High Risk Merchant Accounts

Compare Merchant Accounts-7 Things to Know!

noreply@blogger.com (Ct) — Fri, 18 Jul 2008 01:03:00 +0000

If you’re shopping around to compare merchant accounts and the sales rep fails to mention any of the 7 items below, be sure to ask.

Remember, just because they don’t bring them up doesn’t mean they won’t be charging you for them.

Do they have a Monthly Minimum?
Which means if you’re not processing around $1,200.00 a month in Visa/MasterCard credit card transactions, you can be charged an additional monthly fee up to $25.00.

Do their credit card merchant accounts require you to sign a 2-3 year contract?
And then if you cancel early for any reason, will they change you a cancellation fee ($200.00-$500.00).

Do they charge you an annual fee?
A lot of companies that offer cheap merchant accounts (especially those offering you a “free” terminal) will charge you a yearly fee that ranges from $30.00-$200.00. They’ll either call it an annual fee, membership fee, or a risk assessment fee.

Do they want you to lease a terminal?
Depending on your equipment, you’ll be paying $30.00+ per month for 36-48 months in a non-cancelable lease. Most leasing companies will not give you a break for paying the lease off early - and you’ll also pay a “lease buy-out fee” at the end of the lease (approx 10%). Overall, you’ll end up paying 5-10 times the amount of a cash purchase.

Do they offer a ‘free terminal’?
When you compare merchant accounts for retail processing, remember that there is no such thing as a “free” terminal. Most providers that offer credit card merchant accounts and so-called “free” terminals make up the difference by charging you high credit card processing rates, monthly minimums and annual fees, & then require a 2-3 year written commitment from you. By the end of the first term you will have paid much more in excessive fees for the “free” terminal than you would if you had just bought one. Remember, you can always purchase an inexpensive refurbished terminal - they are fine. Most have a 1-year warranty - and processors will usually swap out your terminal for free if it ever breaks or malfunctions, as long as you’re still processing with them.

Do they offer after hours support?
Be sure to ask about after hours support. Do they provide 24/7 live support in case of card issues at night or during the weekends. The last thing you want is to lose sales due to card related issues because of long hold times or lack of after hours support.

Do they offer a compatible internet gateway?
If you have a website and you need to compare merchant accounts for credit card processing online, it’s critical that your shopping cart be compatible with the processor’s online payment gateway. Check to be sure your shopping cart will communicate with the processor’s payment gateway - before signing up for an internet merchant account.

Article Source : The Transaction Group

How to Get Approved for a Merchant Account

noreply@blogger.com (Ct) — Wed, 16 Jul 2008 02:33:00 +0000

Try these strategies for improving your chances

There are many examples of high-risk merchants, such as telemarketers (inbound or outbound), Internet/e-commerce businesses, merchants in the travel and cruise industries, Internet auctions and businesses offering membership clubs.

But owning a high-risk business doesn't mean you won't be able to open a merchant account. It does mean, though, that it may be more challenging to set one up. Merchant account providers--banks and independent sales organizations--will also consider how long you've been in business, your credit history and any previous merchant accounts you've held with other processors.

Your length of time in business matters because merchant account providers want an assurance that you understand the business environment in which you operate, can identify the potential risks you face, know how to prevent or reduce fraud, and understand how to manage credit card acceptance. Regardless of risk, this kind of knowledge comes only with first-hand business experience.

Your credit report will show how well you've repaid past loans, and if you've had any liens, judgments or bankruptcies filed against you. A favorable credit history will go a long way toward establishing your credibility as a prospective merchant.

And if you've had an earlier, well-maintained merchant account, it's a positive indicator of how you're going to deal with your new processor. Terminated merchant accounts will show up on the Member Alert to Control High-Risk Merchants file, also known as the Combined Terminated Merchant File. If your previous processor terminated your merchant account because you defaulted on it, or if you incurred too many chargebacks, this may negatively impact opening a future account.

To increase your merchant account eligibility, follow these tips:

Ensure a positive credit rating. Remove any past bankruptcies, late payments or liens from your credit report before you apply for a merchant account. To obtain your credit report, contact a credit reporting bureau such as TRW or a company that provides merged credit reports from major reporting agencies, such as Equifax, Experian or Trans Union. Write to them, explain that these matters have been cleared up and ask that they're removed from your credit report. Whether you own a small or large business, having a good credit rating will make a lasting and favorable impression with a transaction processor.
Be honest about previous merchant accounts, bankruptcies, liens or judgments. By acknowledging past financial challenges, you improve your credibility and may encounter one less barrier to opening a new merchant account. You cannot hide information that's part of the public record.
Be willing to pay higher fees or accommodate special account requirements. If you need to abide by special restrictions or pay slightly higher fees in order to open a merchant account, by all means do it! It's worth it to provide your customers with as many noncash payment options as possible. It will help you generate revenues and stimulate impulse purchases.
Shop around for a credit card processor that best suits your needs. Talk to several different processors and don't be afraid to ask questions. Find out about :

