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[H345]High Risk Merchant Account

by Jessie Ferguson, Jes

The risks of offshore high risk merchant accounts

Most sellers of such high risk merchant account are delivering low-grade products ? or simply take your money and run away (this has happened to me several times in the past). These sellers have never processed 1 single cent themselves from credit cards ? and therefore do not know (or care) about the requirements of a merchant. They only know how to sell a useless ?solution? that will go down after 1-2 months of use.

These days the scam artist make your account run for 2 months and then suddenly it gets closed ? and then you never see the funds from the last 3-5 weeks processing ? plus the standard 10% reserve that you normally should get back after 6 months.

A new variation of this scam is that the high volume high risk merchant account processor has very poor reporting system making it difficult or impossible for you to see when and how much you will get paid for which period.

For example a gateway processor that claims to be located in Switzerland (they have no telephone that actually works) and be operated by a Swiss person shows only 7 transactions per page ? and has no reporting system whatsoever. This processor claimed that their discount rate was 8% and reserve was 10% - but actually, they kept 53% of all processed amount ? and after7-8 weeks the account suddenly closed. This so-called Swiss gate also put a chargeback belonging to a completely different merchant on my account and never removed it even though they promised to do so. Another chargeback I was able to prove that the product was delivered but the chargeback still remained.

Another example was a so-called Chinese gateway processor using a gateway went down (lost their bank connection) also after 6 weeks of processing with them ? and never told anything to me - ever ? so for 2 weeks all my orders got declined ? making my potential customers upset and me very frustrated. Besides the cheating then this gateway is so badly built that you can only use Internet Explorer to access the gateway with and you must disable popup blockers. The DNA-gateway does not permit you to use the mouse for copy/paste of customer info which makes it very slow to use. This doesn't really matter because they never pay you 1 single cent.

A great way that these sellers also make money is to make up fines from Mastercard or VISA ? that supposedly requires 1-4 years litigation. These fines do not exist at all or at a much lower amount ? or, are only temporary fines that are refunded to the processor after a short ?hold?-period. The processor has already deducted these funds from the merchant ? but the merchant never gets these funds again. Ever.

A processor broker/seller having a foreign name ? Gany Karim ? (this is not his real name ? just the name he uses for his customers ? so he can not sue me for defamation and supposedly located in Canada sold me those 2 solutions. The total loss was more than 40.000 USD in direct losses ? plus I was not able to process for several months waiting for a new solution to be made ? which never came. However, all his ?fees? that ran into 2.000 USD ? including extra fees that were never explained to me ? was deducted from my processed funds and funny enough I never saw 1 cent at all.

Before a processor loses his bank connection then the bank has for some time asked the processor to change certain procedures which the processor chooses not to do so. Then the bank closes the processors merchant account and then the processor blames the bank for the problem.

When you ask the processor which bank they use then they will never tell you.

After a couple of years you have forgotten all about it and have moved on ? which is what these scam artists hope for.

These processors also have no or very poor customer service (before they close down your account). And after they close down the account ? then they have zero customer service and you can not get hold of them at all or not talk to the decision maker.

Other times then the processor sets up another corporation which they process thru. Then in your contract it says that the processor is not liable for losses incurred if your processor is not paid. The funds will then be in the other company (that the processor also owns).

Are there any offshore credit card processors that are not con artists?

Yes, there are some good offshore merchant account processors out there. I use some of them myself for my own websites so I know that they are reliable.

You will get your own MID account and be able to accept VISA, Mastercard, ACH and maybe other cards also (depending upon your business area) ? for a small setup fee of $599.

You also get to talk to a real life person ? who knows the requirements of a merchant ? and uses the very same processor solutions that I sell. So, I practice what I preach so to speak.

Many merchants complain about the lack of information when it comes to high risk merchant account application. It's not that there's no information at hand; it's more likely because merchant account providers do not provide standard customer service or are simply too lazy to share the nuts and bolts that the applicants need.

CASE IN POINT
For example, a merchant may have already submitted his application before the merchant account provider (MAP) reveals the improbable terms: that he may not receive payment until x number of months or that he may not be approved for a merchant account unless he changes his marketing plan. When this happens, the worst case scenario is that the merchant's application may never be approved. If the company doesn't offer a money back guarantee, he may lose money even before he earns it.

The dark side of high risk merchant application involves a possibility that the MAPs may take long to approve your account. The reason is that they need to assess your business in relation to the rate of frauds and chargebacks that might be incurred. Also, you may spend more on fees than a regular merchant account.

TRICKS OF THE TRADE
However, it's never a dead end road for the high risk merchant. Here, I have compiled a list of some insider information you might want to check out first before diving headlong into your high risk/offshore account application.

Some accounts may be approved within 24 hours.

When it's offshore (account) there is less likelihood that it will be declined.

Merchants with bad credit rating can still apply and get approved.

There's no need to open a new bank account as the funds get transferred
directly to the merchant's bank of choice.

Most high risk merchant account providers require from as small as $10,000 to $50 million on monthly credit card sales volume.

MAPs will provide pricing quotes after analyzing the merchant's business? status. The following are likely criteria for pricing the application:

1. business profile
2. personal credit of the owner
3. business lifespan
4. monthly processing volume
5. business solvency
6. processing history
7. fraud / chargebacks history

Some MAPs require minimal volume caps or none at all.

Merchants may choose your own international bank.

Merchants previously listed under terminated merchant file (TMF) list still get a chance to get their application approved, as long as they were not involved in fraud in the past.

When merchants apply for an offshore merchant account, they do not have to spend for credit card terminal or software to process your transactions.

Merchants may also accept a good number of international currencies as well as have the ability to offer other payment processing options such as by fax, phone, or e-mail.

Merchants may start accepting credit card payments in a matter of a week as soon as their application has been approved and the terminal or software has been set up.

GOING THE OFFSHORE WAY
Now, for businesses who have originally planned to go the route of offshore merchant account application, there is no need to convince them of the benefits they will earn. Going the offshore way means getting a ton of perks when it comes to taxation. Internal bank policies in international banks are not as strict as U.S. banks. The drawback is the higher processing costs and a holdback on proceeds as reserve to protect them against chargebacks in the future.

Article Source : Pg. 11

About Author

Both Jessie Ferguson & Gerri Bryce are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Jessie Ferguson has sinced written about articles on various topics from Skin Care, Finances and Human Growth Hormone. Jessie ferguson has many years experience with and. Jessie Ferguson's top article generates over 22200 views. to your Favourites.

Gerri Bryce has sinced written about articles on various topics from Customer Service, Finances and Online Business. Gerri Bryce is a versatile technical writer specializing in general web content copywriting and consultancy for finance and