 minutes and allows the account representative to get a feel for the merchant’s business. It is very important that the business is completely honest with the representative since there are solutions to most issues and hurdles facing troubled merchants but the representative needs to be aware of them if he is going to navigate the company around them.
Global Pay will present your business with the possible solutions that are available; normally by emailing the application to the merchant (the majority of payment solutions offered by Global Pay only require one application, not multiple applications). Once the application is completed and submitted with the required supporting documents (ID, voided check, corporate documents, previous processing history etc.) the application can be reviewed and fully submitted to underwriting. Most applications are approved within 3-5 business days however certain banks take longer to make their decision.
The best way for us to guarantee an approval is by submitting your complete application to a couple different banks. It is rare that Global Pay is unable to setup a company however it does happen occasionally. When you are ready to apply, it is very important to fully complete the application and submit ALL of the required supporting documentation. Merchants that keep being asked for missing documentation normally will not be approved. It looks like the business is unprofessional or they are trying to hide something. A merchant can never provide too many supporting documents. Complete applications with all supporting documentation will help to streamline the approval process.
Businesses should perform their due diligence when choosing to work with a high risk payment processor. Timely approval and on-time payment settlements are important to any business and when a merchant chooses to accept payments with Global Pay, they are making the choice to partner with an industry leader.
Best Offshore Merchant Account
Offshore merchant accounts have become more and more common for US based businesses but, have always been a requirement for non US businesses. US banks do not accept non US companies and non US signers, unless, there is an owner (with at least 50% ownership) that is a US citizen and has good credit. If your business does not fit into this template or you operate a high risk business, you will need an offshore merchant account.
Offshore vs. Domestic
Offshore merchant accounts provide companies with additional payment processing options when compared with the businesses’ domestic bank(s). It is normal for banks to tighten their risk standards annually. This is fueled by government agencies and Visa/MasterCard. Established domestic bank merchant account profits are mainly derived from their low risk retail customers, their “bread and butter” accounts. They are; low risk, low hassle and low margin accounts. The best part is that the accounts are consistent income for the banks and their sales representatives.
Certain non-US banks will venture into the offshore merchant account industry. They are looking for extra payment processing accounts and additional revenues. These are normally newer and smaller banks. Some are older banks but, the majority are newer banks. They are looking to expand their client and profit base by offering services to merchants throughout the world and the only way of doing this is by offering high risk payment processing or offshore merchant accounts.
The offshore bank is aware of the elevated risks they are accepting by handling high risk accounts but, this is the only reason why a non-domestic company would be processing payments with their bank, in their country. This becomes a win, win for all parties involved. Merchants are able to process their transactions with a trustworthy financial institution and the bank receives additional revenue from companies that they normally would never be entitled to.
Offshore banks will regularly constrict the industries and merchants they accept, similar to normal domestic banks. The reasoning for this lies in the fact that once offshore banks have a profitable portfolio of offshore merchants, they do not want to risk losing them or their license with Visa/MasterCard and become more conservative. If you operate a medium risk or high risk business with high volumes and low chargebacks, you will be accepted and it is a more favorable relationship. For ultra-high risk companies with high chargebacks, you will not be accepted.
The Tax Myth of Offshore Merchant Accounts
For years, the allure of an offshore bank account or merchant account has fascinated US citizens and businesses. The idea of low to no taxes or increased privacy has always been a selling point for offshore banks. Around the turn of the century with the September 11th World Trade Center Attacks, the financial industry changed forever. KYC (know your customer) became even more scrutinized under the guise of preventing; terrorism, drug cartels and money laundering. Certain countries and offshore banking centers were forced to “cooperate” with the US government by having their clients sign IRS W9 forms or closing their account(s). Many years later, nearly every country has agreed to furnish W9 forms to the IRS while other countries avoid accepting US citizens altogether.
Offshore merchant accounts (for US citizens) are technically any non-US merchant account or any merchant account that is not based within the country the business is located or incorporated. For certain US based businesses, the appeal of an offshore merchant account goes far beyond the flawed idea of avoiding taxes (which does not really exist anymore unless you are a large company with physical offshore facilities). These US businesses require a merchant account because of the industry they operate in. The majority of the time, businesses search for offshore merchant accounts because their local banks will not accept their business type. These industries include; pharmaceuticals, nutraceuticals, forex, binary options, credit repair, debt collection and gambling, to name a few. The higher the risk, the fewer the number of banks are that will accept the business.
Offshore banks are individual in their risk tolerance and what they deem to be good accounts and industries. One offshore bank may be very profitable with a certain industry and is interested in accepting similar businesses. While another bank may have lost their shirt with companies in the same industry and has now prohibited them from their portfolio. The only way to find the best offshore merchant account for your company is to enlist the services of an offshore payment processor, such as Global Pay LTD.
Everything You Have To Understand Regarding High Risk Merchant Accounts
There are specific kinds of businesses that are regarded as high risk with regards to credit card processing and merchant accounts. Many different factors are used to work out whether or not a company should be regarded as posing a high risk. These factors are mainly based on the kinds of services and merchandise the company sells and how they decide to sell these services or products. For example, a lot of online transactions are regarded as posing a high risk as these transactions are linked with a higher risk of fraud because the EMV chips can't be utilized to ensure that a transaction is more secure.
In short, a high risk merchant account is almost like the kind of credit card that you will qualify for if you unfortunately have a bad credit history. You might be glad that you can now afford certain purchases, but the high interest rates and other charges will make it more expensive. Well, a high risk merchant account works almost in a similar way, but from the point of view of the seller.
Which Companies Are Regarded As Posing A High Risk?
One of the main factors used to work out the risk of a company are the odds of chargebacks that can include both fraudulent transactions as well as customer refunds. A merchant account service provider will evaluate the level of risk to figure out how many chargebacks your company will likely have to deal with.
Most of the companies that are regarded as high risk are the ones that receive advanced payments such as ticketing services for different types of events or travel agencies. Businesses that also receive advanced payments for subscriptions such as adult entertainment sites and online casinos also fall into this category. So, if your company sells legally questionable products or services, it could mean that your application for a merchant account can get rejected.
Also, banks can frequently be cautious of offering credit card processing services to companies that could be a risk to their very own reputation and may then consequently regard such a business as high risk.
The following kinds of businesses are examples of companies that are deemed as high risk:
• online dating services
• IT services like web hosting
• tech support
• online auction sites
• online prescription services
• dietary supplements
• debt collectors
• herbal supplements
Apart from the kind of industry that the business operates in, there are two other key factors that are also taken into account to work out the risk posed by the business. One factor is its credit rating and the second factor is how long the company has been in business. Those merchants who unfortunately have a bad credit history frequently wonder why their own credit history is so important. Well, the reason is that a merchant account is a type of credit as the merchant gets paid by the bank prior to having actually collected the money from the customer.
So, in short, credit card payments to a merchant are regarded as a type of loan for a brief amount of time.
Unfortunately a merchant account provider also faces the risk of fraudulent transactions by a merchant with bad intentions. Therefore, the credit history of a merchant is one manner to calculate out the risk of engaging in business with a possible merchant.
Though, if a merchant has a bad credit history it is not completely the end of the world. Such a merchant should make contact with a processor that concentrates on providing high risk merchant services that can adjust their services to high risk merchant account processing, although it will be at a more expensive rate than your conventional merchant account will charge you.
Companies that are relatively new in business, even those that do boast a good credit rating, are also usually regarded as high risk. Though, when a company is more established and boasts a decent credit rating, it is in fact possible in certain instances to get rid of a high risk rating and get classified as a "normal" merchant. Your merchant account provider will want to see how many chargebacks you have had previously. If your company has had fairly few chargebacks then your merchant account provider could reach the favorable conclusion to switch your account to a low risk.
If My Company Is Regarded As High Risk, Why Do I Require A Merchant Account?
When you want to accept credit card and debit card transactions, you will need to have a merchant account. Yes, there are alternative online pay services available, but the percentages that are charged by these online pay services are typically more than what you would have to fork out if you had a high risk merchant account.
If you are looking around for a merchant provider, ensure that you look very closely at the small print of the contract. Read through the entire contract very carefully and if there are any fields whatsoever that you are not completely sure about, ask the merchant account provider to explain what it means to you.
High Risk Credit Card Processors
So what is a high risk merchant exactly?
A high risk merchant is a particular kind of company that has more chargebacks than normal as well as higher risk of returns or disputes than what is regarded as average. If your chargebacks exceed more than 1% of your total sales per month, high risk processors generally regard it as too high. Apart from a company's chargeback percentage, a merchant acquiring bank also looks at whether or not a high risk merchant account is potentially involved in any legal contraventions for advertising and/or selling specific kinds of products and/or services as the processor or bank could then face financial liabilities for processing or just get a bad name for welcoming specific kinds of business.
The following types of merchant companies are in fact regarded as high risk:
• tobacco products
• dating services
• travel agencies
• adult merchandise
• stock trading
• diet programs
• replica products
• online membership clubs
• online computer sales
• debt services
• online auctions
A high risk merchant account processor can help merchants from all four corners of the globe to sell their services and/or products. For example, the team at Global Pay LTD can assist merchants in opening a direct high risk merchant account with their very own descriptor. Plus, they enable mail order/telephone order (MOTO) merchants and Internet merchants to accept several types of secure payment methods directly via a website or their virtual terminal platform.
How long before I get approval for a high risk merchant account and can start processing?
Well, how long this entire process will take depends on things like when all the paperwork and other relevant documentation have been received.
The documents that are required for the application process are usually the following:
• Memorandum of Association of the company that is applying
• a copy of the passport of the director or authorized signatory of the company that is applying
• a copy of the newest bank account statement (also, if it is available a voided check)
• the credit card processing statements for the last six months
• a screenshot of the pay page
As soon as all the documents that were required have been received, getting your high risk merchant account approved usually takes about one to two days and what is more, a merchant will typically be able to start processing at once. Though, bigger accounts or those that pose more risk can take longer (as long as 14 days) before they are completely integrated and ready to start processing at every single one of their locations.
Just remember to make sure that all the info that you have provided is correct. Also, be sure to double-check that all the copies of your documents are in fact clear enough to read.
How long will the high risk merchant reserve be held?
Firstly, the high risk merchant reserve refers to the amount that is held back from your available funds after it has been cleared. This reserve is usually anything from 5% to 10% of the monthly sales volume of the merchant’s approved volume.
So, why is there a need for something like a high risk merchant reserve? Well, basically a merchant processor keeps this amount as protection against possible losses that could be caused by merchant fines, uncollected fees, exorbitant chargebacks and so forth.
Though, a word of warning - a high risk merchant reserve can be held for anything from six months (in other words 180 days) under the high risk merchant account’s rolling reserve feature.
What if I run a startup business, can I also get approval for an offshore merchant account?
High risk acquirers can approve or deny a business for an offshore merchant account on an individual basis. So, at the end of the day, if you are the owner of a startup business there are certain things that will be important. These can include how strong your business plan is, how you anticipate to promote sales, the background of other principals in your company and how you service and supply all your clients.
What if a business or the owners of the business have been listed on the MATCH list? Would the business still be able to get approval for a brand new merchant account?
There is some good news as it is within the bounds of possibility. Every single high risk processor will assess the risks on an individual basis. Although, getting approved for a high risk merchant account cannot be guaranteed under these circumstances. Though, merchants can rest assured as expert employees will go to great lengths to get you approved for the merchant account that you require so that you can operate your company.
What will be needed to get approval for your own merchant account and your own descriptor in the event of individual merchants who use a shared merchant account?
It will all be contingent on the size, risk and category. A merchant can get his or her own custom descriptor as soon as his or her individual merchant account has been given the green light to start accepting credit cards.
Will a merchant account be able to process transactions in multiple currencies?
An approved merchant can enjoy the benefits of multiple currency settlements. So, yes!
More About Global Pay LTD
The team at Global Pay provides those merchants who are not PCI DSS compliant with the chance to process card transactions. Their international card portfolio currently has the following cards:
• American Express
• Diners Club International
Some of the other features that they boast that will help to keep your business protected are CVC check, 3D Secure, Address Verification Services, soft/dynamic descriptors and delayed settlement.
Their team can provide you with customized answers to boost your product and are dedicated to bring all the clients flexibility as well as improved financial payment processing.
High Risk Merchant Account Alternatives
Every single kind of business requires credit card processing that is trustworthy and cost-effective. Though, there are only a few high risk merchant account providers and to make matters more challenging even fewer high risk merchant account providers that do provide cost-effective high risk credit card processing that you can count on. The reason for this is that the field of credit card processing is mainly concerned about the unpleasant possibility of chargebacks. On top of that, there are specific types of companies that are historically linked with more chargebacks. As credit card processing is not a high-margin industry, all the merchant account businesses do not have any other option but to regard every company that operate in a so-called high risk field as a high risk business, irrespective of the actual chargeback risks posed by the individual company.
This means that if you have applied to open a merchant account for your company and your company falls within this high risk category, the chances are good that your application will be denied by conventional low risk credit card processing businesses. Though, it is not all doom and gloom. You can rest assured as there are in a fact some great businesses that concentrate on high risk merchant accounts.
How Do Merchants Get Defined As High Risk?
