Medium Risk Merchant Account

[joncase]

Hello,
I am creating a site for a client who will be selling a day trading course. The course materials will be a DVD, printed manual, and email and phone support. The cost will be $995.00. His business is only a year old, and he is having trouble getting a merchant account even though his credit is good. It is the high amount that will be charged to cards that is causing him to be denied. Does anyone have experience in getting a new merchant account when the product cost is so high?
Thank you, Jon

[Dubbya]

Try a different merchant account provider. Contact them to ask if they have a solution.

Typically, they don't have a problem with orders under $100, but anything over that can send up big juicy red flags.

I'd expect that even if your client is able to secure a merchant account, the credit card companies would flag the purchases as suspect until they contact the card holder.

Sounds like a pretty big hassle.

Good Luck

[joncase]

Thank you, Dubbya.

In my continuing research, I found a site, Merchant Accounts >> You're Approved Worldwide - Instabill.com. They hold back 10% of each transaction for a month as security. That could work for my client. Anyone have an experience with them?
Thank you, Jon

[imvain2]

I'm not sure if you have looked into this or not, but Paypal offers a Virtual Terminal Account for $30/month and their normal 2.9% + $0.30 per transaction fee for ALL credit cards.

So you just setup the website with a digital certificate to accept the credit cards, then upon receiving the order your client would run the CC through the Virtual Terminal. We actually have many clients who utilize the process (some with PP some without), a few clients average a dozen orders per day.

And the customer wouldn't even know it was paypal until on their CC balance it would say something like Paypal*YourBizName.

[Dubbya]

While some folks don't care for Paypal, it's an easily integrated, cost-effective solution. You don't have to worry about merchant accounts, there are no monthly fees, they assume all the responsibility in protecting sensitive information, you can drop them at a moment's notice and there's no holdback.

Merchant accounts cost money and if you're accepting payment information, it falls on you to protect it.

Yup, I'd lean toward PayPal, at least until things get off the ground. If it looks as though your client will be doing some big business, you can always deal with the hassles of acquiring a merchant account later.

[joncase]

Thanks imvain2,
A good idea that I'll pass by my client. If there is no restriction that would limit the $995.00 sale charges, sounds good. (Except for the $30 a month charge, but all told that is not much more than the monthly merchant account monthly fees. We have a form set up to receive the order info and he was going to manually enter them into a terminal---but all the merch. acct. people wanted to go through Authorize.net.
Thanks for the great suggestion. Jon

[joncase]

Thank you Dubbya,
Cool. Two votes for PP that make good sense. I'll be looking into it tomorrow.
Jon

[imvain2]

I think the only restriction is the customer's CC.

This is how the company I work for handles our CCs for clients who wish to be charged instead of billed. And the only time we had any limitations was if the CC had a spending limit but that was it.

[astraro]

Moneybookers is a better alternative ,no montly fee ,only 1,8 euro per/transation https://www.moneybookers.com/app/?rid=1476647

[Byteman]

Originally Posted by joncase

Hello,
I am creating a site for a client who will be selling a day trading course. The course materials will be a DVD, printed manual, and email and phone support. The cost will be $995.00. His business is only a year old, and he is having trouble getting a merchant account even though his credit is good. It is the high amount that will be charged to cards that is causing him to be denied. Does anyone have experience in getting a new merchant account when the product cost is so high?
Thank you, Jon

As an ECommerce Web developer and an authorized merchant account provider let me provide a few pointers as most statements here are costing your BIG MONEY. Sorry guys.

Every business seeking to get a merchant account is rated based the company's (SIC) code; Standard Industrial Classification. This determines what risks are with this type of company; plus having good credit helps.

During the application the merchants are asked to estimate the single average ticket transaction and the overall average monthly volume. We have clients charging thousands of dollars so price is not the issue.

It's all amount (RISK) and in this case there are a few red flags, internet, downloadable files, risk of charge-backs.

In some cases the merchant provider may ask for a deposit upfront and or hold back a certain percentage. After processing between 6 months to 1 year and have proven good business practices and with very few charges (if any) they will no longer require the hold-back. You do receive the hold-back monies..it's your money.

For internet merchant accounts you will need a Merchant Account, Payment Gateway, SSL Digital Certifcate, some form of shopping cart/checkout.

You will pay much higher fees if you manually key transactions via a virtual terminal.

