|
RISK FACTOR IN MERCHANT ACCOUNT RELATED
TO TOBACCO INDUSTRIES
The most risky business in today’s world
is tobacco business. Though the overall
return on sales is high as compared to
the other products, it is considered to
be a down directed business. Many fraud
cases have been ruled out with the
tobacco merchant account. According to
the past records, the tobacco companies
were imposed heavy penalties by the
banks and other non-banking financial
institutions. The processors or the
payment gateway systems consider the
tobacco merchant account as the high
risk transaction process. The merchants
holding a tobacco merchant account are
not provided with credit card facilities
as so many fraudulent cases have already
taken place.
These tobacco merchant accounts fall
under offshore merchant accounts which
are considered to be high risk merchant
accounts. Since ten years, online
tobacco merchant accounts have emerged
and are improving as compared to the
early days. A high rate of tax is
imposed on tobacco by the government.
This is done in order to reduce the
level of consumption which, finally, is
affecting the tobacco companies. The
merchant account provider refuses most
of the tobacco companies to open a
tobacco merchant account. This is
because of the slow progress in the
online tobacco business. To encourage
the online tobacco businesses, the banks
and the merchant account provider
refuses a normal tobacco account. The
banks and other financial institutions
have made a set of rules and regulations
which are quite harassing to the tobacco
merchant account holders. The rules are
to be followed very strictly. The
tobacco companies have to be careful in
choosing the country to which they
should export their product. Normally,
tobacco suppliers export to those
countries where the tax rates are very
low.
As a famous saying goes, every problem
comes with a solution. These tobacco
companies that have faced many
obligations while carrying out the
business are now overcome by the
technology in the banking sector. An
internet site named Instabill has come
into act for the tobacco merchant
account holders. This system helps in
providing merchant account to the
tobacco companies and also helps in
processing of the credit cards for
various transactions.
The Instabill system also helps a
tobacco business to get world-wide
coverage for their business. It is
accessed through the internet and a user
can access the tobacco merchant account
from any part of the world using a
computer and an internet connection.
Gradually when the business expands,
there is increase in sales and a
merchant is able to get a high return of
profit out of it thus eliminating risks.
Various payment gateway systems have
emerged which compliment the online
tobacco merchant account. These systems
act as a secure server while processing
of online checks and credit card is
done. No credit card terminal is
required. As in other merchant accounts,
the transaction processes with the
credit card is the same. The user or the
customer has to key in the required
information to make a complete and
successful transaction. After the
formalities are completed, the customer
can proceed with the online payment
methods. |