There are several characteristics that define high risk merchants and to make things even more complicated the arena of high risk e-commerce is constantly changing. If a bank classifies a company as high risk, it can in fact be because of many different things for example:
1. a startup company that does not have a long credit card processing history
2. an industry that has gotten a bad reputation because of high rates of returns and chargebacks
3. services or products that are based on subscription (such as magazines or online dating)
4. any merchant who has had a bank terminate their merchant account
5. a history of bankruptcy
6. bad credit
7. your company is targeting a specific region or country
8. high-volume companies like nutraceuticals
Local And International Solutions
A possible solution to your problems is the team at Global Pay LTD. They deal with a couple of sponsor banks that offer both local and offshore high risk merchant accounts. If you are interested in opening a domestic high risk merchant account, your business operations can be based across the globe, but you will need to have the following:
1. a company entity (can be offshore or in the United States)
2. a company rep who is either located in the United States or abroad
3. a business bank account.
If you are interested in opening an offshore high risk merchant account, your company can be located anywhere and there is no need for a UK or US rep. Though, you will have generate at least $15 000 (USD) every month in sales to qualify. Plus, only MOTO or online transactions are allowed (in other words no card present swipes).
Global Pay can make merchant accounts available to a wide range of high risk companies (whether you are a startup or an existing business).
This category of high risk usually includes companies that:
1. have been denied on previous occasions
2. have been dropped by a different processor
3. face high chargebacks or are regarded as a bad credit merchant
4. have long lead times prior to delivery
5. have large tickets
If you decide to partner with Global Pay, the following advantages are just some of the perks that your high risk business will get to experience:
1. in-house expert underwriting
2. discounted rates that normally range from 1.9% to 7.95%
3. authorization rates that range from $0.20 to $1
4. monthly costs that can range anything from as little as $5 per month to $210 per month
5. the possibility of a month-to-month contract
6. no application fee
7. instant approvals
8. acceptance of multiple currencies as well as deposits
9. compatible with the majority of gateways as well as shopping carts
10. compatible with more than 50 processing gateways
11. eCheck processing
12. 3DS processing
13. prevention of chargebacks
14. assistance with regards to integration with more than 100 shopping carts
15. acceptance of MasterCard/Visa/American Express
16. MOTO accepted
17. swipe accepted
So, if your high risk company operates within the gambling, software, travel, legal, tobacco or adult entertainment category, you will be glad to know that you can turn to the team at Global Pay LTD.
The team at Global Pay has been offering quality high risk merchant services since 2005. Plus, during this long time that they have been in the business, they have managed to stay up to date with all the latest changes and regulations.
Some of the industries for which Global Pay provides payment processing services are:
1. Internet gambling
2. Adult entertainment
3. Tech support
6. Online dating
7. Online casinos
8. Penny auctions
If you decide to join forces with Global Pay LTD, the following are just a few of the advantages offered by their high risk merchant accounts:
1. A bigger selection of acquiring banking solutions
2. 3D Secure
3. Fraud protection tools and measures such as SSL certificates
4. Offshore and international banking with fewer trading limitations and possible tax advantages
5. Multi-currency processing
6. Live customer support by highly skilled merchant account managers
High Risk Merchant Services Financial Consulting And Management
Every company is aware of the importance of payment processing, especially online companies. There are many different options when a business goes searching for a payment solution. Some businesses easily find merchant accounts while others are not so lucky. High risk merchants are among the merchants that are considered “not so lucky.”
Merchants labeled as “high risk,” have an unending battle of; finding, setting up and keeping merchant accounts. Merchants will use multiple accounts to spread their processing volume (and risk) if one of the accounts is closed. The difficulty is for merchants who require consistent support with their payment processing solutions.
The payment processing industry is very confusing and constantly changing; from the terminology to the technology and regulatory requirements. High risk merchants need a payment processing professional that will help guide them through this every changing industry. If your team requires complete guidance with finding and integrating new processing solutions or just an additional processing solution, Global Pay LTD can help.
Payment processing consulting meetings are available by; email, phone, Skype or face to face.
Consultations include but are not limited to the following:
• Analysis and written reports
• Debit and credit card processing solutions
• Echeck and ACH processing solutions
• E-commerce services
• Gift card and loyalty programs
• Specialized equipment
• Merchant support and training
• Customer support and training
• Customized online reporting
• Fraud prevention and education
• Seamless integrations with no downtime
High Risk Merchant Account Payment Gateway
The Global Pay gateway provides online merchants with the ability to connect multiple banks and acquirers to their business/website and accept payments from all credit and debit cards. Setup is simple and only requires the merchant to integrate into one gateway. In addition to a normal payment gateway, the Global Pay platform offers a number of tools for; customer relationship management, accounting, payout management and fraud controls.
So What's A Merchant Account Payment Gateway Exactly?
Your company can process credit card orders via its website conveniently in real-time with the help of an Internet payment gateway. In more basic terms, it is like an online cash register or a credit card terminal for your company's website and it works in a similar fashion to the ones you see in the stores that opt to operate conventionally.
Merchants are able to manage their client’s support tickets with ease. Customized reporting makes accounting a breeze and allows businesses to keep a close eye on all transactions in real-time. Payout management to clients is recorded in the gateway to maximize efficiency and limit client inquiries on payout schedules and payout reports. Fraud controls are provided with a full suite of options, allowing merchants to activate and configure the controls that are relevant to their business.
This payment gateway can be integrated with just about every virtual shopping cart and site. With the help of a virtual shopping cart, customers can select all the different items they would like to buy. Then, when they proceed to the checkout, this shopping cart will add up the total amount that is due (including the tax and shipping costs) and gather the billing and shipping details of the customer.
Next the payment gateway will capture the transaction that was made via credit card, conceal the data of the transaction by converting it into a code, send it to the relevant processor in order to get authorization and then reply with a notification stating whether it has been approved or declined.
Though, merchants should guard against adding too many third-party badges to their checkout pages. If you do this, it will only congest your page. Therefore, it is important that you take the time to determine what will be suitable for your online store or simply just include the main ones such as Visa, MasterCard and Discover.
Three Easy Steps
In short, there are three steps that online payment gateways perform whenever a customer buys something from your website with a credit card. These steps are authorization, settling and lastly reporting.
Step One - Authorization
The credit card issuer has to authorize all purchases that are paid for with a debit/credit card via the payment gateway first. Your payment gateway verifies if the card can be accepted and then a secure connection gets created between your company, your customer/client and your credit card processor by the payment gateway. Thanks to this process, the transactions get processed quickly and efficiently. On average, the response time only takes one or two seconds!
Step Two - Settling
Settling happens at the end of the day. During this process, your Internet payment gateway combines all your transactions and then forwards these to your bank in one cluster so that you can get your payment.
Step Three - Reporting
Every single transaction gets recorded. This convenient process enables you to view or download your transactions. Alternatively, you can also use the payment gateway reporting features to print out a copy of your transactions.
Different Kinds Of Payment Methods And Gateways
It is key that you determine which type of gateway will serve your online business best since there are different kinds of gateways available. For instance, a few payment gateways make available an external service and other gateways provide a direct service. PayPal is an example of an off-site payment gateway. With PayPal, your clients or customers get directed away from your online store so that they can conclude the checkout. In other words, whenever your customer clicks on the icon of PayPal in order to make the payment, he or she will be directed to a page of the actual PayPal site and then once that is done, then back to your online store's website to confirm.
Then you also have on-site payment gateways. With the use of an on-site payment gateway, a customer can complete the transaction without having to be redirected to a different site. This type of gateway empowers you to set up your very own checkout page that is secure enough to process any payments from. Why is this a great way of doing business? Well, thanks to an on-site payment gateway your customers will get to enjoy a very smooth experience.
Benefits Of Using A Payment Gateway
The Global Pay’s gateway features unsurpassed performance, with the capability of handling over 90 transactions per second, a mandatory requirement in the business enterprise environment. Transactions can be batch uploaded or individually processed. Depending on the size of the company, merchants will choose the level of their involvement with integration and management. Global Pay will host the payment gateway or the merchant is able to host the gateway on their servers. Global Pay will provide any level of customer support and technical support, one-time or on a regular basis. It is all up to the merchant.
One of the biggest perks is that unlike with conventional terminals that can only process a single transaction at the same time, there is not a restriction on how many customers can use the Internet payment gateway simultaneously. On top of that, you can also offer your customers more options. When you display various payment options, your customers will be more inclined to proceed to checkout as it will be easier for them to pay you. Also, if you are fortunate to have customers who shop frequently at your online store, you can charge their credit cards on a recurring basis. This feature is sure to let you rest assured.
Payment gateway redundancy is a top priority at Global Pay LTD. Merchants are easily able to nominate certain merchant accounts or backup alternatives during scheduled downtime and unscheduled payment network outages. This is especially important in the high risk environment when a bank or acquirer has frozen one of your merchant accounts and unless it is automatically switched to a different one, your company won’t be able to accept payments.
Fraud detection is a crucial part of any payment gateway, however; what happens when one of the filters fails? Global Pay has a multi-tiered fraud detection and minimization system to verify that all transactions are real.
Thanks to fraud screening tools such as card code value (CCV), card verification value (CVV) and address verification service (AVS), fraudulent transactions are less likely to happen. Also, by keeping the credit card transactions in your gateway and not on your website, your liability gets reduced as well.
Lastly, payment gateways are also really handy for telephone transactions or orders that you receive via the mail thanks to the fact that you can enter all your transactions manually.
When you would like to transform your standard website into an online store, a payment gateway is definitely essential. Any merchant who wants to increase his or her online sales is able to welcome transactions of higher value without any issues.
Commerce has modified the manner in which consumers shop and how they complete transactions online. In this day and age, electronic funds transfer (EFT), online payments and even digital currencies such as Bitcoin are included as ways to pay! This means that the manner in which merchants can collect their payments will have to alter dramatically.
So, be sure to include a payment gateway in your checkout procedure, because by doing this you will guarantee a buying experience that is both smooth and secure. Ultimately this will mean that your valuable customers will be able to pay for your products or services with a lot less fuss. Are you all set up to process online payments yet? Contact Global Pay to find out more information on opening the right payment gateway for your business.
High Risk Merchant Account Risk Management
How Is Fraud Detection Important?
Fraud detection is paramount to any online business and Global Pay LTD has you covered with a suite of robust fraud detection protocols for identifying fraudulent activity. Fully customizable, merchants will have the option to evaluate such elements including; customer’s internet address, transaction amount, number of transactions and speed of transactions. Post transaction fraud assessment is another important feature, which allows businesses to scrub transactions that have been approved for verification prior to providing services or products. In addition, companies have the capability of enlisting the services of their own third party fraud services.
Customization is one of the most important features of any fraud detection and scrubbing system. What works for one merchant might not work for another merchant. Different businesses have different price points and customer bases that “Universal” fraud filters are unable to adapt to. Fraud filters are required to be tweaked regularly to maximize the number of real transactions while minimizing the number of fraudulent transactions.
Automated Clearinghouse (ACH) Delays
Most electronic transactions get processed by an automated clearinghouse (ACH). Thanks to this, you can use one bank for your merchant account, another bank for your business checking account, while various other banks can look after your transactions with your clientele. The United States Government manages this clearinghouse system. Though, ACH processing includes a delay (typically this is only two to three business days) before the money that's paid to your company will be available in your checking account. Consequently, you will have to take this delay into consideration, plan your cash flow appropriately and ensure that all your deposits are still completed punctually.
To accept merchant accounts that are regarded as high risk or high volume (like online stores or merchants with unsatisfactory personal credit), a merchant bank might add an extra ACH delay. So, prior to signing a contract with your credit card merchant account provider, make sure you are aware of the delay.
So What Is The Role Of A Fulfillment House?
Well, it is a business that ensures the back end of your company operates efficiently. Their team will record your orders via a toll-free number, take care of any credit card transactions, pack the orders and then ship the orders. In other words, the only thing that you will have to concentrate on is to sell your products.
However, as one would expect, there is a drawback. The fulfillment house will receive a percentage of your sales. This cut is more or less two (or even three) times the percentage that you would have to pay for a merchant account. Plus, in many cases, they only offer credit card processing for any sales that were received via the toll-free line. This means that you will have to find a different way to process your credit card sales received via the Internet.
A Few Things To Consider Before Deciding On A Fulfillment House
Here are a few questions you should ask yourself:
• Do my products need any special care with regards to packing or storage?
• What is their policy for merchandise that gets damaged during shipping?
• After they have received an order, how much time does it typically take to pack and ship the order?
Is My Return Policy Really Important?
The majority of merchant banks will instruct your company to create a return policy. This return policy should be shared with the customers prior to the sale and should also be given to your merchant account provider. In addition, numerous companies print this policy on their receipts as well, in an attempt to prevent any confusion.
When you communicate your return policy to your customers prior to a purchase in clear terms, it can assist in preventing any chargebacks. On top of that, if there is any dispute, your case will also be strengthened. You can also ask the customer to indicate on the order form that he or she does indeed agree with your return policy. It is up to the customer to read it, but it shows that you have made a genuine attempt to make your return policy available to them. A few good things to include in your return policy are the process that should be followed when asking for a refund, the time frame for offering refunds etc.
At the end of the day, managing your chargebacks calls for honesty, consideration, describing your products correctly and replying to customers quickly.
The Threshold Of Merchant Account Chargebacks
When your merchant account receives a lot of chargebacks, your account will pose more risk to the merchant bank. A chargeback is when one of your credit card transactions gets reversed in the event that there was an issue with processing the transaction. A few common reasons for a chargeback are customer disputes, processing issues and fraud.
