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THE STRUCTURE OF HIGH RISK MERCHANT ACCOUNTS

We all know that the merchant account is also a type of a bank account which allows the merchandise businesses to accept payments through debit cards or credit cards. Wholesale transactions or bulk transactions are undertaken by the merchant account holders. The merchant account integrates between the retailers and the banks. The merchandise business settles or processes only debit/credit card transactions.

In the modern technical era, all transactions like authorisation, cancellations, deposits, etc. are electronically sent to the bank. Various types of credit card processing devices are into existence. A credit card terminal is used to read the magnetic strip which is at the back of every credit or debit card. Some of the terminals automatically read the computerised chip but some terminals needs manual operation. This is an important factor that determines the functioning of the merchant account. Various fees are also charged to the merchant account holders. These fees may be periodic fees like monthly or annual or percentage of amount per products. The fees are set by the issuing bank or the merchant account holders. But the per product percentage of fees are known after looking into the merchant’s business level. The credit card issuing companies like the VISA or MAESTRO, etc. also fixes the rate in some situations.

The interchanging of fees may vary according to the type of the credit card and also by viewing the details of the transaction. Banks also provide with some discounts to the merchant account holders. Certain amount on fees is charged for accepting payments through the credit cards. One of the method of billing a merchant by the bank is 3-tier pricing. It is the simplest as well as the most popular method of pricing for the merchants. The merchant account holders are grouped into three categories in the 3-tier pricing method. The rates are based on the type of tier as the merchant should be eligible for certain criteria according to the tiers. Other fees like statement fee, monthly fee, authorisation fee are also imposed on the merchants. The authorisation fee is charged when the transaction is requested for authorisation to the credit or debit card issuing company. This fee is different than per product fee or transaction fee. There is also another fee called the statement fee. When the monthly statement is sent to the merchant account holder, the statement fee is charged. It is charged on a monthly basis. The statement contains all the details of the transactions that the merchant has made during the month. The statement also contains the details of the cash flow and fund flow of the merchandise business. A minimum monthly fee is also charged by the merchant account providers.

The monthly minimum fee is collected in order to compensate for the costs of maintaining the merchant account. The e-commerce service also authorises online payments. The payment gateways lets most retail outlets to process the transaction by accepting the credit cards. A merchant may have their own payment terminals but some also prefer to use the third party services.

Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.