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High risk merchant processing
A merchant account is simply a special
type of bank account which is designed
specifically to accept payments made by
credit cards. These payments could be
made by customers either at the stores
where the purchase is made, via credit
card terminals or over the internet via
shopping carts made in a company’s web
page. In order to accept payments made
by credit cards, a trader will require
an internet account at a financial
institution such as a bank. Merchants
having high risk businesses like
casinos, online gaming, and adult
industry business have problems in
obtaining merchant accounts. This
happens due to the risk associated with
the card frauds that take place as well
as the involvement of high turnover.
This results in financial institutions
shying away from giving internet
merchant accounts to these business
owners. A trader can then obtain the
services of merchant accounts from
private institutions.
After a merchant account is obtained,
the next requisite is to have payment
gateway accounts. A payment gateway
account is simply a processing account
used for the authenticity verification
of the card after which the funds get
transferred to a merchant’s account.
A consumer enters his card details on a
merchant’s web-page. This information
needs to be entered on secure web-pages.
This implies that that details collected
on web pages need to be encrypted such
that no third party is in a position to
read it. Have secure web pages is
mandatory in order to reduce frauds made
by credit cards. After this, the
shopping cart software compiles all the
received information and sends it across
to a credit card processor, which is a
payment gateway. The processor then
verifies the received information and
then determines the firm managing the
credit card of the consumer. After this,
the processor sends a billing request.
When the credit card firm receives a
billing request, the company does an
account validation to ensure that
nothing is wrong. An acknowledgement is
then sent to the respective payment
gateway. If the received information is
authentic, the processor initiates a
fund transfer to the merchant’s account.
The merchants can also opt for 3rd
party merchant accounts. In this type of
merchant account, the merchant account
provider collects the money for the
trader. However, the fees taken by 3rd
party account providers for processing
could be higher in comparison to
personal merchant accounts. The merchant
account processing functions in a
similar manner for both the 3rd
party as well as the personal merchant
accounts. However, the difference lies
in the fact that the payments are not
directly made in the website of the
merchant but the consumers are directed
to make payments in the website of the 3rd
party processor. Hence, all the details
are entered by the consumers in the
website of the 3rd party
processor. The processing that follows
after entering the information is the
same. Therefore, it is dependent on the
merchant to select a personal merchant
account or a 3rd party
merchant account. |