Thus, a lot of chargebacks are frequently a sign that the merchant is struggling with customer service or the quality of the products. Your merchant bank can close your account in the event that you reach the chargeback limit. So, reply quickly to any customer disputes and attend to other things that could lead to chargebacks.
Therefore, when you look around for a credit card merchant account, pay attention to what the threshold is (normally 1-2%) of the bank with regards to chargebacks. There is not a single merchant that can prevent chargebacks completely, though when you are informed about the threshold, it will assist you to put measures in place to manage the chargebacks.
It is also a good idea to check if the merchant bank has a division that is devoted to chargebacks as these staff members will be able to assist you in case of any customer disputes. Any great merchant bank will regard managing chargebacks as important and will offer some form of chargeback protection to their clientele.
A holdback is a percentage of the credit card merchant account's receipts that the merchant bank keeps to take care of potential chargebacks. Though, rest assured, the holdback is returned after a certain time. However, usually a merchant bank does not include any interest on this percentage and your company also can't use it during this time.
If I Have Bad Credit, Will I Be Able To Open A Merchant Account?
When your credit history is not too great, you could find it difficult to open a credit card merchant account, especially when you are looking for a high risk merchant account like an online store. A possible answer is getting a secured account which means that you will have to give a specific percentage of your money or sales to the merchant bank that will then act as security.
Though, as soon as you have showed that you are in fact creditworthy over a specified period, you could be eligible to get a standard merchant account.
High Risk Merchant Account Transaction Management
Global Pay LTD’s system allows merchants to incorporate all of their processing partners into one payment gateway. Only one payment gateway integration is required. All data is available in the payment gateway including; customer relationship management interaction (receiving and responding to support inquiries) and transaction information (sales, refunds, chargebacks).
Customer relationship management, all in one central location, helps merchants exchange support inquiries and responses with their customers, both quickly and efficiently. Managers will be able to review all support inquires and confirm they have been resolved.
Transaction management is vital to any company using multiple merchant accounts. Global Pay LTD provides transaction management services to help automate the process of spreading sales over several different merchant accounts. Businesses have the ability of fully customizing their transaction management settings to fit their individual needs. Taking a business’ merchant services to the next level.
What Are Merchant Services All About?
Merchant services are also known as credit card processing and deals with electronic payment processors. Some of these merchant processing activities include retrieving sales info from the merchants, obtaining authorization for transactions, getting the funds from the bank that issued the credit card and forwarding the payments to merchants.
A Little Bit About The History Of Merchant Services
Merchant services have changed drastically over the years. In the old days (when life was still a lot easier), merchant services relied significantly on the personal relationship that existed between the merchant and the customer. However, there was a need for merchants to be able to extend credit to those customers whom they did not know without making themselves vulnerable to risk.
So, because of this need, the earliest form of a credit card (known as the "Charg-It" system) was launched in the 1940s. Then, about a 10 years later, several financial institutions started credit programs that included a "revolving credit" service. However, since many banks begun to launch their very own credit programs, the customers grew tired of having to carry so many cards from all the different banks and, on top of that, merchants had to interact with too many financial organizations.
To address these challenges, several banks joined forces to create "Card Associations". In fact, both Visa and MasterCard can be traced back to one of the most popular card associations. This new system meant that there were at all times two banks taking part in the process. The "issuing bank" represented the cardholder and gave credit to the customer, while the "acquirer" represented the merchant. The merchant must have an account with the "acquirer" and this account is called the merchant account. Over the years this system has become more automated and cost-effective as electronic payment systems were introduced.
Visa and MasterCard remain two distinct companies, but today all the banks belong to both associations. Though, Visa has grown and taken charge in credit card technology. Today they boast more than a billion cards that have been issued and deal with more than half of all the credit card transactions that are completed all over the globe.
The Transaction Process
Services or products are bought by a customer from a merchant.
The info gets forwarded to the acquiring bank via a wide range of ways such as standard terminals, processing software and payment processing gateways.
The transaction gets routed by the acquiring bank to a processor and one of the associations, for example MasterCard or Visa.
The transaction gets routed by the particular association system to the issuing bank to ask for approval.
The particular issuing bank replies with a response. When the holder of the card gets approval, the issuing bank will give and send an authorization code to the association.
The particular card association sends the authorization code to the acquiring bank.
Now the acquiring bank sends the approval response/code back to the terminal of the merchant. The terminal of the merchant can print a receipt for the customer to sign (however, this will depend on the sort of transaction or merchant).
The customer gets billed by the issuing bank.
To conclude the transaction process, the customer pays the account to the issuing bank.
More About Authorizing A Transaction
In order for a sale to be processed, a merchant must get approval from the bank that issued the card. Why? Well, this process helps to safeguard a merchant from fraudulent cards and aims to prevent approving transactions of people who have failed to settle their accounts or have exceeded their credit limits.
Usually a credit card will be swiped to gather the info that gets stored on the card's magnetic strip. This info then gets forwarded to the processor/merchant bank that will log the transaction and send the info to the bank that has issued the card. This transaction will then either get approved or declined and the verdict will be sent back via the bankcard association network to the POS terminal.
Settlement Of The Funds
The term 'settlement' is used for the actual transfer of the money to a merchant. Merchants will usually review all the credits, voids and specific day's sales at the end of every day.
What Is The Interchange Fee?
Every time the cardholder swipes his/her credit card, the merchant must pay a percentage of the transaction (most of the time this is known as a discount fee). Factors such as the nature of the business and involved risk will influence the fee that the merchant must pay. As the issuing and acquiring banks take on the risk of each transaction (like late payment, fraud and so forth), merchants get charged with this discount fee. So, in order for merchants to get their money, the acquiring bank must first pay the fee to the issuing bank. This is known as an interchange fee.
What Does Downgrading Entail?
When a transaction fails to meet certain interchange requirements like not gathering the right card information at the point-of-sale terminal or manually entering the details instead of swiping a card, a transaction can get downgraded. When a transaction has been downgraded, it means that a merchant will have to pay a higher fee.
So What Is AVS?
MasterCard and Visa designed AVS in an attempt to fight fraudulent activity that happens with transactions that do not get processed face-to-face. What AVS does is it tries to validate the zip code and address of any customer who uses a credit card. So, every time that a card gets key-entered instead of swiped, the processing system will ask the merchant to key in the ZIP code of the customer's billing address as well as the numerical part of the customer's address. The transaction will then get qualified by the processing system when this info is the same as the records of the issuing bank.
High Risk Merchant Account Dynamic Reporting And API Translation
Payment processing is a confusing enough endeavor; reporting and integration doesn’t have to be. Most high risk businesses have multiple merchant accounts to spread their volume. The confusion arises when the payment processors have differently formatted reports and APIs. The task of trying to analyze this massive mixture of data generated by; multiple payment methods, multiple processors, multiple merchant accounts and large transaction volumes, is nearly impossible. The company must spend time deciphering dissimilar reports and integrating different processing platforms. This is not the case with Global Pay. While staying in the secure gateway, users have the ability to generate custom reports with any data in their transactional history, quickly and easily.
Global Pay’s payment gateway features dynamic reporting along with API translation. The merchant will need to perform just one gateway integration. All of the company’s merchant accounts will be connected to that gateway. The Global Pay gateway will emulate the bank’s gateway; all transactions will be processed normally however the merchant will not need to login to several different gateways to spread their volume. All reports, statements and exports will be converted to a universal format, allowing for easy review and interpretation.
• Dynamic reporting to easily analyze transaction reports
• Quickly search all transactions
• Online support instructions and tools; from integration to reporting
• Dedicated 24/7 merchant support
Easily Integrated Technology
• Simple API integration for all programmers
• Many payment options available through one gateway interface
• Extensive shopping cart integration compatibility
Real-Time Payment Processing
• Process individual or batch transactions
• All payments are processed in real-time
Hosted Checkout Pages
• Quickly add payment processing to your website
• Customizable secure payment checkout pages
• Hosted pages are PCI DSS compliant
High Risk Merchant Account Transaction Reporting
The Global Pay LTD payment system features a fully customizable reporting area, providing the insight and real-time data your business needs to succeed. Merchants have the ability to generate detailed analysis on; merchant activity, customer activity, transaction approval/decline rates, terminal failure rates, advertiser activity, sales, support, settlement, fraud and chargeback management.
The easy-to-use reporting component helps provide merchants with detailed information on all aspects of their processing activity. Effortlessly process; individual transactions, batch transactions, manual payments and refunds.
Additional administrative tools include:
• Detailed sales reporting
• Statement reporting
• Revenue trends and charts
• Customer transactions and their geo-location
• In-depth customer service functions
• Detailed transaction search features
• Virtual terminal for manual payments
• Web traffic statistics
• Affiliate tracking and payments
The transaction process is a very in-depth process that takes only a fraction of a second to be completed.
Inexpensive Fees For International and High Risk Merchant Accounts
The Reason Why You Will Require A High Risk Merchant or International Account
Do you reside outside the United States of America? Are you selling products or rendering services that involve a high level of danger like adult entertainment, online gambling, functional food, or even electronic cigarettes? Well, if you have answered yes to one of these two questions, you will probably need a high risk merchant account that you can use to manage all your orders that you receive via credit card.
When your company is based in the United States of America, has a United States bank account and the person who acts as guarantor is in possession of a US social security number, your company can qualify for a domestic high risk merchant account that is based in the United States and gives you the ability to process US credit cards. Though, there are several companies that fulfill these measures, but are frequently required to look for credit card processing with banks that are not located in the United States. The reason for this is that the USA imposes tougher limitations on lines of work like gambling and so forth.
An international merchant account is not meant for processing international orders. A trader can deal with an international order with whichever trader account, provi ded that the customer or client is in possession of a debit or credit card that has the logo of Visa or Mastercard.
So, who uses an international merchant account then? An international merchant account is employed specifically by companies that are not based in the United States of America as well as by US-based companies, if their transactions are regarded to involve a high level of risk which means that banks in the United States will not underwrite it. High risk transactions include functional food (such as vitamins and supplements), adult entertainment, online casinos and gambling, software downloads, medicinal drugs and consolidation of debt to name only a few examples.
Why Your Company Could Be Regarded As High Risk
Two of the main worries for merchant processors are the higher chance of fraudulent activity and a lot of chargebacks that these merchant processors really try very hard to prevent. In the United States of America it is not as difficult to track down a trader when fraudulent activity occurs as traders who are based in the United States of America are given employer identification numbers as well as social security numbers. So, in view of the fact that a social security number is not given in other countries, the banks in the United States will in most cases not agree to underwrite a merchant account for companies not based in the United States of America. As a result, traders who are not from the United States are obligated to make use of a payment processor that is not from the US.
There are specific lines of work like functional food, electronic cigarettes, tech support, vapor stores, adult entertainment and so forth that are likely to encounter disputes, excessive chargebacks. These types of industries are in essence regarded as high risk. For example, companies that supply vitamins and supplements are known for accumulating a lot of chargebacks from unhappy customers. What often happens in this case is that the customer was unaware that he or she signed up for a subscription and then refuses to pay for the product when it arrives on their doorstep the next month.
So, those who trade in these lines of works might experience that it is essential to make use of a domestic high risk processor or a merchant processor that is not located in the United States. On top of that, factors like an unfavorable credit background, criminal history and exceedingly high volumes every month also mean more risk.
Does your company sell rare coins, jewelry or other expensive products? Well, items that constitute a big expense could mean your company is also regarded as high risk. Does your company render a traveling service or sell tickets to events like a sporting match or a business conference? "Contingency" sales like these also increase the level of risk as the client is paying for the service in advance, but the event can still be cancelled.
Are New Companies Regarded As High Risk Too?
You can rest assured. Simply because you have a startup or your company is still brand new, does not mean that you will immediately be regarded as high risk. There are countless alternatives for new company merchant accounts that do not call for a high risk credit card processor.
What If My Company Is Regarded High Risk?
You are possibly wondering how it will affect you if you run a high risk company. So, if your company is seen as posing a higher level of risk, you can also expect to pay rates for merchant processing services that are remarkably higher. Plus, in many instances you will have to deal with payments that have been delayed as well as rolling reserve funds. What is a rolling reserve fund you might wonder? It is simply a small percentage of the money that you have made through sales that the bank keeps in a separate account to use as provision for unforeseen situations like chargebacks. Merchants do receive a payout of the rolling reserve funds eventually, but it can have a significant effect on your cash flow.
When it comes to global and high risk merchant accounts, Global Pay LTD boasts really cost-effective fees and some of the quickest payments in the field. That means that even when your company is regarded as extremely high risk and you do not meet the requirements of a traditional merchant account, the team at Global Pay can still help you. Global Pay LTD offers different merchant alternatives that will assist you in managing all your payments that you receive via credit card.
Is A High Risk Merchant Account Right For Your Business?
Nowadays people are using cash less and less. A study completed in 2014 found that more than 40% of the American population prefer to use debit cards when they were paying for merchandise in-store, while more than 30% preferred to use their credit cards. In fact, less than 10% stated that they preferred paying for goods using cash.
This is also the case for online transactions. In 2014, almost 50% used their credit cards, 30% relied on their debit cards and more than 10% made use of PayPal.