Most people don't realize that a small business doing any volume in payment processing is the third or fourth highest expense.

I'm sure we can help your client get approved. Apply online at Accept Credit Cards and increase sales or Merchant Service Fees | Credit Card Acceptance | Lower Discount Rates

[imvain2]

I have spoken with many merchant providers and their rates were ALWAYS more expensive then paypal's rates. I have seen AMEX rates upwards of 5% per transaction, and discover and master card around 3.5% percent for lower risk, card in hand brick and mortar store with a good rating.

Originally Posted by Byteman

As an ECommerce Web developer and an authorized merchant account provider let me provide a few pointers as most statements here are costing your BIG MONEY. Sorry guys.

Every business seeking to get a merchant account is rated based the company's (SIC) code; Standard Industrial Classification. This determines what risks are with this type of company; plus having good credit helps.

During the application the merchants are asked to estimate the single average ticket transaction and the overall average monthly volume. We have clients charging thousands of dollars so price is not the issue.

It's all amount (RISK) and in this case there are a few red flags, internet, downloadable files, risk of charge-backs.

In some cases the merchant provider may ask for a deposit upfront and or hold back a certain percentage. After processing between 6 months to 1 year and have proven good business practices and with very few charges (if any) they will no longer require the hold-back. You do receive the hold-back monies..it's your money.

For internet merchant accounts you will need a Merchant Account, Payment Gateway, SSL Digital Certifcate, some form of shopping cart/checkout.

You will pay much higher fees if you manually key transactions via a virtual terminal.

Most people don't realize that a small business doing any volume in payment processing is the third or fourth highest expense.

I'm sure we can help your client get approved. Apply online at Accept Credit Cards and increase sales or Merchant Service Fees | Credit Card Acceptance | Lower Discount Rates

[deepsand]

1) The referenced PayPal account is a merchant account.

2) PayPal's discount rate is not, as another said, invariably the the least costly.

Discount rates of 2.145% for Discover and 2.25% for Visa/MasterCard are quite common, even for small merchants doing nothing but card-not-in-hand transactions. Amex is almost always higher; 3.25% would be a typical rate.

Transaction fees of $0.10-0.15 are typical of other card processors & merchant acquirers, as are monthly maintenance fees of $15-20.

3) Approval by PayPal is, as is the case with other merchant accounts, not guaranteed. You'll still have to pass muster with them.

In short, there is no magic bullet. Both you and your expected transaction types, amounts & volume will be evaluated re. risk. The higher the risk of charge-backs, the less able you appear to be able to immediately fund such, the higher the discount rate. If the risk is too high, you'll be declined for an account. If one can arrange for a suitable guarantor, so as to reduce the rick to the merchant acquirer, approval can still be obtained.

Once an account is obtained, and with a sufficeintly good track record, it is not difficult to renegotiate one's discount rates, switch merchant acquirers, etc., so as to reduce ones card processing costs.

[blitzen]

When I first started, I had no problem with $1,000 to $5,000+ charges. I told them the avg expected charge would be around $500 (we sell small stuff, too) and had no problem.

Keep shopping around.

I don't understand how the merchant credit affects the merchant account application.

As long as you have security measures in place, are PCI-DSS compliant, and have no criminal record (but I doubt they check that), it should be no problem.

Regarding PayPal, for the prices you charge, get the V/MC/Disc/AMEX merchant accounts, not PayPal unless PayPal has an account that is invisible to your customer, like the standard merchant account.

I offered PayPal and Google Checkout in addition to V/MC/Disc/AMEX processed by us and the only customers who used PayPal or Google Checkout were those who ordered under $50.

For the size of your orders, it'd be a good idea to join the Better Business Bureau or your country's equivalent. I have customer's checking my business license online at the state and the BBB all the time.
Also, a toll-free number is a must for this size orders. These folks are looking for credibility.

[deepsand]

Originally Posted by blitzen

I don't understand how the merchant credit affects the merchant account application.

As long as you have security measures in place, are PCI-DSS compliant, and have no criminal record (but I doubt they check that), it should be no problem.

When a merchant accepts a credit/debit card transaction, and it is settled, the merchant acquiring bank credits the merchant's account for the proceeds, even though it may not receive the funds from the card issuer's bank for several days.

Additionally, if one receives a charge-back, the merchant acquire bank must pay the issuer's bank, regardless of whether or not the merchant has sufficient funds in his account to cover it.

