Banks want to encourage the view that credit cards are a safe and convenient way to buy, so it isn’t really true that it is difficult to get a bank to approve a merchant account. In fact, banks allow customers to chargeback, to foster the confidence that if the consumer is not satisfied with his purchase using a credit card, there is always a way to get a refund. This is a risk for the bank in case the payment to the merchant has already been processed. Thus, here’s what a bank would initially look into your company for, to offer you favorable merchant account services: -
• How large is your company?
• How long have you been in business?
• How long have you lived in the community?
• How many years have you been at the current address?
• If your business is a partnership, how long have the partners been together?
• What kind of business are you in?
• How much business experience do you have?
• How is the structure and order of your organization?
• Do you cater to your customers face-to-face or are you a mail/phone order company?
Banks have statistics of charge backs and other deceitful or unethical activities in all industry sectors. Hence, risky businesses may never hope to have a bank as a merchant account partner. For instance, porno Web sites that average over 50% charge backs are definitely avoided by well-established banks.
Banks have their own ways of limiting chargebacks. You may be asked to guarantee the account agreement, which means that you will be personally liable if your company ends up owing money to the bank. In addition, banks may ask you for a secured savings account for several thousand dollars to secure your credit card account, as insurance against future chargebacks. Be sure to acquire all the particulars of a bank's chargeback policy.
Different banks have different policies, in accordance with which they may or may not offer the businesses in their “high-risk” category with merchant accounts. Some banks are happy to do business with anybody, but for a mighty high price. Some of the businesses considered "high-risk" are, Pornography, gambling, get-rich-quick, weight-loss programs, herbal remedies, etc. These businesses are usually forced to work with smaller banks or other financial organizations, providing similar services.
Retail storefronts or “cardholder present” transactions present lesser risk to banks and hence low fees are charged in comparison to internet based businesses that rarely manage to get merchant accounts from banks.
For more information, visit
Credit Card Processing and Merchant Account Services.