This means that your company will need to be able to process both debit and credit cards in order to look after all or your clients. Yet, this is much easier said than done as several companies that are regarded as high risk by banks and other institutions that provide credit card processing accounts have in fact a very difficult time to get this service. A company will find it easier to understand the merchant account industry better if they understand why certain companies are viewed as high risk in the first place.
So What Is A Merchant Account?
In basic terms, a merchant account is a kind of bank account that a company can use to receive payments that are made with credit or debit cards. This type of account depends on an agreement between a merchant and an acquiring bank. Though, in certain cases payment processing firms can also be included in this agreement.
The bank or institution that offers the merchant account can charge various fees such as percentage-based fees or transaction fees that get determined by the kind of transaction. For instance, when a credit card gets swiped the fees will usually be lower than when it is manually keyed into the terminal. Also, the fees linked that are with e-commerce transactions are generally more.
The risk of loss influences some of the fees that a payment provider charges a company. The biggest such risk that banks can encounter when they offer a merchant account to a business is chargebacks. These chargebacks can translate to millions of dollars that can get potentially lost! Fraud, like when a client's credit or debit card gets used to buy something without his or her permission, is one of the most common causes of chargebacks.
Now if your company is regarded as posing a high risk a bank could possibly not give you a standard merchant processing account. If that is the case, the company's other alternative is to get a high risk merchant account. A merchant processor will give such an account to a company if they regard them as posing a higher risk of chargebacks. Or, when the owner of a company has a bad personal credit background he or she might also be left with no other alternatives but to apply for a high risk merchant account. Or, if your business is linked with a less-than-appealing industry like adult entertainment sites, guns or tobacco; some banks might think twice about giving you a merchant account as well and could instead ask you for more information to be able to use their services.
The following are just a few examples of high risk companies:
• Online dating sites
• Detective agencies
• Travel agencies
• Nutritional supplements
• Pawn stores
So What Happens If Your Company Gets Labeled As High Risk?
If your company has been regarded as posing a high risk, your alternatives will be very limited unfortunately and it will not be as easy for you to apply for a merchant account successfully. Or, when a payment processor views your company as very risky or even fraudulent, they may say no to you when you apply for a merchant account. Even a few companies that are generally regarded as posing a low risk can be regarded differently, in other words as high risk, when it starts to receive a lot of chargebacks. Though, it does not end there, your merchant service provider will keep tabs on your chargebacks and can label your business as high risk as soon as it starts to get more chargebacks.
So to make things easier, keep the following in mind whenever you are searching around for a provider. These useful tips will help you to get the best possible option for your business.
Find Out About Their Reputation
Although several merchant service providers provide credit card processing as a service, only a few of these merchant service providers concentrate on high risk businesses. Get a business that works transparently and boasts many great reviews and enough info about all the options that they offer to high risk merchant accounts. Ask what you need to ask and be sure to get reliable testimonials!
Study All The Terms And Conditions With Great Care
Every business owner should read the agreement with their merchant account processor with the utmost of care and ensure that he or she completely understands all the different fees that will apply. When you go over the terms and conditions carefully, nasty surprises like unanticipated fees can be avoided.
Investigate Changes In Status
Check whether or not the business that provides your high risk account can reclassify your high risk account at a later stage when your company manages to get fewer chargebacks. If you can manage to get your status changed to low risk, your company will have to pay a lot less in fees.
Market Your Company
Explain to the merchant account provider why your company should be offered a lower rate. Tell them about your business background, satisfactory credit history and so forth. It is really worth a try. After all, if you do not ask, you will never know.
Fast Merchant Account Application Approval
There is no industry standard application process with high risk/non-US merchant accounts. Each processor and each bank is different. The process of not only finding, but applying to banks, in a number of countries and regions around the globe is a very painstaking and trying job.
The Global Pay LTD streamlined application process helps to reduce the hardship of preparing application packages and handling the ongoing underwriting during the approval process.
Merchants contacting banks directly will soon realize the burden of finding new processing partners. Most banks will not deal directly with merchants while others will not support the industry the merchant is in. Global Pay works with a banking network that currently processes transactions for their clients. These are not untested solutions. Our team will understand your business and present it to the appropriate banks. The requirements will be known upfront and will be disclosed once we have interested banks.
High risk approvals are easily obtained when the merchant has provided a complete application package. Any outstanding documents are then requested and the account proceeds to final approval and setup. This process is effortlessly duplicated for other banks and processors. One single generic application allows for effortless account submission.
At the end of the day, if you want your business to succeed it will have to be able to accept payments via credit and debit cards.
Offshore High Risk Merchant Accounts
Are you looking for a high risk merchant account? Are you also searching for a provider of MasterCard and Visa credit card processing solutions aimed at those kinds of companies that are regarded as high risk? Do you require some assistance?
Well, then you are in luck! This guide will teach you practically all there is to know regarding accepting credit cards with a high risk merchant account.
In this comprehensive guide you will find advice and knowledge shared by experienced payment consultants who have assisted clients who operate in the credit repair, online tobacco and debt support industries successfully with their different payment requirements.
You will find out more about:
1. The kinds of companies that are regarded as posing a high risk
2. How the process (starting at inquiry and ending at being able to process payments) works
3. Which info and documents you will need in order to apply for a high risk merchant account
4. What must be included on your site
5. What does a high risk merchant account cost on average
6. Solutions available for offshore and international businesses
7. Centralizing reporting and load balance in the case of various merchant accounts
8. Why you should consider getting more than one merchant account
9. In which instances are reserves needed
10. The average hold period for high risk merchant accounts
11. TMF MATCH List merchants
12. Why you should be weary of online reviews
It can be rather hard for high risk businesses to get approved for a merchant account. The reason for this is that the majority of independent sales organizations, processors as well as sponsor banks that work with acquiring in the payments field do not like risk. As a result, they are just not willing to provide their services to those businesses that are viewed as prohibited or restricted. Though, there are providers that provide high risk solutions, but they are difficult to track down as they prefer to work more privately.
So, keeping all this in mind, it might be time that you no longer search in the wrong places, but instead to begin a relationship with a well-informed payment consultant that knows a lot about high risk. Ideally, join forces with one who has previously assisted several clients reap the rewards of secure processing by successfully acquiring approval for accounts.
So which kinds of companies are regarded as high risk?
In the payment field, there are several kinds of companies that are regarded as posing a high risk by acquiring banks. A business can be regarded as high risk because of many different reasons. Though, the main reason is the type of merchant category, thus its business type.
The following are examples of just some of the business types:
-Short-term payday lending services
-Online stores that sell e-cigarettes
-Document preparation services
-Online dating services
-Online and in-store furniture sales
-Gems and other precious metals
-Hair restoration services
-Lead generation services
The prior processing background, type of business model, where the business has been registered or incorporated and the personal credit background of the owner are some of the other things that can play a role in if a company gets regarded as high risk. Even high risk companies’ chargeback ratio should not exceed 1.5%. In the event that the chargebacks exceed 2%, prior to sending an application form, a chargeback mitigation plan will also be needed.
Though, rest assured, if your company is in the high risk category, you can still open a merchant account. There are companies that can be of assistance. As the high risk industry constantly changes and financial institutions are at all times grappling with new rules, it is difficult to determine exactly what can be done. The best advice is to complete a contact form to schedule a private consultation with an agency free of charge.
The following are just some of the types of accounts that have enjoyed success in the past:
-Memberships and subscriptions
-Online liquor sales
-Canadian retail and e-commerce
-Prepaid phone cards
-Online dating and matchmaking services
-Discount insurance or medical memberships
-Ebay merchants without websites
-Internet service providers
-Stock trading tips
-Live animals (such as puppies)
How does the entire process work?
The process for low risk businesses and high risk businesses is not the same. If you have a low risk business, you have to fill out a long application form and complete underwriting. You are then usually approved within only 24 hours. Though, this process is much longer for high risk businesses. If you have a high risk business, you first have to submit a short pre-app form and previous processing statements. The acquiring bank and provider will then review these documents. Only after you have been pre-approved, will you be invited to apply which requires you to complete a long application form and attach all the supporting documentation.
So, in short this process has nine steps:
-Pre-app and statements
-Proposal with pricing options
-Complete application and agreement
-Approval and setting up of your account
-Testing and merchant training
When you complete the application form, do not leave any space blank. Every single box should be filled out! If there is a field that is not applicable, be sure to write down N/A. Also, avoid sending various emails with more than one attachment. Instead, it is a good idea to place the agreement and all the documentation into one PDF or .zip file. If you want to create a good impression, use a program like Adobe Acrobat to merge all your supporting documentation into just one PDF document. This will make the job of those responsible for underwriting much simpler.
When you have all the needed info, this process can be completed relatively fast. Though, if some needed info is missing, this process can take longer. Therefore, ensure that you are completely ready before you get this process going. As a matter of fact, a few processors will even add a penalty fee in the event that all your information is not shared together at the start of the process. Also, when a merchant sends an application that is not complete or requires more due diligence and he/she fails to respond with the required documentation within three business days, a few processors will add a set up fee of a few hundred dollars.
Which info and documentation are needed to get approved for a high risk merchant account?
Merchants must be ready to give basic info about the business, the owners, an explanation of the services or products that the business provides, a website address, forecasted transaction and dollar volumes and info about how the business will operate during the pre-application process.
In the event that your business is already processing, on top of the pre-application form, you will also have to give three months’ current bank statements and complete merchant processing statements reflecting the total sales, returns, chargebacks and so forth. Usually a transaction history report is inadequate and instead a “proper statement” will be required. In the event that you presently do not possess a merchant account, you can get a statement from for example PayPal which will assist you to get approved.
To summarize, for the pre-application you will require:
-An application form
-Three months’ business bank statements (ensure that all the pages of the most recent statements have been included)
-Three months’ processing statements (ensure that all the pages of the most recent statements have been included)
For a full application, you will require:
-Articles of Incorporation
-A copy of the driver’s license of the owner of the business
-A letter from your bank or a copy of a voided check (bank imprinted)
-A copy of your IRS EIN SS4 form (if a US business)
The following extra documents are recommended and might be needed by a processor:
-An application form that has been fully completed (in other words all the boxes must have been answered and where it did not apply, N/A should have been used).
-A valid passport or government-issued ID of the business owner
A utility bill of the business owner that displays his/her name and residential address (this utility bill may not be older than three months).
-A voided check from your depository account (non-starter, bank imprinted) or a letter from the bank (on its letterhead and signed) showing your good standing.
-Three months’ processing statements (the most recent ones). It is best to send a copy of your printed statements since Excel or CSV files are not trustworthy enough.
-Three months’ business bank statements (the most recent ones)
-Your Certificate of Incorporation and Articles of Organization. This documentation must display the registered address.
-A list of shareholders and/or a shareholder certificate
-Two years’ annual business financial statements. If the company is less than two years old, interim financial statements should be provided and if it is a startup, the owner’s most recent tax returns. (not usually required but best if you have it available)
-Supplier contract information (in other words, the copy of agreement, website and contact info)
-In the event that a license is needed to do business, a copy of this license is needed.
-If you accept cards telephonically via a virtual terminal, offer sales solicitation and the process of verification. If you have any recordings, provide these too.
-A reference letter from the bank for the owner (it must be for the personal bank account of the owner and may not be older than three months).
-A business plan or summary that details the experience of the merchant in this specific field and the future plans to promote growth and deal with customers, staff and so forth.
-The owner’s résumé (always a plus)
Potential extra requirements for processors:
-A processors questionnaire
-Copies of whichever customer agreements
-If applicable, copies of every state license
Extra requirements for nutraceuticals:
-Disclosure of the supplier
-List of ingredients
-If applicable, a Fulfillment House Agreement
-If applicable, a Good Manufacturing Certificate
In the case of bigger accounts, financial statements (balance sheet, profit and loss) and most recent business tax returns will in certain events be needed too. If the business tax returns are not available, the most recent personal tax return can be submitted instead).
If you have a Canadian business, a Canadian EIN, Canadian bank account and Canadian address that can be verified are needed.
What must you display on your site?
Any high risk account should at least boast an active site (even if you are not selling your products or services online). Your website should also have your street address, phone number where customers can reach you, T&Cs for your services or products that you sell and how your refund policy works.
-Detailed description of your services and products on your site.
-Transparency regarding the actual price a customer would have to pay. It should be written in such a manner that anyone can understand it.
-The registered address of the business must be easy to find. Either place it at every page’s footer or on the page with all the other contact info.
-A web contact form, email address, or phone number where customers can get support without any issues.
-A cancellation policy
-A return and refund policy
-A page answering FAQs that links to pages relating to refunds, returns, complaints and so forth.
-Terms of membership, if applicable
-A delivery policy with shipping options, estimation of how long delivery will take and any shipping costs
-A checkout page that is SSL encrypted or secured.
-Other security features and risk management measures (3D Secure, PCI and so forth)
If your website sells e-cigarettes then the following are extra requirements:
-On your home page you must display a nicotine-warning label.
-A pop-up window that verifies your age must appear before anyone can even gain access to the website.
Also, try not to include links to other sites, in particular unsecured links that do not employ HTTPS encryption.
What is the pricing for high risk merchant accounts usually?