In short, the merchant acquirer acts as a lender to & guarantor of the merchant. And, as with any other such agent, needs to be assured of the merchant's credit worthiness before undertaking such.

[edhan]

Originally Posted by joncase

Thanks imvain2,
A good idea that I'll pass by my client. If there is no restriction that would limit the $995.00 sale charges, sounds good. (Except for the $30 a month charge, but all told that is not much more than the monthly merchant account monthly fees. We have a form set up to receive the order info and he was going to manually enter them into a terminal---but all the merch. acct. people wanted to go through Authorize.net.
Thanks for the great suggestion. Jon

That amount should not be a problem with PayPal as I have made payment for $9,500 with it.

[jammybiskit]

Deepsand said
"PayPal's discount rate is not, as another said, invariably the the least costly.

Discount rates of 2.145% for Discover and 2.25% for Visa/MasterCard are quite common, even for small merchants doing nothing but card-not-in-hand transactions. Amex is almost always higher; 3.25% would be a typical rate.

Transaction fees of $0.10-0.15 are typical of other card processors & merchant acquirers, as are monthly maintenance fees of $15-20."

Can you point us in the direction of such providers, please, Deepsand?


We've been using PayPal for the past 2 years (and lately Google checkout too).

We're currently casting around for a merchant account, though our transaction size is much smaller than $995. Perhaps we're being a bit too hasty. Thank you imvain2 for your tip on PP's virtual terminal account.

The main problem with PayPal is abandonment. Recently we've noticed this skyrocketing - customers go to PayPal but give up.

Has anyone else noticed this recently?

astraro said "Moneybookers is a better alternative ,no montly fee ,only 1,8 euro per/transation" but when I looked at moneybookers they were quoting 8% per transaction. Maybe that's just in the UK but that would be nearly $80 for a $995 sale!

Another possibility might be Durango (High risk, high volume merchant accounts - Accept credit cards online!) who claim to specialise in internet accounts and claim to have a high acceptance rate.

Major UK banks charge around £250 ($500) for merchant account setup plus £25($50)/month plus at least 4.8% per transaction on top of the collection fees. No wonder the financial services sector is the darling of the government.

Great thread and just at the right time! Thanks.

[pauper]

I have been working with websites that are considered hi-risk merchants for over 5 years. Getting hi-risk merchant accounts can be difficult depending on the industry. The client you are referring to with the day trading kit is hi-risk but should be an easy client to get a merchant account for, I recently just worked with a client who has a similar product and was able to get him a merchant account fairly easy.

Go to the site PaySources.com and contact them and they will be able to help you get a merchant account for your client.

I have been working with http://www.PaySources.com which is a merchant services provider for about 4 years, they do all types of merchant accounts but specialize in getting merchant accounts for hi-risk merchants such as online pharmacies, online gaming (casinos, poker rooms, etc), adult sites, membership sites, investor clubs, investor services, and every other hi-risk merchant you can think of.

I have had clients that tried getting merchant accounts everywhere with no luck and I have sent them to PaySources.com and Pay Sources has been able to place them with a merchant account everytime.

Hope this helps.

Regards,
Pauper

[deepsand]

Originally Posted by jammybiskit

Deepsand said
"PayPal's discount rate is not, as another said, invariably the the least costly.

Discount rates of 2.145% for Discover and 2.25% for Visa/MasterCard are quite common, even for small merchants doing nothing but card-not-in-hand transactions. Amex is almost always higher; 3.25% would be a typical rate.

Transaction fees of $0.10-0.15 are typical of other card processors & merchant acquirers, as are monthly maintenance fees of $15-20."

Can you point us in the direction of such providers, please, Deepsand?.

Try

George C. Gregory
Americard Processing Systems
3300 North Ridge Road
Suite 325
Ellicott City, MD 21043

800-352-1654
410-461-9923 Fax

Home Take Charge Cards . Com

GeorgeC@TakeChargeCards.com

Should he inquire, you may tell him that a client, Hound Dog Tours, referred you to him.

[joncase]

Thank you all for helping me with my client's problem. He was able to get an account with PayPal that will give him a virtual terminal. The rep at PayPal said he knew of several of PayPal's VT account holders who are selling items for more than a $1000.00 a pop on their sites and PP has been able to accommodate them. A good alternative to going through the hassle of acquiring a merchant account.
Jon