The discount rate : The percentage of each transaction paid to the merchant account provider. If your monthly charges are less than a certain volume, the processor may charge a higher percentage.
Transaction fee : A flat rate charged for each transaction processed.
Equipment : Some examples include point-of-sale terminals, printers and peripherals. Also find out about installation costs.
Monthly minimum fees : These are minimum fees that the merchant account provider collects each month from the merchant if the merchant's discount rate and transaction fees don't add up to the monthly minimum specified on the original merchant application. It is usually about $25 per month if the monthly minimum volume isn't reached.
Reserve fees : If your credit history is in question, or if you own a new or high-risk business, you may be required to set up a reserve account, which protects the processor from any future losses. The reserve account is calculated as a percentage of your sales.
Chargeback fees : These are the costs charged by a processor to cover disputed charges.
E-commerce : If you're an e-commerce merchant, ask your prospective processor about the costs of storefront solutions that you must have to effectively operate your Web site, such as shopping carts, Web hosting, payment gateways, virtual terminals, virtual checks, databases for fulfilling orders, customer tracking, and a way to calculate tax and shipping charges.

Operating a high-risk business does not exclude you from being able to process credit cards. When you shop around for the right transaction-processing organization, go into it knowing what to expect. Follow the strategies outlined above, and the experience of opening a merchant account will hopefully go smoothly. And in the end, getting approved will put you on your way toward generating more revenues for your business.

By John Burtzloff
Article Source : Enterpreneur.com

What Is A High Risk Merchant Account

noreply@blogger.com (Ct) — Tue, 15 Jul 2008 01:21:00 +0000

High risk merchant accounts are ideally suited for businesses greatly involved in high risk dealings. Some examples of such businesses are those providing gaming, travel and pharmaceutical services, telemarketing and multi level marketing companies. Finding a merchant account provider willing to set up a high risk merchant account for businesses such as these may prove to be a challenging task as many banks and financial institutions are reluctant to take on the increased risk of credit card fraud that comes with such high risk businesses.

There are however, advantages of setting up a high risk merchant account. These include the flexibility of offering multicurrency transactions, 24-hour customer support, real-time processing as well as the recognition of all major credit cards. In addition, if you choose a merchant account provider from a foreign country, chances are that you will be able to enjoy tax benefits from setting up an account with them.

As merchant account providers are more stringent in approving businesses setting up high risk merchant accounts, the greatest challenge you might face trying to set up such an account may be in getting your application approved by an account provider. It is unsurprising then that the better your credit rating, the better your chance of being approved for a high risk merchant account.

As you would probably already know, nothing comes for free and a merchant account (a high risk one at that) is no exception. However, the fees involved can vary from provider to provider. Apart from this factor, the variance in fees is very much dependent on the level of risk involved and the type of business you own. Setup fees can vary from as little as a few hundred to as much as a few thousand.

If you're low on budget however, setting up a high risk merchant account will inevitably cost you more than a regular merchant account - including higher credit card processing rates. However the good news is that providers that offer services for high risk merchant accounts will not require any security deposits in order to run your account.

Article Source : Copyright 2008 Active-Venture.com - Web Site Hosting Service

Here are a few other business type that are classified as High Risk Accounts :

Adult Sites and Products
Amusement & Recreation Services
Auto Rental
Bail Bondsmen
Buying / Shopping Clubs / Wholesale Clubs
Lotteries
Cellular Phones & Beepers
Check Cashing Services
Coin Shops
Collection Agencies
Computer Stores
Credit Repair
Credit Interest Rate Reduction
Custom Products
Dating
Detective Services
Door-to-Door Sales
Downloading of Software
Escort Services / Massage Parlors
Gun Shops
Hair Restoration Services
High Volume / High Ticket
Home / Apartment Operated Business
Horoscope / Fortune Tellers
Infomercials
Insurance Products
Investment Opportunities
Internet / Custom Jewelry Sales
Meat Provisions, Freezer, Lockers
Mortgage Services / Securities Sales
Multi-level Marketing
Outbound / Inbound Telemarketing / Phone Solicitation
Pawn Shops
Internet Pharmaceuticals / Vitamins
Seminars, Educational
Sports Cards
Sports Forcasting / Consulting
Telecommunications Equipment Sales
Time Share Sales
Travel
Used Auto Sales
Water Purifiers
Weight Loss Centers