There are countless things such as type of business, volume, processing background, location and the business owner’s own credit score that influence the risk profile and pricing. Several high risk accounts located in the United States of America can be grouped in the 3-4% range that are dependent upon review. In fact, startups are frequently priced in a higher category than companies that are more established and boast a great processing background. A few types of businesses have higher rates than other types (for instance, tech support is frequently close to the 8% range and those trial offers that only bill a customer once the trial period has concluded and they failed to cancel can be as high as 8%).
Solutions available for offshore and international businesses
Processing banks that are located outside of the European Union and North America have really different processing banks. In the case of an offshore bank, the setup process can be anything from 14 days to 6 weeks and it calls for quite a lot of work. So, because of this, the processing banks are not really interested in an international merchant that boasts low volumes every month or a startup as these generally do not lead to profit.
Certain processors will give offshore merchant accounts to businesses that are not registered and incorporated in the US, Australia, the United Kingdom, Canada and the EU. Though, these processors are really hard to track down and usually ask very expensive rates.
Why you should consider getting more than one merchant account
In short, the reason is continuity. You see if anything should happen to your main merchant account and it perhaps gets closed for whichever reason, you will be grateful to have more than one merchant account as your business will be able to continue to do business without the collection of payments getting interrupted. As you can imagine, being unable to collect payments for a few weeks (or even longer) can really do a lot of harm to your company. So, when you have more than one merchant account, it is like a type of insurance for your high risk company.
Another reason is volume limitations. A few high risk providers only give approval to new merchants for a limited processing volume. For instance, certain accounts get approval with a limit of about $30,000 per month. When your company must process more than the limit, the only solution will be to open another merchant account.
Centralizing reporting and load balance in the case of various merchant accounts
You will require a strong gateway when you wish to run various merchant accounts. The gateway will have to be able to support many processing networks, load balance transactions across various multiple merchant accounts, support volume limits as well as tools to manage fraud and enable you to centralize your reporting.
Various gateway accounts might be an answer, though when you can route your sales via various accounts, with the help of various processors all via one gateway login, it really is much more straightforward.
When you have more than one kind of product, it is really handy when you would like to process a few products via a higher cost high risk account, while running the other products via the lower cost low risk account. This can save you a lot!
Fraud scrubbing is also a key gateway feature. This tool enables you to configure many filters to assist you in detection and protection against fraudulent transactions.
In which instances are reserves needed?
Money that is held to offset possible risk, in other words reserves, is at times needed when applying for a high risk merchant account. The reason for this is that the processor accepts the risk in the event that things do not work out and they can balance the risk with the help of getting a reserve. How much the reserve is will differ and is influenced by the type of merchant and other things that are usually based on its previous processing history and the personal credit of the owner. Usually it is 5% and three months rolling. When it is a new merchant or one that poses higher risk, a six month rolling reserve of 10% is often asked. Business models that offer trials and negative billing are really high risk and will call for the highest reserve, while in the event where all the products are sold as a one-time sale without any recurring billing will boost your chance of approval and significantly lower the reserve amount that is needed.
Debt collection and credit repair usually need a 10% reserve, while tech support can call for up to 25%! The amount of reserve needed will be explained in the proposal that your processor sends to you.
The average hold period for high risk merchant accounts
The standard processing for a merchant account is two days-two weeks. Though, a higher risk account can at times call for money to be held anything from one to four days to four weeks after settlement. This hold period depends on the owner's prior processing background and credit. Every single processor has its own policy and provides different hold periods based on the underwriting risk. Thus, when you are doing your own research before you open a merchant account, make sure you ask the processor of their specific hold period.
TMF MATCH List merchants
So, what is TMF you might wonder? Well, it stands for Terminated Merchant File. Several merchants end up on this TMF list because they had too many chargebacks. Though, there are other reasons that a merchant can get on the TMF or MATCH list. For a comprehensive explanation, consult Section 11 of the MasterCard Security Rules and Procedures document.
Though, in short, it happens when the merchant takes part in unauthorized disclosure or use of account info, money laundering-related actions that involve false transactions, too many chargebacks (chargebacks that add up to more than 1% or $5000), excessive fraudulent transactions, when the business owner has been convicted of criminal fraud, bankruptcy, violating the standards of a card association, not being in compliance with the Payment Card Industry (PCI) Data Security Standards (DSS), transactions that are against the law, identity theft and taking on someone else's identity in an illegal way just to open a merchant account.
In many cases when you have been terminated because of too many chargebacks, you can correct it over time. Though, you can only get off the TMF MATCH list via the same bank that has placed you on the list. If you have found out that you are indeed on the list, you must contact your previous provider before you do anything else.
A merchant will appear on this TMF MATCH list for five years.
If you are a merchant and you would like to get approved for a brand new merchant account, you will have to:
-Be off of the TMF list for a minimum of six months
-Not owe money for any chargebacks to the bank or processor
-Be able to do a minimum of $100K per month
On top of the standard required documentation, you might have to state where else you have submitted your application and where things did not work out.
It is very difficult to get off of the TMF list. In fact, in certain instances it might be necessary for a company to start from scratch again with a new corporation, new owners, new EIN, new site, new bank account, new contact details and new way of doing business. So, yes - basically it could be easier to make everything new! In the event that you do get a brand new account, you will have to do everything that you can to mitigate chargebacks, avoid ending up on the TMF MATCH list and operate a great business.
Why you should be weary of online reviews
The chances are good that you are already aware that countless online reviews are indeed fake. As a matter of fact, a few of the top ten best sites will only suggest processors that pay to be on that list. Yes, reviews can be helpful, though many times it is much better to chat with an experienced payment consultant who boasts practical knowledge by placing clients with providers that have a history of looking after the requirements of high risk companies.
There are people in the high risk payment field who are really seasoned, though it might be difficult to find them online. Yet, tracking down a pro who concentrates on high risk businesses is one of the most crucial things you need to pay attention to when you are searching for a brand new merchant account. It is recommended that you find a consultant and use his or her practical know-how and relationships to set you up with a few stable processing accounts from processors who grasp high risk and boast happy clients.
What Are High Risk Merchant Accounts?
The Global Pay team concentrates on providing high risk merchant accounts for North American and international high risk companies alike. They provide a range of comprehensive high risk merchant services such as dependable, cost-effective and secure credit card processing, integrated fraud protection, chargeback management services as well as Automated Clearing House (ACH) processing.
Their aim is to be a globally recognized high risk merchant account provider. In order to achieve that successfully, they must grasp and look after the special requirements of the high risk merchants and fields that they concentrate on. Therefore, they have compiled a high risk merchant account resource center that was created to offer owners of businesses a one-stop place where they can get all the info that they will require to get a high risk merchant account, look after those accounts and successfully accept debit and credit card payments.
Who Are Regarded As High Risk Merchants?
The high risk credit card processing category includes any business in a field that has one or more of the characteristics listed below:
• a field that big banks do not want to support
• a field with strict regulation
• high ticket sales
• a history with a lot of chargebacks.
It is key to understand that this classification gets based on the industry of your company, irrespective of the individual track record of your business per se. Also, this high risk category includes companies that have been abandoned by a prior credit card processor, those that appear on the TMF or MATCH lists or are situated outside of the United States. If the owner's personal credit is bad or his/her credit scores are low, the business can also be placed in this high risk category.
Obtaining A High Risk Merchant Account
How Can I Get My High Risk Merchant Account?
Well, on paper this rather straightforward question has a very easy answer - apply for a high risk merchant account. The merchant account provider will complete the application process together with you, forward it to the department in charge of underwriting to assess your application and as soon as it has been given the green light, you can welcome payments. Though, when you are regarded as a high risk business, this process is not as easy. The majority of banks and processors do not give payment processing to merchants that fall into the high risk category. Thus, you will have to get a high risk merchant account provider.
How Can I Identify A High Risk Merchant Account Provider?
Regrettably high risk companies have a difficult time getting credit card processing. The sales rep is interested in your business, however their sponsor bank/processor will not underwrite any high risk company because of the chargeback risk. Thus, whenever you phone a merchant account provider you should immediately ask them if they offer merchant accounts to businesses in your field that are categorized as high risk. Also, be sure to double-check with them as the sales rep could inform you at the beginning that they will, though then after you have completed the entire application process you discover that their underwriting department in fact does not.
So Does The Team At Global Pay Provide High Risk Merchant Accounts?
They do! Global Pay offers all-inclusive credit card processing services to countless high risk merchants, including businesses that are only starting out to those that process millions every single month. Simply complete their five-minute online application free of charge. As soon as you get approval, you can start to process transactions. Global Pay will also look after setting up your payment gateway and chargeback management tools to make this experience straightforward and effortless.
How Can I Increase My Processing Volume Limit?
The majority of high risk companies would like to scale their company to $100 000 (or even more) per month in sales. The issue is that your first merchant account is usually capped at about half of that (in other words $25,000 to $50,000). Now you can increase this cap in the following way.
In a certain way, your merchant account is like a line of credit from your processor to your business. So, similar to other business loans, your history allows you to get a bigger line of credit. Usually after three to six months of processing successfully (in other words having few chargebacks, having a steady volume and so forth), your business can ask to have its account re-assessed to get a higher limit.
What Are Underwriters Searching For When Assessing An Application For A Merchant Account?
The task of the underwriter at the credit card processor is to ensure that the company does not pose a bad risk for the credit card processor. The underwriter is specifically evaluating the possibility that the credit card processor will encounter losses. Regulatory fees and losses on the account are two of the primary ways that a credit card processor can encounter a loss. To be more specific, the underwriter wants to determine the possibility of many chargebacks going unpaid or monthly accounts not being settled. With regards to regulatory fees, the underwriter wants to determine if the processor stands the risk of getting fined by the government, the card brand or sponsor bank for helping with a payment on behalf of a merchant that is guilty of fraudulent or other bad activities.
Thus, at the end of the day, the underwriter wants to see a business that has a bit of cash in their bank account, follows an acceptable business model and boasts stable and skilled owners. Your company stands a better chance of being approved when they satisfy more of these factors.
Typical High Risk Fields
Any company with bad personal/business credit scores, a high chargeback ratio or high average tickets can be viewed as high risk, though most high risk companies get categorized as high risk because of the type of industry that they choose to work in.
• Water and Air Filtration
• Collectibles and Antiques
• Clothing Sales
• Auto Parts and Accessories
• Auto Transport
• Sales of Alcoholic Beverages
• Computer Hardware
• Debt Consolidation
• Discount Buying Service
• Document Preparation
• Downloadable and Educational Software
• Extended Warranties
• Financial Aid Consulting
• Financial Services
• Insurance Providers
• Magazine Subscriptions
• Mobile App Software
• Functional Food
• Pawn Stores
• Precious Coins and Metals
• Remote PC Tech Support
• Self-storage Business
• SEO and Web Design
Ratings Of Gateways For High Risk Companies
A high risk company typically accepts payments in one of the following manners:
• Swiped payments in person
• Via the telephone (also known as MoTo Payments)
• Via their site (also known as e-commerce)
• Recurring (for instance automatic payments)
If the transaction is not swiped in person, the sale will as a matter of fact get processed via a payment gateway (a type of software that sends the card data to the processor in a secure manner). There are countless of payment gateways on the market, though the majority of high risk companies make use of just one of the following few.
Allied Payments Gateway
This gateway is one of the most popular ones since it is so simple to set up. Also, it is straightforward to use and can integrate with practically any shopping cart or CRM.
Global Pay Gateway
This gateway specifically concentrates on the requirements of high risk merchants. It provides powerful reporting and can integrate with a few chargeback management services and practically all the main shopping carts and CRM. Also, its gateway is set up to deal with multiple logins with various levels of permissions. This is vital in order to guarantee that any integrated chargeback management service can gain access to your gateway, yet be unable to run transactions or gain access to any other section of your account.
Authorize Payment Gateway
When you are just looking at the cost, this is frequently the most affordable solution. It is marketed at sensitive low risk companies and a few high risk startups that want to save a few dollars every month in cheaper monthly costs. It is a rather basic system, however for small high risk merchants that do not require chargeback management services and make use of one of the main shopping carts that they know for sure works with this gateway, it is an adequate solution.
So how can you get a payment gateway you are wondering? Well, the majority of merchants buy their gateway via their merchant account provider as it is generally less expensive than getting it directly from the actual business. Why? Well, the business gives big discounts to the merchant account providers and this frequently means they can then sell the gateway to their clients at a price that is cheaper than its retail price. Also, your merchant account provider will then be able to assist you to set it up and offer guidance for any problems.
Customer Relations Management For High Risk Companies
Customer Relations Management (CRM) software gets employed by high risk companies to manage the info of their customers and their profile, to keep a record of contracts and the salesperson linked with the sale, to look after recurring billing and keep tabs on how the advertising campaigns do, forward automated email messages and more. There are several CRMs available today, though high risk companies typically make use of one of the following possibilities.
This is the best one for recurring billing companies and continuity, specifically the functional food field. Apart from this industry, they are also well liked thanks to their unique features like its ability to preprogram transactions, contact center integration and so forth. Though, the main concern is that they are not cheap. Although they do not list their prices, you can usually expect to pay over $500 per month for a subscription, plus a setup charge of more than $1000. Thus, only the big high risk companies will consider them.
This is the best for the majority of small high risk companies that can no longer use Excel to keep track of their payments and clients. What makes it so attractive is that it only costs about $12 per month! They also provide a recurring billing scheduling and can work with a few payment gateways.
As weird as it sounds, many of the high risk startups simply rely on Google Spreadsheets, a cloud-based spreadsheet free of charge that is almost like Excel to look after their customer info when they first begin. It does not cost a thing and when combining it with the gateway of Global Pay, they can enjoy basic functionality without having to pay a lot. This is obviously not an answer for bigger high risk companies that boast more than a couple of hundred clients because Google Sheets can be inconvenient. Though, when you are searching for the most affordable option just to begin with, it is free after all.
Everything High Risk Companies Must Know Regarding Chargebacks
If you are a merchant operating in a high risk field, you must know your chargeback ratio. The reason for this is that frequently too many chargebacks lead to merchant accounts getting closed by processors.
How Can I Work Out The Chargeback Ratio?
The chargeback ratio of a company is the number of monthly chargebacks divided by the total of monthly transactions. The amount of the chargeback and outcome do not matter. As soon as you get a chargeback, it is regarded as one. Thus, when your high risk company gets 1000 transactions in one month and 30 customers lodged a chargeback dispute in that particular month, your chargeback ratio for that particular month is 3%, irrespective of the outcome of those 30 chargeback disputes.
Why Do Processors Care About Chargebacks Ratios?
When your chargeback ratio is more than 2%, your processor can encounter possible fines from MasterCard or Visa if they still allow you to continue processing. These fines can be over $10,000! This means that when they receive a fine for allowing you to continue processing, they will face incredible losses compared to the money they get from you for their service. So, it is crucial that your chargeback ratio is not more than 2%.
Plus, chargebacks can also be an early sign that there could be a few problems with your company, for example fraudulent activity, unhappy customers, not enough security measures and so forth. For this very reason, credit card processors will also rely on your chargeback ratio as a possible sign of great financial losses that they can encounter down the line.
Why Does A High Risk Company Receive Many Chargebacks?
High risk companies can get many chargebacks for whichever of the following reasons:
• Not enough fraud filters or steps for uncovering and preventing risky transactions.
• Several customers are uneducated and are not aware that they can phone the customer service number on their credit card statement when they have a problem with a charge.
• Several customers will not remember that they ordered a product and as the high risk company's name might be difficult to recognize they then think it is fraudulent.
• Owners of high risk companies, specifically startups, might not grasp or make use of all the strategies and services there are to ensure the chargeback ratio remains low.
• Several small high risk company owners and startups fail to grasp that most of the time a chargeback, does not matter the outcome, can affect their chargeback ratio, thus they do not give a refund at once.
So How Can I Ensure That My Chargeback Ratio Remains Low?
Prior to the sale
It is important to uncover stolen credit cards in a flash and identify fraud or a not-so-good sale prior to happening. When you are making use of a high risk payment gateway, many services to prevent fraud can be added automatically.
During the sale
You should aim to completely deliver on your promise. Thus, record a salesperson's telephone conversation, check that your disclaimers are easy to find and simply offer first-class service.
After the sale
As soon as the sale has concluded, you should ensure that you are one step ahead of the customer. So, ensure that your receipt clearly states what a customer should do when they have a billing query. Also, ensure that your support center employees are skilled and helpful. Lastly, it is also a good idea to send a follow-up message after the sale to find out if your customer was satisfied so that you can rule out any possible chargebacks.
After A Client Complains
In the majority of high risk fields you can significantly lower your chargeback ratio by using the strategies discussed above, though you will possibly still have to deal with a few.
As soon as a customer lodges a complaint at their issuing bank, you can make use of a chargeback alert system. This will offer you a three-day period within which you can give a complete refund. If you do this, this chargeback will not be initiated and your ratio will not get influenced. Be sure that the issuing bank also takes part in this program, otherwise it will not work.
Ensure High Transaction Counts
High risk companies with only a few transactions every month face a bigger risk of exceeding their chargeback ratio threshold. Small companies need to be extra careful about ensuring that they identify and prevent fraud while they go the extra mile to ensure their customers remain satisfied.
Offshore Merchant Account Providers
If you are looking for one of the top high risk merchant account solutions, Global Pay LTD will be able to assist you. They have joined forces with a global network of offshore and local high risk merchant account acquiring banks to be able to offer you some of the most cost-effective rates and dependable credit card processing for the high risk field that you operate in.
Some of the services and equipment provided by Global Pay include:
• high risk merchant accounts
• credit card processing
• POS equipment
• credit card terminals
• payment gateways
• chargeback services
• risk management client
Thanks to this wide range of services offered and their high risk merchant placement program, it will be easier for your business to build a reliable payment platform. Together with their banks, they have created a network of acquiring banking relationships that can look after high risk companies from all over the world.
Some of the high risk fields that they offer processing services to are:
• Credit repair businesses
• Travel agencies
• Weapon dealers
• Pawn shops
• Auto repair shops
• Debt recovery agencies
• Online dating
• Used auto dealers
• Web design companies
Now when one has in the past opted for services that appeared to be more affordable, the chances are good that one would have discovered that at the end of the day these so-called "cheaper" options as a matter of fact work out more expensive. There are many reasons for this such as concealed fees, inadequate services, frozen accounts, inadequate fraud prevention strategies and not being able to expand your payment options. Do not forget, if something sounds too amazing to be true, the chances are good that it is. So, be very cautious of any sales agents or processors that market fees and rates that are not inclusive. Though, if you opt on Global Pay LTD, you can rest assured as all the fees and rates are clearly explained for every single package. In other words, there are no nasty surprises or concealed fees!
Pick A Processor That Is Correct For Your Kind Of Business
There are certain processors that only concentrate on particular types of business, for instance those that sell adult entertainment, while other processors can be regarded as "generalists". A few companies are open and easy to understand, but there are companies that do not boast these qualities. Then a few companies offer only the standard services. So, it will work in your favor if you were to ask the sales agent that you are interacting with regarding their current client portfolio so that you can get a better understanding of the kinds of merchants that they are at the moment providing services to.
When Your Application Gets Turned Down
You could require a virtual terminal, payment gateway, eCheck solutions and risk and fraud management when your company offers its services and/or merchandise online. The payment acceptance channels will determine which types of services you will require. What is important is that you ensure that your processor is able to provide all the services that you require and, more importantly, provide these services exceptionally well.
Companies such as PayPal often approve accounts automatically only to review it a few weeks later and then cancel it. American banks such as Bank of America are also known for approving merchants automatically when they sign up and will then assess the accounts in more detail at a later stage. What in most cases happens then is that you will start to process only for your approval to get denied or cancelled at a later stage by these bigger banks.
Investigate Your Prospective Providers
High risk industries are in essence extremely intricate and unpredictable. Business owners will not have enough time to find out everything that there is to know about the payment processing industry, let alone stay up to date with all the changes. Therefore, you will have to work with a business that will not exploit the fact that you do not know everything. Now one of the best ways to assess this is by determining if a payment processing company is open about their rates and fees as well their expertise. Ensure that your payment processor concentrates on high risk industries and teams up with various banks that are based both domestically as well as offshore. In fact, MasterCard and Visa have over the past couple of years started to take severe measures against high risk companies. So, you will have to know that your payment processor is up to date and at all times is weathering the storm. Unfortunately several processors have taken too many risks which resulted in fines. Be sure to ask your processor direct questions regarding their experiences and to explain all the rates, fees, and terms and conditions extensively. Then, calculate what the cost of an average transaction will be after all the fees have been included.
Rates And Fees
It depends on where you are located, but MasterCard and Visa will usually take about 1% and the banks will also charge an interchange cost (the level of risk will determine the rate). Then, the base transaction gets affected by a couple of factors such as the type of card that is used, type of credit card transaction and whether or not the card was present.
At the end of the day, just be sure to double-check that you are not being overcharged.
How Is An Offshore Account Different From An Onshore Account?
A domestic or onshore merchant processing account most of the time refers to an account that is also located within the country where you are based. For instance, when you are situated in the United States and your account is managed by a bank that is also situated in the United States, you will be governed by the local legislation. An offshore gateway or processor is typically an international firm that concentrates on offering credit card processing around the globe. In certain instances it can be beneficial to have both an offshore and an onshore account as you will not have any issues with lapses in business.
What Are Offshore Merchant Accounts?
If you are looking for dependable and cost-effective comprehensive offshore credit card processing, chargeback management services and Automated Clearing House (ACH) payment processing, look no further than Global Pay LTD. They can provide offshore merchant accounts to global and US-based high risk companies that are the most difficult to place. Their offshore merchant accounts are the perfect solution for companies that will process a minimum of $50,000 every month. Their services include credit and debit card processing at your business, tools to avoid chargebacks, fraud prevention and a gateway.
They strive to be the top offshore merchant account provider and realize that in order to reach their goal they have to grasp and address the unique requirements of offshore merchants and fields that they concentrate on. Therefore, they have created the following list of offshore merchant resources aimed at offshore companies in particular. This ultimate list will share everything that high risk business owners will require to begin, expand and welcome debit and credit payments with the help of an offshore merchant account.
Who Should Get An Offshore Merchant Account?
Well, offshore credit card processing is aimed at businesses that meet one or more of the following descriptions:
• The main owner is not an American citizen.
• The company operates in a field that is known for high chargebacks.
• The company operates in a field that certain American sponsor banks and processors will not support.
Please take note, that in the majority of instances, a business will require an offshore merchant account because of the type of industry that it works in, irrespective of the risk profiles of that specific company. Though, in a few cases, it can relate specifically to the business itself, for instance companies that are located or owned outside the borders of the United States of America, businesses that grow quickly and now require high processing limits and companies owned by owners who have a bad credit history.
A Few Of The Most Common Offshore Fields
Businesses with bad credit scores (whether related to the owner or the business itself), fields that are linked with high chargebacks and startups in the high risk industry can be classified as high risk. Though, most companies that make use of an offshore merchant account do not have any other option as they are not owned and operated in the United States of America or the field that they work has a difficult time to acquire US domestic processing.
• Financial services
• Forex trading
• Furniture sales
• Insurance providers
• Liquor sales
• Magazine subscriptions
• Bitcoin merchants
• Educational, mobile app and other downloadable software
• Computer hardware
• Functional food
• Tech support
• Web design and development
Benefits Of Having An Offshore Merchant Account
One of the major reasons that companies like offshore merchant accounts is because it makes it easier for them to get an account with higher processing volume limits. Merchants are usually limited to $50,000 with a domestic merchant account (though, when they have prior processing history that can back up their growth they can get a higher limit with a domestic account). Now offshore merchant accounts generally do not have any hard volume caps. Your business can benefit from higher processing limits on the condition that it communicated with its payment processor regularly.
A second popular reason that owners like to make use of offshore merchant accounts is that they work in a field that has a hard time qualifying for a merchant account in the United States. Offshore merchant accounts are called offshore for a reason, namely the sponsor bank is situated outside the borders of America. As a result, these banks have regulatory rules and underwriting that are vastly different than those offered by American sponsor banks. So, these banks can support processing for companies and industries that American processors will not or may not welcome.
The Cons of Offshore Merchant Accounts
Unfortunately there are some disadvantages of opting for an offshore merchant account. It is important that you are familiar with these cons prior to signing up for one.
Firstly, there is the issue of customer card decline rates. If you process a payment for a customer located in the United States with a domestic merchant account, no fraudulent activity gets flagged from the credit card bank of the customer. As a result, a card will only be declined in rare cases.
Now when you use an offshore merchant account you are accepting the payment with a processor that is from a different country which makes the transaction cross-border. A few credit card issuers view this type of transaction as posing a higher risk and will consequently decline the transaction. When you decide to use an offshore merchant account, just know that you can anticipate anything between 5% to 50% decline rates.
A second disadvantage is higher costs. The transaction percentage (discount rate) and per transaction fee (authorization rate) are usually more expensive than those rates offered by domestic accounts. The main reason for this is that offshore sponsor banks will only do business with high risk companies when it is really profitable for them.
FAQs Regarding Offshore Merchant Accounts
What does an offshore underwriter want to see when they assess my application?
The underwriting team of an offshore processor is not much different from domestic processors. They too want to guarantee that the processor will not encounter losses either as the result of many chargebacks or fees/fines. While low risk processors do not grasp that a few chargebacks will happen, offshore processors are more understanding but will still not allow too many chargebacks. Just like domestic accounts, offshore underwriters must check that their banks will still make enough profit. Though, the way their costs are organized can be a lot different. Offshore processors, unlike domestic processors, will frequently call for high minimums that must be met monthly to guarantee that it is profitable enough and that they can be rewarded for risk that they now take on.
Why is there a volume minimum?
Offshore merchant accounts call for a degree of setup and also need the bank's approval. Therefore, the majority of offshore merchant account providers need their merchants to process a specific amount per month at least so that the account remains in good standing. This is called the monthly premium and can be anything but normally $20,000.
Why should I pay application or integration fees when I have an offshore merchant account?
Well, there is quite some degree of technical work needed to complete the integration. Also, this helps to prevent companies that are very badly managed or do not have a lot of capital to get approved.
Opening An Offshore Merchant Account
When you are applying for an offshore merchant, you have most likely already applied for a domestic account at some prior stage. If you did, that process was most likely very simple - you had to complete an application form, give them a voided check, and identification. Now an offshore account is a bit harder. First, you will have to identify a dependable offshore account provider that has a good reputation.
What Are Offshore Merchant Account Providers?
All merchants, those that are based in the US or beyond its borders, need a funding institution/sponsor bank to underwrite their accounts. Thus, an offshore merchant account simply means that the relevant funding institution is not located in the United States of America. The funding institution then joins forces with an offshore processor that will be responsible for processing payments.
How can I locate an offshore merchant account provider?
There are quite a few payment processors and merchant account providers that provide offshore processing. Though, it differs from domestic processing as the differences and quality among the various payment processors differ a lot. Thus, when you are looking for an offshore merchant account provider you should not just opt for one because they welcome your business but you should assess the stability of their processor too.
Can the Global Pay team provide me with an offshore merchant account?
Definitely! The Global Pay LTD team offers comprehensive merchant services that include credit card processing services to several industries that are regarded as high risk. Their clients range from startups to companies that have to process over $100,000 every day. Their application process is straightforward. All you have to do is complete an online application (it is free and will take only five minutes). Their team will then send you a PDF copy via email that explains all their T&Cs as well as pricing for an electronic signature. As soon as you get approval and are integrated, you are ready to start processing. Their team will deal with your chargeback management tools and your payment gateway to make this entire process straightforward and effortless.
Your A-Z To How Chargebacks Will Affect Your Offshore Business
If you are operating in a field that is classified as high risk, you must know your chargeback ratio. The reason for this is that most frequently too many chargebacks can lead to credit card processors closing high risk merchant accounts. This also applies to offshore merchant accounts.
How Can I Work Out The Chargeback Ratio?
Your company’s chargeback ratio refers to the number of monthly chargebacks divided by the total of monthly transactions. The actual amount of the chargeback and outcome do not matter. Once you get a chargeback, it gets classified as one. Thus, if your high risk company gets 10,000 transactions in one month and 300 customers lodged a chargeback dispute in that particular month, your chargeback ratio for that particular month will be 3%, irrespective of the outcome of those 300 chargeback disputes (there are a few exceptions depending on how your particular sponsor bank and processor count reversed chargebacks).
Why Do Processors Care About Chargebacks Ratios?
When your chargeback ratio is more than 2%, your processor (including your offshore processor) can encounter possible fines from MasterCard or Visa if they still allow you to continue processing payments. These fines can be more than $10,000! This means that when they receive a fine for allowing you to continue processing payments, they will face incredible losses compared to the actual money they get from your business for their service. So, it is crucial that your chargeback ratio is not more than 2%.
Now an offshore merchant account can provide some extra chargeback flexibility, but usually this 2% rule is also applicable for offshore merchant accounts. Plus, chargebacks can also be an early sign that there could be a few problems with your company, for example fraudulent activity or unhappy customers. As a result sponsor banks and processors will not want to offer long-term help to these types of companies.
Why Do Some Companies Receive Many Chargebacks?
High risk companies, especially those that use offshore merchant accounts, can get many chargebacks for whichever of the following reasons:
• High risk companies frequently accept web payments that are linked with greater levels of chargebacks and fraudulent activity because of the payment method’s nature.
• Several customers will not remember that they ordered a product and as the high risk company's name might be difficult to recognize; they then think it is fraudulent.
• Owners of high risk companies, specifically startups, might not grasp or make use of all the strategies and services there are to ensure the chargeback ratio remains low.
• Several small high risk company owners and startups fail to grasp that most of the time a chargeback, does not matter the outcome, can affect their chargeback ratio, thus they do not give a refund at once.
So How Can I Ensure That My Chargeback Ratio Remain Low?
Prior to the sale
It is key to detect stolen credit cards in a flash and identify fraud or not-so-good sales prior to them happening. If your business uses a high risk payment gateway, many services to prevent fraud can be added automatically.
During the sale
It is a no-brainer, but you should try to deliver on your promise. Thus, record salespersons’ phone conversations, double-check that your disclaimers are easy to find and simply offer a great service.
After the sale
As soon as the sale has concluded, you should ensure that you are one step ahead of your customers. So, double-check that your receipts clearly state what a customer should do when they have a billing question. Also, ensure that your support center staff members are skilled, cordial and helpful. Lastly, it is also a good business practice to send a follow-up message after the sale has been concluded to check that your customer was satisfied so that you can rule out the possibilities of chargebacks.
After A Client Complains
In the majority of high risk fields you can really lower your chargeback ratio by simply implementing the strategies discussed above, though you will possibly still have to deal with a few cases of chargebacks.
As soon as one of your customers lodges a complaint at their issuing bank, you can make use of a so-called chargeback alert system. This will offer you a three-day period within which you can refund the customer completely. If you do this, this chargeback will not be initiated and your chargeback ratio will be unaffected.
Ensure High Transaction Counts
High risk companies that process only a few transactions every month face a much bigger risk of exceeding their chargeback ratio threshold. As a result, smaller companies need to be extra careful about ensuring that they identify and prevent fraud while they go the extra mile to ensure their customers remain satisfied. Generally, having more monthly transactions can help prevent your chargeback ratio from increasing rapidly because of one or two unexpected cases of chargebacks.
What Does High Risk Merchant Mean? Why Am I A High Risk Merchant?
So many merchants want to know the reason that they got classified as high risk. Unfortunately the majority of merchants in fact do not understand why a bank has decided to give them the “label” of high risk, especially as they regard themselves as trustworthy businessmen who have great business models and ideas to offer.
This is actually one of the most difficult things regarding merchant accounts to explain to owners of companies (and it does not matter if they are brand new or in charge of an established business).
As a matter of fact, any type of financial institution (in other words acquirers, payment service providers, banks and so forth) processes money and is as a result forced by regulators to label a merchant as low risk, medium risk or high risk.
So, the following few factors all play a role in high risk merchant accounts and the process of getting your account approved.
The kind of industry
More than anything else, a bank will take a look at the kind of industry which your business operates in to get a better idea of the degree of risk involved in approving such an account. Unfortunately there are specific kinds of businesses that are regarded as high risk irrespective of their company’s own individual history. A few of the better known high risk merchant account fields are:
• travel agencies
• tech support
• nutraceuticals (functional food)
• debt collection
• telemarketing services
• adult services
• subscriptions (in particular those with long-term commitments)
You might be wondering why travel agencies are regarded as high risk? Well, in short it is because a client will have a lot more time to ask for a chargeback. After all, while he or she is waiting to go on their holiday there are many things that could still happen.
Also, travel agencies face more risk as their clients could possibly not have liked the holiday package that they have booked. For instance, the photos could have portrayed a different holiday or the weather could not have played along or not all the facilities could have worked. The list of what could go wrong goes on and on and on… Unfortunately when clients are not satisfied, they demand to be reimbursed.
The MATCH list
What is the MATCH list, you’re asking? Well, it is a list of those merchants whose merchant accounts have been stopped. So, in short, the MATCH list is almost like a blacklist with the all the accounts which have been terminated which then gets circulated among all the different processors and acquiring banks. If merchants have been put on this MATCH list, it is because they are now regarded as high risk merchants for financial institutions.
The following are a few of the reasons that you could have been put on this MATCH list:
• exorbitant chargebacks
• an act of breaking the terms set out in one of your contracts
• fraudulent activity
• money laundering
The risk of chargebacks
The following factors can mean that your kind of business could get higher than normal chargebacks (which is not good):
This happens when a client does not agree with the fact that they have granted permission to be billed each month. This type of payment is riskier as your clients get charged automatically. It might be that the client is blissfully unaware that you will regularly process the payments automatically. So, as soon as he or she spots the deduction they might be caught off guard.
Just like in the case of recurring billing, the merchandise gets shipped automatically every 30 days. Many customers do not read that they have in fact given the thumbs up to this regular shipping.
No refunds policy
A customer will be more inclined to lodge a chargeback when they can’t get a refund for their purchase in the event that they are not entirely happy with what they have bought for whatever reason.
No contact details
Unfortunately you can expect more chargebacks when you do not include phone numbers and other contact detail on your website. In fact, banks actually call for this info to be found without any hassle on your website so that chargebacks can be prevented.
Not having credit card processing history
Unfortunately you might have the best intentions, but if you are a brand new business without any processing history, your business might also get classified as high risk. Why? Well, simply because no one knows your business and therefore do not know what they can anticipate. Let’s be honest, as you have not sold any products before or rendered a service, the payment service provider does not know if you will even manage to deliver on your promise or what the quality of your products or services will be like.
So what can be done in the event that you have unfortunately been classified as high risk? Well, it is not the end of the world - after all it is only a type of classification. There are high risk merchant account providers available in the market. In fact, you can rest assured as many of these providers grasp all the special requirements relating to getting a high risk merchant account approved and will join forces with banks from all four corners of the globe that can approve accounts for high risk companies.
High Risk Merchant Account Payment Methods
Global Pay LTD supports the following payment cards; Visa, MasterCard, American Express, Discover, Diners Club, JCB and UnionPay. Other payments options include; PayPal, Neteller, MoneyBookers, WebMoney, Bitcoin along with other crypto currencies.
Merchants requiring additional methods are easily assisted directly through our partner network, including but not limited to; Apple Pay, Yandex, Skrill, AliPay, Sofort and Qiwi.
Check and ACH processing services are available to companies in all industries. Payments are quickly debited from your customer’s bank account and then ACH’d or wired to your business bank account after the short hold period.
If you are a reliable merchant then you will be able to locate a payment service provider that will be in position to provide you all the services that you require. Though, it might cost you a bit more than what you have anticipated as you will have to settle on a rolling reserve.
Just make sure that you get a payment service provider that is capable to work with you and ensure that you are extra cautious in your business. So, at the end of the day you will be able to process payments!
Guide To Offshore Merchant Account Providers
An offshore merchant account can, as a matter of fact, be very beneficial to countless companies. What makes this type of account so great is that they are rather simple to set up and are not regulated so strictly as domestic merchant accounts. On top of that, many high risk merchants that work in certain industries will not have any other option but to open an offshore merchant account. Other merchants like owners of startups or those who have a bad credit history can also encounter a tough time trying to open a merchant account.
Though, unfortunately just like with almost everything else in life, offshore merchant accounts do have a one or two negatives as well. As this type of account is not regulated that strictly, it does not offer the best levels of protection. Two other possible issues facing high risk merchant accounts are expensive chargeback costs and extended settlement periods. Then, in case a dispute should arise, merchants often find themselves in rather tricky positions where they will find it very difficult to achieve a resolution that will satisfy all the parties involved.
So What Is An Offshore Merchant Account?
Well, for starters the acquiring bank or acquirer of an offshore merchant account is registered overseas. The credit card processing is then completed by either the merchant account provider situated in the overseas country (or its selected acquiring bank) and then it gets settled into the domestic bank account of the business.
Who Will Possibly Be In Need Of An Offshore Merchant Account?
Most businesses that use offshore merchant accounts either do so because they can take advantage of tax regulations in that jurisdiction or they operate in industries that are regarded as high risk. Some businesses also decide to use an offshore merchant account because they concentrate on a particular overseas market like for instance China.
Offshore Merchant Accounts Aimed At High Risk Industries
It often happens that domestic financial institutions and banks place certain companies in the so-called high risk category and then as a result do not want to offer them a merchant account.
A merchant account provider will evaluate the risk that a merchant poses by looking at various factors such as the type of industry, trading history, credit worthiness and company model. For example, if the merchant works in one of the following industries namely travel, adult entertainment or subscription services, he or she will find it extremely hard to get approved for a merchant account.
Though, all is not lost as getting an overseas merchant account can be significantly less challenging. The reason for this is that offshore acquirers are not as restrictive and show more flexibility towards the types of services and products that they process payments for.
Overseas Card Processing Fees Can Be More Affordable
When you sell to an overseas audience, your customers will pay with their credit cards that have been issued by one of their local banks. As a result, it will in fact be processed as an international transaction. Consequently the merchant will have to pay more expensive fees than they would have paid if the transactions were processed locally.
Though, merchants can sometimes avoid these higher fees by getting a merchant account in that country. That way all the credit card transactions that happened in that specific country will no longer be processed as international transactions.
This means that the credit card processing services that are offered by offshore merchant accounts can be particularly advantageous if you run a business that operates across the globe. Alternatively, if you are planning to expand your boundaries at some stage, getting an offshore merchant account is without any doubt something to think about closely as you will then be able to welcome various currencies. This might just be the edge that your business needs to differentiate itself from the fierce competition.
An offshore merchant account can also offer your business possible loopholes that could result in possible tax perks. For example, several gambling organizations have established their companies in Malta and Gibraltar where the taxes imposed on gambling can be much less.
So What Can You Expect To Pay For An Offshore Merchant Account
It is not to say that offshore merchant accounts will be more expensive than domestic merchant accounts. As a matter of fact, domestic high risk merchant accounts can be very expensive. Though, you can get the same type of services but only pay a small percentage of the cost if you instead get an offshore merchant account. On top of that, certain offshore merchant account providers will not ask you to pay expensive deposits or application fees like other domestic financial institutions require you to pay. Also, if your business boasts a high volume of sales, it could possibly benefit from less expensive credit card processing fees too!
At the end of the day, the costs are calculated individually and will be influenced by the type of risk the industry poses, trading volumes and the history of the company.
Forget About Volume Limitations
The operations of your business could possibly be restricted by the local regulations and as a result you might encounter unfortunate losses. Though, the good news is that there are certain high risk offshore merchant account services that do not cap the volume of your business.
You can rest assured as there is nothing illegal about using overseas merchant accounts to conduct business. Although countless merchants find that overseas merchant accounts offer them many perks, ensure that you have a great reason why you choose such an account over a domestic account and study those T&Cs and costs very closely first.
Guide To High Risk Merchant Accounts
As high risk businesses are associated with uncertainty, it frequently causes them to be disqualified on the spot when they are applying to get merchant services. It is difficult enough to run a reputable, successful company when you are operating in the high risk field and you should not have to deal with the added stress of finding the right merchant provider that will be ready to look after the requirements and goals of your company.
Many times a high risk merchant runs the risk being contacted by those that operate unethically and provide fake offers with expensive rates, inadequate infrastructure and long-term contracts with expensive fees in case you want to terminate.
Mastering these obstacles makes it harder for risky merchants to work and be successful than those companies that are fortunate enough to work in less risky and volatile fields. Though, it is a not all doom and gloom, there are in fact qualified providers that boast a good reputation and concentrate on catering to high risk merchants. These providers provide quality options and are knowledgeable of the industry and, on top of that, they also boast the infrastructure and manpower needed to offer first-class support to their customers.
A Merchant Account Provider Is Liable For Your Company's Risk
If you are regarded as a high risk merchant, you will want to join forces with a merchant provider that concentrates on providing a service to fickle industries and can provide a quality, customized service based on the practical knowledge that they boast in the area. These experts are known for offering satisfactory rates and adequate customer support, while giving you the opportunity to work out the terms of your contract with perks you will not be able to get with a provider that is not as experienced.
The following are some of the indicative signs of a great high risk merchant provider:
• They concentrate on working with high risk merchants.
• They have experience when it comes to working with high risk merchants and the required manpower.
• They boast the suitable hardware facilities that are required to process credit card transactions.
• The boast great customer support, ideally they can be reached via email or Skype round the clock.
• They do not mind to negotiate fair and sensible pricing plans.
• They offer e-commerce support (in other words payment gateways).
Why Are Certain Companies Classified As High Risk?
So how does a merchant get classified as high risk? Why is it undesirable to offer a service to such a business? Well, the chance of a high risk business experiencing issues with credit card processing fraud is greater. Not all the high risk industries are the same. A few of the common types of high risk businesses are; e-cigarettes, adult entertainment, online gambling and, believe it or not, furniture stores. If you are a high risk merchant that operates in one of these industries, it can be hard to get a merchant service account.
Now a merchant provider can place a business in a high risk category more often than not based on the industry's actual reputation. The industry's reputation can be viewed as the manner in which business is done and the image of its clientele. For instance, the majority of online companies are volatile since they are at risk of consumer data theft. An online company is also at high risk for credit card fraud because it is not difficult for a fraudster to present himself or herself as a trustworthy customer by sharing false info that can be difficult to check online.
Another obstacle that a high risk merchant must face is the perception of the industry. For example, an online gambling site is regarded to be volatile because in the past it has been associated with business practices that could not be trusted. Ultimately any company that has to deal with higher levels of fraudulent activity will be regarded by a bank, processing agency or other financial institution as being high risk.
It then comes as a bit of a surprise that some businesses that operate conventionally rather than via the Internet, like a furniture store, can be regarded as risky simply because it sells big-ticket merchandise that can be hard to process. At the end of the day, the way in which your industry is regarded or the manner in which it does business can be a big deciding factor when it wants to the get the right merchant provider.
All businesses that have quite a high rate of chargebacks, for instance travel agencies, can be regarded as high risk merchant accounts. When clients are frequently asking to be refunded or simply cancelling their transactions, it can lead to potential fraudulent activity. Now your merchant account provider does not want to detect a lot of chargebacks as the good name of the bank or financial institution gets put into question whenever a refund is approved.
So, because of this a merchant provider's rates and fees for cancelling a contract that they put in place will not be cheap, ultimately influencing your bottom line.
Another factor that can play a role is how long your business has been in operation. Although start-ups are becoming increasingly popular, they are frequently regarded as posing a high risk as they are still in one of the most unpredictable stages, namely the first five years. Unfortunately the majority of businesses find it difficult to survive the first five years. As the odds are not in your favor, it will not be easy to get a merchant service account with a good provider.
Luckily there are some merchant account providers that boast the required knowledge and do in fact embrace the opportunity to work with a high risk business. These providers grasp the risks that play a role in a high risk business and the difficulties of finding a reputable provider. Though, be aware as there are several providers out there that will exploit this situation as they know you have limited possibilities and could as a result offer you a very high
Offshore Merchant Account Alternative
With the help of overseas merchant debit and credit card processing, essentially any Internet retailer or store can effortlessly welcome payments in countless different currencies. This means that when you open an overseas account, your business will have the golden opportunity to reach a much bigger market when it allows consumers from all across the globe to make a payment conveniently via your website by using the currency that they prefer whether it is the Euro, Canadian Dollar or Japanese Yen. In most cases, when your business starts to accept other currencies it will have to pay fees that are significantly higher, however when you look around, your business will in fact be able to identify a bank that will offer you a fee that you as a business owner will have no issues paying as you will now be benefiting from a bigger retail market that comes from all four corners of the world.
The solutions offered by an overseas credit card payment gateway is different to the standard MasterCard, Visa and American Express that are so popular in the United States. Yes, MasterCard, Visa and American Express are also found in countries apart from the United States, but there are other credit cards such as JCB and Diner's Club that are even more popular in some of these overseas countries. So, if you, as business owner, want to ensure that your business makes as much money as it possibly can, you will have to put measures in place that will empower you to accept other cards too.
As with all e-commerce websites, you will have to make security, during the checkout process, one of your company's key focus points. This means that your business must be on the lookout for a merchant processor that will be able to deal with foreign transactions while providing you the ultimate level of security.
It is key that your business gets an SSL (Secure Sockets Layer) server. Your customers will not use your services or buy your products again in the event that you are unsuccessful at keeping them safe from fraudulent activity. On top of that, to make matters worse, when your business has failed to protect one of its customers from fraud, the chances are good that the customer will just end up speaking disloyally of your company's website to all their family members, colleagues and friends. This means that you must at all times act proactively regarding looking after your website's security.
As an offshore account alternative is regarded as high risk, you can expect that the rates and fees will also be more expensive. So, when your business is busy putting in place an international merchant account, you will in many cases find a fee table offered by companies that include some of the following information:
• Between 3.5 to 10% of the credit card transaction will be subtracted as a service fee.
• The fee for a chargeback can be as little as $35 to as much as $150.
• Every single time a credit card is used as the method of payment, a transaction fee that ranges from only 35 cents to $1.50 will be charged.
• A membership fee of about $50 will be charged every month.
• A once-off fee that ranges anything from $250 to about triple that amount will be charged for setting up the merchant account of your business.
• The minimum fees that must be paid every month range from $20 to $50.
There are a few credit card companies that will charge extra fees that are then passed on to the owner of the business. American Express is for instance one company that is rather known for charging fees that could range from 1 to 3% per transaction amount. Though, there are certain merchant processing businesses that will refrain from charging these fees in an attempt to get you to engage in business with them. If this is the case, just double-check that the service fees that such a business charges are not too expensive in an attempt to recover the other fees that they have refrained from charging.
Also, if your business is in the process of setting up one of these types of accounts, be on the lookout for businesses that can offer your business customer support 24 hours a day, seven days a week, online access to your account, daily payments, additional tech support and security measures that involve high technology to help curb tampering with your account and other fraudulent activity.
There is no need to highlight that your business depends a lot on getting the money that the customers have spent and when a payment is not received in a punctual manner, your business will ultimately find it very difficult to pay all its accounts. There are several international banks that offer weekly payments twice a week, though a few opt for weekly payments instead. If you can, try not to engage in business with those banks that only make weekly payments. The reason for this is pretty straightforward... Any delay will mean that you could possibly go two weeks without getting any money. Obviously this can make severe demands on the budget of your business.
So, if you are in the process of setting up an offshore account alternative, ensure that you have a few questions written down and do not sign up with any business till you are completely sure that you comprehend every single term and condition. If it should happen that you are not sure about a specific matter, be sure to ask as many questions as possible so that you have all the answers that you require to feel at ease about opening an account. However, if you remain unsure or cannot rest assured, there is nothing stopping you from continuing with your search. At the end of the day, you are in charge of your business and you want to ensure that you can spend without causing your business too much debt.
Being Approved For A High Risk Merchant Account
If you are applying for a merchant account for the first time or you are experiencing issues being approved, there are some points to consider when applying.
Understanding The Process
There are two parties involved with the underwriting and approval process of a merchant account; the account representative along with the (preliminary) underwriter at the payment processor and the (final) underwriter at the bank.
Similar to applying for a; loan, mortgage or insurance policy, there are multiple underwriters that need to sign off on approvals. These underwriters assess the risk involved with the account and make the decision if the reward is worth the risk. In the payment processing industry, risk comes mainly in the form of chargebacks.
Understanding the different aspects of merchant account underwriting is the most powerful tool a merchant can have when applying. This knowledge is acquired the easiest by working with a competent account representative that helps your business navigate the approval process.
The overall goal of the account representative is to receive an approval. The majority of these reps work on a strictly commission basis and are aware of the requirements and processes of the different banks they partner with and are able to work with the merchant to assemble a strong application package that will most likely result in an approval. The reps usually will not waste time working with merchants that do not listen or that do not respond to repeated requests, remember, they are commission only and accounts with little chance of actually being approved are quickly deleted. It is best in the beginning to explain to your account rep what you are looking for and work with them to achieve approval.
Many High Risk Accounts Are Not Cut And Dry
Most high risk merchant accounts are not easily setup with the first set of documents that are submitted. It is not uncommon for underwriters to request additional documentation. Usually the bank will request an updated document or statement to complete their final application package. Businesses should be aware of the common bank requests during the underwriting process and understand that they will need to comply in order to be approved. Merchants unwilling to adhere to the bank’s requests will find themselves without a merchant account and possibly without an account representative eager to submit them to other banks.
Several Points To Consider When Navigating Your Way Through The Application Process
1. Be realistic and understand; your business, the industry and the risk they both present to a payment processor/bank. If your industry is considered high risk, be aware that the underwriting process will be more in depth than a normal low risk account.
If you are applying for an offshore merchant account, be aware that monthly volume and previous processing history are the most important factors when applying offshore. If you do not have either of these, the approval process will take longer.
It is true that certain high risk merchants are able to be approved within 1 day, however; most high risk merchants will be approved within 1 week and some accounts are approved within 1 month. It depends on the strength of your company and the history you can provide.
2. Always be completely honest with your account representative. Finding and working with a great account representative in the high risk industry is a great benefit to the merchant. Merchants have the ability to speak with a person that has previously setup hundreds of companies with high risk payment processing services. They know the industry, they know the bank and they know how to get approvals. If you are not 100% forthcoming with them, it will come out with the bank and the account will turn into a decline. Most company issues are not decline threatening, unless they are concealed. Always be completely honest with your account rep.
3. The more information you provide, the higher your chance of approval. You can never provide too much information on your business to the bank. Not only will more information cover all of the required documents stipulated by the bank, it will also make your business look more professional, more serious and more legitimate to underwriters.
It does not take long for underwriters to decline accounts that are not complete. It shows that the owners are not serious and that the company will most likely be a short-term endeavor; in other words, a waste of time for the processor and the bank.
4. Provide current processing statements. Every underwriter (low risk, high risk and offshore) wants to see processing history. It is similar to applying for a car loan and having the bank check your credit. It is not always required but once you provide it, you normally receive better rates and better terms in addition to being approved much faster.
5. Startup businesses are more difficult to be approved. Similar to a borrower with no credit, startup businesses are considered riskier than already operating businesses (with processing history). There is no track record, making it riskier for the bank and processor. When you apply for a merchant account as a startup, be willing to wait a little longer and be willing to submit additional documents, like a business plan, to be approved. Business plans are extremely helpful to underwriters. It explains your business in full and shows that the owners are serious about succeeding.
6. Incomplete application packages are not helpful to underwriters. Some companies believe that submitting just the application or the application with a couple documents will “get the ball rolling” however; that is not the case. Partial application packages are not even reviewed until the full application package is submitted. It is very important to FULLY complete the application and submit it in with ALL of the supporting documents. This will move along the underwriting process and help to secure approval as soon as possible.
7. The most important goal is to be approved. This sounds obvious to most but some merchants focus on insignificant details of their application, putting the full approval at risk.
An example would be a company that is currently processing $100k per month and applies for a new account with a monthly limit of $400k since they feel they will reach that monthly amount within the next 90 days. A knowledgeable rep might explain that $400k is too high and apply for $150k or $200k a month with the ability to increase the limit 50% monthly. Now, both amounts on the application get the merchant to the desired target of $400k per month within 90 days, however; the bank is much more likely to approve an account at $200k with a 50% monthly increase than $400k off the bat. It gives the bank 90 days to monitor the business’ processing prior to increasing the limit to $400k.
It is not uncommon for account representatives to tweak applications in order to obtain approvals. It is much, much easier to increase the limits on an account or improve the terms of the approval once the company has actively processed with the bank. Underwriting is based around comfort. If the parties extending risk are comfortable with the business, there is a very good chance the business will receive everything they want. Comfort is easily earned when a company is processing with limited chargebacks and limited issues.